Over the year, the U.S. dollar index (DXY) has risen by over 12 percent, due to high U.S. interest rates and a perception that the U.S. dollar is a safe haven asset.
However, these factors in themselves are not enough to maintain U.S. dollar hegemony, said W. Scott Stornetta, Partner at Yugen Partners and the most cited scientist in Satoshi’s 2008 Whitepaper, which laid the foundations for Bitcoin.
“The whole idea of going on the defensive and trying to shore up [the dollar], and make sure nobody else becomes the world’s reserve currency, is completely misguided,” he said“Eighty percent of the effort should be directed towards making the [U.S.] economic engine even more vital, and then all of the benefits that accrue from that, such as serving as the world’s reserve currency, follow a natural path.”
Some analysts have claimed that the United States is interested in maintaining dollar hegemony, so that it can dominate world trade, and is therefore keen to suppress alternate currencies, including Bitcoin.
Stornetta said that the U.S. needs to “realize how to take advantage of the multitude of currencies, rather than viewing it as its sole sovereign right to declare the medium of exchange, the unit of account, and the store of value.”
Stornetta spoke with David Lin, Anchor and Producer at Kitco News, at the AIBC Summit in Malta.
Money and Competition
The future of money is one of competition, which could defy its traditional role as a “medium of exchange, unit of account, and store of value,” said Stornetta.
He was also critical of the claim that central bank digital currencies (CBDCs), digital fiat issued by a nation’s central bank, can monopolize the monetary system.
“The idea that the existing players of nation state fiat currencies have a monopoly on the system, and simply by adopting blockchain-style solutions for their existing currencies, that all of the non nation state actors will be boxed out, is just a myth,” he said. “It’s way too late in the game for it to go back to being a closed system.”
Stornetta claimed that blockchain technology would play a prominent role in defining money in the future, leading to more decentralization and individual control over money.
“The blockchain is like a money kit,” he stated. “I would call it Fed in a box… the existing nation states and their own fiat currencies, pushed out as CBDCs [central bank digital currencies], are going to have to compete on their merits with other alternative currencies.”
To find out Stornetta’s view on the future of Bitcoin, watch the video above
Follow David Lin on Twitter: @davidlin_TV
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