Bitcoin, a worrying challenger? – The cryptosphere is already aware of the disruptive potential of Bitcoin and crypto-assets vis-à-vis monetary and economic systems. However, it is still quite surprising to see that now even a large American bank, such as Morgan Stanley, is doubting the omnipotence of the dollar against the king of cryptocurrencies.
Bitcoin, the only serious contender for the throne of the dollar king?
Since the end of World War II and the Bretton Woods agreements, the US dollar has established itself as the world’s reserve currency .
Ruchir Sharma , as Head of Global Strategy at Morgan Stanley Investment Management , shares an interesting reflection on this in the Financial Times . The banker assesses there competitors who could replace the dollar as the global reserve currency .
Past the euro of the European Union and the renminbi of China – which do not appear to him to be sufficiently reliable competitors – Ruchir Sharma comes to consider the case of Bitcoin (BTC):
“ Lest the central banks, under the aegis of the US Federal Reserve, devalue their currencies [via the printing press], many people have bought bitcoins in large quantities. Its price has more than quadrupled since March, making it one of the top investments of 2020. ”
With the coronavirus crisis , the already huge debt of the United States has become more than worrying . This makes the Morgan Stanley expert say that:
“(…) The reign of the dollar should end when the rest of the world begins to lose faith in the ability of the United States to continue paying its bills. This is how the dominant currencies went downhill in the past. “
If Bitcoin goes from the status of an investment to that of a medium of exchange …
… It would be Game Over for the dollar. This is in summary what Ruchir Sharma thinks since, according to him, even if bitcoins are more like an investment for the time being, the banker sees a change underway :
“Small businesses are starting to use bitcoin in international trade, especially in countries where the dollar is hard to come by (like Nigeria) or where the local currency is unstable (Argentina). And in recent weeks, PayPal and its affiliate Venmo have started storing bitcoin with a view to accepting it as a form of payment next year. “
Even among those who are most skeptical of the technological news that digital currencies are, gold is preferred over the dollar, as the precious metal has been recognized as „protection against the decline of state currencies for hundreds of years. ‚years‘ .
Ruchir Sharma concludes his presentation by saying that the current bitcoin and cryptocurrency rush should „serve as a warning to government money printers“ , especially in the United States.
Without wanting to, the Morgan Stanley leader also ends with what could be a sarcastic nod to the French government. Indeed, the latter has just passed in force – by ordinance and without consultation of Parliament – new restrictions against the cryptosphere. However, Ruchir Sharma gives as a final warning: „intervening to regulate the boom in digital money (…) can only accelerate this popular revolt [for healthy currencies]“.