Cryptocurrency And The United States, The Troubled Marriage (Part I – Economic Reasons)
The United States is often referred to as the Land Of Opportunities. It is known as the epitome of technological and scientific research. The country itself has created some of the most coveted and iconic products, from the Harleys to the iPhones.
So when cryptocurrencies touched the American shores, it felt like an almost perfect marriage. Consequently, America witnessed its crypto boom, with several crypto-blockchain start-ups emerging in the country, making promises like none. Bitcoin, Ethereum, TRON, Litecoin, Dash Coin, USD Coin, you name it, and the US had it.
However, things seem to be changing for the worse in the last few weeks, as the authorities have started to criticize cryptocurrencies. Recently, a Congressman went on to say that they are a threat to the US Dollar. And suddenly, the entire crypto space in America is in a panic state over its future in the country.
So what’s the matter? Why are the authorities worried about? What made this sudden shift in the US? We try to find out.
What’s the strength of the US Dollar?
The US Dollar has been the largest, globally accepted currency for decades. Almost every international trade taking place between any two countries is done for the USD as consideration. Global petrol and diesel rates are decided in USD, so are the rates for gold and commodities.
Also, due to the volume of trade, the United States is directly involved is humongous, and miles ahead of any other country. This makes the USD a rock solid stability, making it the most preferred universal fiat currency.
It is this dominance of the USD, which make America the global economic and political force that it is. This dominance helps the US to keep a check on its rivals, and also implement policies around the world, which it thinks are suitable and necessary.
Why are cryptocurrencies a threat to the USD?
The entire philosophy of digital currency is based on the concepts of decentralization. No single authority or a group can control cryptocurrencies, and therefore, they are free of any influence from any government authority.
What this essentially does is make people take control over their own wealth, without any intervention from the authorities. Moreover, as cryptocurrencies are getting accepted worldwide, it reduces America’s bargaining power.
US Congressman Brad Sherman recently stated that most of the international power which the United States enjoys is due to the USD being accepted as the global currency. Worldwide adoption of cryptocurrencies would weaken the relevance of the US sanctions over countries like Iran, he added. Further, Sherman went on to demand that the government must impose a complete ban on the use of digital currencies in the country.
Also, major US companies which transact heavily in USB Dollars are now slowly and steadily. JPMorgan is leading the list, as it launched its own JPM Coin, focused at global money transfers. Therefore, it causes a straight loss of utility of the USD, and also loss of revenue generated from charges on global transfers.