BlockChain & Cryptos | |
BlockChain & Cryptos | |
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Wednesday, January 13, 2021 / 12:30 PM /Avery Wright / Header Image
Credit: unsplash.com
One
of the most interesting trends surfacing in the crypto industry today is the
increasing likelihood of Bitcoin emerging as the next global reserve currency - something that Bitcoin fundamentalists have been preaching for the last decade.
With
the combination of transparency and decentralized trust brought on by the
blockchain, individuals and companies across the world have had the opportunity
to participate in a free financial system since the emergence of Bitcoin some
twelve years ago.
Since
the dawn of Blockchain, trust in this trustless system has been slowly rising
with a diverse range of individuals, institutional investors, and even world
governments investing in the technology and the various tokens in circulation
today. One result of this has been the free flow of liquidity across borders in
a remarkably revolutionary way - satisfying the ever-growing need for a more
efficient global financial system.
Mr.
Yoon Kim is
an accomplished and dynamic crypto analyst and strategist. He successfully
built the TMT sector of Tremblant Capital and helped the company increase its
AUM from $200 million to $5 billion in five-years' time. He then launched
Vestry Capital, a global TMT equity fund as the head of which he served as an
advisor and consultant to various hedge funds and blockchain projects.
With
his 20 years of experience in investing and in the blockchain industry, Mr. Kim
acutely understands these shifts in the global financial system.
For
that reason, one of the key topics of conversation during The New Normal of
Blockchain & Cryptocurrency panel which AIKON
organized in late October was "where the future lies for the USD and its
long-term position as the world's reserve currency".
Mr.
Kim indicated that the USD losing some of its standing in the global financial
system and possibly its status as the reserve currency as an inevitable product
of blockchain's accessibility and decentralization.
As
Mr. Kim has pointed out, the current financial system has been in place since
World War II - 75 years now! On average, global financial systems have
typically lasted for ~70-80 years each. We are, then, coming to the end of an
era and can stand with bated breath awaiting the next financial revolution.
Moreover,
history has shown that significant global events often precede the breakdown of
institutionalized financial systems. For the Pax Britannica, it was World War
I. For the global financial system, we have today, it may very well be the
impact of COVID-19 on the world economy.
Having
been a staple of the global economy, and considering the turmoil, the US has
endured throughout 2020, USD is in serious danger of being dislodged from the
position of power it has enjoyed over the last three-quarters of the 21st
century.
Given
the amount of influence that US politics now has on the rest of the world and
being mindful that the level of engagement that USD (as a global reserve
currency) will have on the rest of the world after the presidential election
will probably never reach the levels from 40 - 50 years ago when it was at its
peak. With the decrease in the level of engagement of the US with the world
economy after the Soviet Union dissolution, what we see now are the effects of
the politics that took 20 years to materialize.
In that
sense, Mr. Kim pointed out that it is very probable that USD is about to be
dethroned as the most important currency in the world.
And
while there are those who would like to see the Chinese RMB take its place, Mr.
Kim considers this very unlikely to happen. For one, dethroning USD from the
position of the global reserve currency would put a significant amount of
pressure and responsibility on the Chinese financial system, responsibilities
the country seems to be shunning presently. For instance, China has been
accused of intentionally increasing demand which then leads to an increase in
the prices of international commodities.
Therefore,
the question is what will supplant USD as the global reserve currency or at
least become an alternate reserve currency running in parallel with USD?
Mr.
Kim stated that Bitcoin seems to fit perfectly, especially taking into account
the timing of its rise, as well as its ability to cross borders with very
little effort.
As
political and economic relations between the US and China continue to collapse,
it is becoming increasingly unlikely that either the USD or RMB will be viewed
as a viable global reserve currency going forward.
Bitcoin
may prove to be the thing that both nations, as well as the rest of the world,
decide they can live within the upcoming decades.
While
the Chinese government is actively restricting crypto trades, there is massive
support within the government for cryptocurrencies and blockchain. This implies
that they have a long-term strategy in place, where Bitcoin would be used to
dislodge the USD as the global reserve currency.
In
the same way, we're seeing the causality of the US global economics politics
conducted in the past 20 years and its effect on the situation now, there is a
good chance that 20 years from now we will have Bitcoin as the reserve currency
of the world simply because it will not be controlled by any one nation and its
financial system.
Should Mr. Kim's predictions come to be realized, individual and corporate players in this new market that is quickly gaining momentum should be preparing for the shift.
This article originally appeared on
aikon.com
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