Bitcoin (BTC) and other cryptocurrencies have undoubtedly taken the world by storm. The bull run of 2021 saw a massive inflow of new investors looking to make their first big break. However, the importance of Bitcoin, and cryptocurrencies in general, goes beyond making a buck, but rather into changing the global economic norm.
We are well aware of the dominance held by the US Dollar in global politics and economics. However, as seen in recent times, the USD has lost a big chunk of its foothold. China and Saudi Arabia have “accelerated” ongoing talks to price oil contracts in yuan rather than greenbacks, indicating that the dollar-centric global financial system is under severe strain.
Notably, the “petroyuan” conversations have been ongoing for six years and were not prompted by events in Ukraine. According to the Wall Street Journal, they have been accelerated not by Russia’s incursion, but by US Middle East strategy in recent months.
The Dollar’s continuous fall as a worldwide trading and reserve currency has important ramifications for the US economy, and it may make neutral or non-state monetary networks, such as Bitcoin (BTC), more valuable to a wider range of participants.
However, the current shift is causing a structural issue. The dollarization of OPEC (Organization of the Petroleum Exporting Countries) oil sales aids in the unification of global markets around a single currency. If the US loosens its links with OPEC, this major dollar-trading node, as well as the broader dollar network, will almost certainly divide and collapse.
Bitcoin to the rescue?
With Sanctions hitting Russia, the country has already revealed that it is open to the discussion to accept Bitcoin for its oil. India has recently made big purchases of discounted Russian Oil using the Indian Rupee. As oil is not one of the sanctioned items, there was no backlash from the NATO countries regarding the deal.
With geopolitics turning the tide to the east, economists argue that it is only a matter of time before the Chinese Yuan overtakes the Dollar to become the dominant global currency. If, and when, that happens, it will surely disrupt many financial institutions, as well as people’s savings and investments. Bitcoin can provide a soft landing spot for that situation. Being a non-political and neutral currency, Bitcoin has the advantage of not belonging to any country. It truly belongs to the whole world.
We have already begun seeing Bitcoin (BTC) become a legal tender (El Salvador). Moreover, an increasing number of businesses have begun accepting Bitcoin, and other cryptocurrencies, as a form of payment. Hence a global Bitcoin adoption isn’t all that unprecedented.
Additionally, giant financial institutions like JP Morgan and Goldman Sachs are already offering Bitcoin (BTC) and cryptocurrency investment options to their clients. Although this development is fueled in part by the client’s demands, it also shows the firms’ willingness to accept a more neutral currency in these times of flux.
Although we are yet to see the bigger picture of how things unfold, Bitcoin, in the meantime, seems like the safest bet to keep investors’ money safe.
At the time of publication, Bitcoin (BTC) was trading at $47,543.05.