Will USD lose its world reserve currency status due to the cryptocurrency revolution?

The popularity of blockchain technology is growing day by day. It earned a wide range of fans throughout its history and this year their number has reached the possible maximum. Such a growth in popularity had clear reasons.

Blocking allows to decentralize and store any digital information, including money, data, information about people and property rights. It is difficult to overestimate the potential of introducing new technology by financial institutions and business models. This September, the head of the IMF, Christine Lagarde, warned that very soon cryptocurrencies could replace central banks, credit organizations and even national money.

At the same time, the impact of blockchain on international policy and public administration has been given too little attention. Western countries, and especially the US, dominate the world because of their influence and the strength of their economies. Their role is enshrined in the Bretton Woods Agreement, and the US dollar is the world reserve currency. Since all financial entities are essentially forced to work on American terms, the US Treasury Authority extends far beyond the country. The United States can destroy any business by simply calling it the sponsor of terrorist organizations or by accusing money laundering.

Cryptocurrencies based on blockage may simply deprive the United States of this advantage by decentralizing the financial system, which would make it possible to withdraw this system from state control. This is consistent with the objectives of States that have long sought to limit the impact of the United States dollar on the world economy. These countries are often unhappy with their dependence on the SWIFT system, a standardized interbank banking network. Simple disabling of the system leads to the cessation of international operations, instantaneous inflation, and the fall of the economy.

The ability to influence the economies of other countries is significantly limited in the new crypto world. No state can impose sanctions against decentralized protocols. Successful implementation of national cryptocurrencies or the wider introduction of global cryptocurrency types like Bitcoins will limit the impact of any sanctions and mitigate the consequences of a possible disconnection from the SWIFT system.

The new technology will allow making exchanging payments faster, cheaper and without the participation of third parties. Today international transfer takes several days. This process involves various organizations: banks, clearing houses, and SWIFT. Operations with cryptocurrencies such as Dash and Litecoin take several minutes and cost one-two cents. The world cannot give up that advantage.

Thus, cryptocurrencies allow countries to go beyond the dollar system. Their main advantage is decentralization. The influence of centralized systems, namely the US dollar as a reserve currency, will gradually weaken over time. There is no way back – the dollar is bound to lose its status in the near future. A completely new international playing field will be created. Which exactly? We can only guess.