Blockchain technology is catching on, and dragging the rest of the world aboard. What we are beginning to see is the positive impacts of competition. Traditionally government-controlled finance has sucked for a long time. No one wants to carry around heavy precious metals, so we all just put up with the dollar bills they keep printing. Bitcoin and other cryptocurrencies have introduced an alternative that is increasingly growing in popularity.
Bitcoin’s Saving Grace: Borderless and Permissionless
A person in a communist country can participate in Defi much easier than they can buy S&P 500 for example. People worldwide can participate in a global economy just by using their cell phone. There is immense value in that. The USA could legislate against cryptocurrencies, but they would absolutely be shooting themselves in the foot. All that innovation and money would move somewhere else, say China. Because cryptocurrencies have no boarders, it would weaken the USA in comparison to other countries to try and oppose it.
CBDC Enters The Ring
Instead they’ve decided to join in. There are a number of CBDC (Central Bank Digital Currency) in varying stages of development. China is launching their own “Digital Yuan”. Now, the Fed is beginning to investigate a cryptocurrency for themselves. There is no telling what that would look like. I’d expect them to try and maintain control over the currency, print massive amounts, and restrict who is allowed to use it just as they do with the dollar bill (in which case I don’t see the point and would avoid buying it). However, in due time it could have a positive impact on the world in general. Governments in the future will need to work harder to incentivise people to continue using their currency instead of relying on a captive audience.