Bitcoin, a worrisome challenger?
The cryptosphere is already aware of the disruptive potential of Bitcoin and crypto-actives against monetary and economic systems. However, it is still quite surprising to see that now even a major US bank, such as Morgan Stanley, is beginning to doubt the omnipotence of the dollar against the king of cryptomoney.
Bitcoin, the only serious contender for the throne of the dollar king?
Since the end of World War II and the Bretton Woods agreements, the US dollar has established itself as the world’s reserve currency.
Ruchir Sharma, as head of Global Strategy at Morgan Stanley Investment Management, shares an interesting reflection on this subject in the Financial Times. In it, the banker assesses competitors who could replace the dollar as the world’s reserve currency.
After the European Union’s euro and China’s renminbi – which do not seem to him to be reliable enough competitors – Ruchir Sharma comes to consider the case of Bitcoin (BTC):
„For fear that the central banks, under the aegis of the US Federal Reserve, would devalue their currencies [via the printing press], many people bought Bitcoin in large quantities. Its price has more than quadrupled since March, making it one of the most popular investments of 2020. »
With the coronavirus crisis, the already enormous debt of the United States has become more than worrisome. This makes Morgan Stanley’s expert say that :
„(…) the reign of the dollar should come to an end when the rest of the world begins to lose confidence in the ability of the United States to continue paying its bills. This is how the dominant currencies have fallen in the past. »
If Bitcoin goes from being an investment to being a medium of exchange…
…it would be Game Over for the dollar. This is what Ruchir Sharma thinks in a nutshell because, according to him, even if Bitcoins are more like an investment at the moment, the banker sees a change in progress :
„Small companies are starting to use bitcoins in international trade, especially in countries where the dollar is hard to come by (such as Nigeria) or where the local currency is unstable (Argentina). And in recent weeks, PayPal and its subsidiary Venmo have begun to stockpile Bitcoin with a view to accepting it as a means of payment next year. »
Even among those who are the most skeptical of the new technologies that are digital currencies, gold is preferred to the dollar, because the precious metal is recognized as a „protection against the decline of state currencies for hundreds of years“.
Ruchir Sharma concluded his presentation by saying that the current rush to Bitcoin and cryptomoney should „serve as a warning to government currency printers“, especially in the United States.
Unintentionally, Morgan Stanley’s leader also concludes with what could be a sarcastic nod to the French government. Indeed, the latter has just passed – by ordinance and without consulting Parliament – new restrictions against the cryptosphere. Ruchir Sharma gives as a final warning: „Intervening to regulate the boom in digital money (…) can only accelerate this popular revolt [for healthy currencies]“.