Bitcoin Will Supersede the US$ as the World’s International Currency
A currency worthy of the name must be able store value. The dollar is not one of those. In fact, neither is the pound, since its quantity is growing much faster than GDP. The number of pounds in circulation is growing year-on-year and considering that we are far from posting the same levels of growth, this automatically results in inflation. To put it more simply, the pound is worth less and less. Its purchasing power is decreasing and savings are being robbed…
It is also useful if currency can allow anonymous payments, not to mention ones not requiring outside permission. This permissionless attribute is one of the remarkable qualities of Bitcoin, which we do not talk enough about. Probably because, after all, the banks rarely forbid us from transferring our money (that being said…). Will this always be the case for everyone? No need to speak of the future, this is already the reality for Russians and Iranians alike!
In this article, we will talk about the extra-territorial nature of the dollar and when money becomes a weapon used to blackmail nations…
The US dollar: an intergalactic currency
In 1974 the US dollar became the unavoidable international currency. Just four years after the oil crisis and three after having (forever) suspending the convertibility of the dollar into gold, the United States of America pulled off the biggest coup in history… it forced Saudi Arabia to sell its oil in no other currency other than the US$.
It was an extraordinary geopolitical 180, as the end of the Gold Standard coupled with the depletion of US oil fields meant US global domination was on the verge of being extinguished.
Since that year, every nation on the planet has had to, in one way or another, own some dollars in order to be able to buy the black gold essential to any industrial powerhouse.
This monetary imperialism offers innumerable advantages to the United States, the most important obviously being the ability to exchange oil for dough… The dollar also allows the United States to capture approximately half of the world savings to finance its debt through the recycling of ‘petrodollars’.
So what are central banks doing with their mountains of dollars? Bingo! They reinvest them in order to earn interest in the most liquid asset of them all… the debt of the United States government! It is for this reason that the United States can afford to have a chronically high trade deficit without its currency collapsing. The dollars collected by the oil-producing countries ultimately come back to water US debt and US arms dealers. A perfect circle.
Unsurprisingly, the dollar therefore represents 60% of the currency reserves of central banks across the globe (it was 80% in the not so distant past).
It’s very simple, in 2018, the European Union settled only 20% of its energy imports in euros and the remaining 80% in dollars. Even Air France buys its Airbuses (made in Europe) in dollars … Those who see the EU as a necessity to weigh against the United States on the international scene can draw their own conclusions.
LAWFARE and justice for all
Now let’s get to the heart of the matter. The other great advantage of the dollar is that it can sanction countries that do not align with USA’s ‘extraterritorial law’ or, to put it more clearly, with American imperialist foreign policy.
This war by law, let us not mince words here, was theorised by the American army colonel Charles Dunlap and formalised shortly after the attacks of 11th September in 2001 as an alternative to military intervention (lawfare).
Lawfare makes it possible to decree monetary embargoes which are de facto transformed into economic embargoes. BNP Paribas paid the price in 2014 when it was ordered to pay nine billion dollars for facilitating dollar transactions on behalf of countries under American embargo (Iran and Cuba). In summary, any dollar transaction must comply with US law, that is, with the interests of the United States or face hefty sanctions.
And that’s not all, the American judiciary system no longer hesitates to attack companies in allied countries. It has become an all-out tool for economic warfare working hand in hand with the NSA, which spies on all contracts over $200 million. Alcatel, for example, felt the force of the Federal Courts soften (in a bribe case with a Costa Rican politician) only after having agreed to merge with the American company Lucent. We will learn later that this blackmail was aimed at obtaining patents on optical fibre networks.
The same goes for Alstom, the flagship of French industry, to whom the Americans have twisted their arm to get their hands on the famous Arabelle turbine, the centrepiece of French nuclear submarines.
An Arabelle turbine. Sometimes size does matter.
To put it another way, France was castrated via mafia techniques with the full cooperation of the US judicial system…
“We can no longer make nuclear submarines in France without American authorisation.”
– Alain Juillet, former director of the DGSE
The kingpin: SWIFT
Washington is waging a constant economic war that takes multiple forms. Fines, blackmail, freezing of bank accounts and monetary embargoes. At this point, I hear what you say… ‘Why don’t we just use another currency other than the dollar?”
Unfortunately, it’s not so simple, because whether you make a transfer in pounds, dollars or Indonesian rupiah your transfer will, regardless, pass through a body located in… Belgium!
That’s right, all international financial transactions must pass through the company SWIFT (Society for Worldwide Interbank Financial Telecommunication), which is a kind of cooperative of private banks subject to the US empire.
It is the latter of which that is authorised to disconnect banks from any country from the SWIFT network. So even if Iran decided to trade in euros, it would not matter…
Iranian banks have been disconnected since 2012, apart from the short-lived Iranian nuclear deal that Donald Trump *astily put a stop to as soon as he was elected. The European Union has pretended to take offence by creating a sort of clearing house to barter with Iran, but it has never been used (INSTEX). All it took was the United States to threaten to tax on large German sedans for the whole of Europe to put the idea to bed (the automobile industry represents 20% of German exports).
In short, the consequence is that the Islamic Republic of Iran can no longer pay for its imports or be paid for its exports, in any currency.
By the way, Iran had categorically refused to sell its oil in dollars for a very long time. It also reminds me that Sadam Hussein had also decided to sell his oil exclusively in euros rather than dollars two years before receiving the visit of several GI Joes… The petrodollar is the eternal nerve of war.
SWIFT is thus a mechanism of world domination making it possible to force regime changes by strangling their economies.
Now is the time to go back to our preamble: Bitcoin is a currency which is ‘permissionless’, unlike the greenback. In other words, if China bought Iranian oil in Bitcoin, the United States could do absolutely nothing about it. I say nothing but China, the only country in the world that dares to brave the embargo on Iranian oil decreed by the Americans (through bartering), is now in a trade war with the US. Currently, the US taxes half of imports made in China by 25%, a war which has been exacerbated by COVID-19 since 60% of Chinese ports are still not running.
All banks, and therefore all currencies, must go through SWIFT, so that the countries that threaten the petrodollar are exposed by an unplugging from Uncle Sam’s network.
The SWIFT threat was even brandished before Vladimir Putin in the wake of the annexing of Crimea. In 2015, when NATO threats came to a head, many Russian citizens abroad were unable to use their payment cards.
“Limiting Russia’s access to the global international bank payment system, SWIFT, would practically mean a declaration of war.”
– Dimitri Medvedev, Russian Prime Minister, 2019
Moscow and Beijing have since set up their own international payment systems operating according to the same standards as SWIFT so as not to risk seeing their savings collapse if their banking systems are quarantined (sorry for the pun). The BRICS are even planning to acquire a common cryptocurrency… Oi, Bitcoin already exists you know!
Bitcoin is a currency that comes with its own payment system. It’s kind of like buy one get one free. The cryptocurrency invented by Satoshi Nakamoto is also apolitical, since it does not serve any country in particular, unlike the dollar which offers exorbitant privileges to the United States.
Bitcoin is not a manorial currency that requires you to bend down to use it. Its decentralised operation makes it physically impossible to prevent a transaction from being executed.
In a world where competition for raw materials will intensify, it is unlikely that a piece of paper (i.e. a dollar) can keep its value on the international scene. The de-dollarisation of the world is underway and Bitcoin has its own strengths, which make it the natural candidate for succession to the dollar. The privilege of an international currency never stays in the same hands for long.
Sooner or later, Bitcoin will win over many for its obvious monetary qualities, but also for the inability for it to be used as an oppressive and ideological financial tool, unlike the 21st century American dollar. Besides, how can we forget that Bitcoin also embodies the best way to protect yourself from your own government in the event of mass dictatorial surveillance facilitated by the end of physical money.
Just your average global millennial embracing, and interested in, the future of money and finance. Excited by blockchain tech as well as fintech but have a special passion for DeFi and Yield Farming, what will this technological disruption bring next?