The global financial system, by creating the most valued currencies in the world and determining the economies of many countries, has led to some nations becoming richer while others remain poor. While the American economy possesses trillions of dollars and shows significant strength, Sudan's economy is entirely bankrupt, and this is due not only to the lack of education, production, and strong governance within the country but also to the global financial system that started centuries ago.
The Power of Cryptocurrencies Against the Financial System – A Study
The Dominance of the Global Financial System
The Turkish economy losing 5% of its value against the US Dollar in a single day shows the weakness of the TL and the strength of the US Dollar. However, the real issue is that the dominance of the US Dollar as the global currency has made all countries dependent on it, forcing them to constantly rely on the US. The claims that this system can be changed with Bitcoin or other cryptocurrencies are unrealistic. The global trade and financial system is secured by laws and strongly controlled by organizations, especially the American administration. Therefore, even in the face of major wars, it is unlikely that cryptocurrencies will be used globally.
Ownerless Money Cannot Govern the World
Cryptocurrencies are entirely ownerless and are not issued by any central bank. Bitcoin has a production limit of 21 million, unlike the US Dollar, which has unlimited production rights and a self-regulating mechanism. Therefore, it is impossible for Bitcoin to be used in global trade against the US Dollar. World leaders agree that the existing financial system should not be changed. Russian President Vladimir Putin stated that while the use of the US Dollar could be gradually reduced, it is unrealistic to expect it to disappear entirely from trade.
The Power and Acceptance of Cryptocurrencies
It is not possible for cryptocurrencies to govern the world economy unless accepted by states. Even if Bitcoin's value reaches 200 thousand US Dollars, it is still seen as "impossible" for it to be used by states as of 2018. Washington is certainly not going to allow this situation. The US administration is likely to respond with legal measures against countries attempting to manage their financial system with cryptocurrencies. Existing agreements mandate the use of the US Dollar for trading in valuable resources like oil, and any deviation from this results in legal sanctions.
The Unchanging Nature of Global Trade
The US will not allow the reduction of the use of the US Dollar in the global trade and financial system. Even the largest economies in the world hold significant reserves of US Dollars. This reality underscores the impossibility of replacing the financial system with cryptocurrencies.
The Limited Impact of Cryptocurrencies
The market value of cryptocurrencies has fallen to 194 billion dollars, which is lower than the value of many countries. The anonymity of those managing these currencies limits their impact. No matter how high Bitcoin's value gets, without the backing of a strong government, it is impossible for cryptocurrencies to make significant changes in the world economy. Their impact is expected to be more prominent in the areas of privacy and security.
The Future of
Cryptocurrencies
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In 2018, Bitcoin and altcoins were most commonly used for secret payments, even by politicians who opposed them. The US Federal Reserve and SEC are taking the strongest measures against the threat of cryptocurrencies' anonymity. In the future, it is expected that the use of cryptocurrencies will increase for secret transactions between individuals and in certain trades, even if they do not affect the financial and trade system significantly.