The decline of the US dollar
‘But worse still for the future of the dollar is that, increasingly, companies in Africa and Asia are buying and selling in bitcoin.’
The US dollar has been the world reserve currency since 1944 and ever since all other currencies have been pegged in comparison to its value. However, signs that this is beginning to end have been emerging for a long while and have only intensified because of the pandemic.
The fact is the US dollar is seeing competition on a scale that it has not seen since the cold war and that competition is beginning to look a lot stiffer than it ever was in those days. Bitcoin is continuing to spike in value and more and more investors and businessmen are beginning to turn their dollars into bitcoin. The big dogs of the financial and business world are starting to become wary of the dollar, they’re scared that it won’t hold its value and will fall apart and so are increasingly turning to bitcoin to guarantee the safety of their profits.
But worse still for the future of the dollar is that, increasingly, companies in Africa and Asia are buying and selling in bitcoin, thus removing the need to use the dollar altogether and increasing their profits.
Nigeria is the second largest bitcoin market in the world and has been called the ‘giant of Africa’ because of its large GDP and military spending compared to the rest of the nations of that continent. It’s a nation rich in natural resources, and has seen massive amounts of foreign investment by both the Chinese government and private Chinese companies. Toted by some as a future superpower, its businesses are increasingly trading with foreign counterparts in bitcoin; obviously a massive problem for the US dollar. Seen through this lens it's obvious why the Nigerian central bank has attempted, very unsuccessfully, to ban bitcoin. It does not want to annoy the USA, who I’m sure has put a lot of subtle and hidden pressure on the Nigerian government to end crypto-currency trading and attempt to halt this threat to the dollar.
Combine this with the severe economic damage to Europe and the United States itself compared to the strong economic recoveries of nations like China and Japan, the already weak and ailing dollar is bound to decline further. Like a snowball rolling down a hill, it will only get bigger and pick up more speed. What exactly will happen if this does occur is impossible to know, but I’m sure whatever happens will certainly be bad.
