In the global Super Power race, the US has had to battle the likes of Russia, and China more recently, but always come out on top thanks to the proliferation of the US Dollar. The United States’ native currency is one of the most widely accepted and recognized around the globe, and that has given America a lot of sway.
By being the go-to financial instrument, it means that the US has bargaining power. It means that the US’s economy gets a boost from outside of its own borders, and it also gives its a lot of collateral when making deals, or even bullying other nations to accept its deals.
The proliferation of its currency is no string that even China, a country strongly opposed to the US’s strength on the global stage, is held under its thumb. However, that could start to change if China’s latest technological play comes off.
China has made little secret of its intention to base the next couple of years around the growth and expansion of new technologies, one of which is blockchain. In terms of a technological arms race, China is clearly winning. However, this technology brings with it a financial facet, which just may have the power to slash the yuan/dollar usage gap.
China has no interest in boosting or bolstering Bitcoin in its borders but would like the benefits of digital, borderless currency. This has led to the People’s Republic getting ready to launch its own, government-backed, cryptocurrency.
If this launch is successful, and the adoption and proliferation goes as expected, the US Dollar might have a real competitor on its hands. More so, the competition will not only come from China.
“A war of crypto tokens will break out next year, and ‘soldiers’ will not only include central banks and governments but also multinationals like Facebook and large cross-border financial institutions. Competition will be beyond imagination,” Cao Yin, a Shanghai-based blockchain veteran, told the Global Times.
Facebook’s Libra offering has also been touted as a new form of finance, and one that seemingly is a major threat to the US, based upon the backlash it received there. However, the US knows it can control Facebook’s attempts, not so in China.
“China now definitely comes out at the head of the list when it comes to digital currency technology,” Yang Wang, a senior research fellow with the Fintech Institute of Renmin University of China, added. “In terms of technology, China’s digital currency excels, whether in its security level or speed, which means it will surpass competitors in user experience.”