Posted 11 months ago | by Ben Armstrong
Clash of the Wet Noodles – US and China Equally Suited to Fail in a Decentralized World
It is interesting to compare the USA and China in terms of their next generation tech development priorities. In a recent OP-ED by Ripple co-founder and chairman Chris Larsen warned that the US risks losing a digital cold war that could see the Chinese Yuan replace the US dollar as the global reserve currency.
This idea is – without any doubt – totally absurd.
The USD will be torn apart no matter what happens with China and their vision of a Sino-led global economic order. It is true that China is way ahead of the USA in terms of blockchain development – but it is equally true that the Chinese use Nazi-esque concentration camps to deal with ethnic minorities.
It is also true that China doesn't recognize Taiwan as a nation, and routinely threatens the small island with its armed forces. Additionally, China has no interest in floating its Yuan in the same way that Western nations allow relatively free trade in their godawful fiat nonsense (when the central banks aren't manipulating the FX markets).
No One Trusts China
Let's be honest – a CCP led China is a bad actor on the global stage.
The Western corporate oligarchs wanted into the Middle Kingdom because of its massive pool of cheap labor, and few human rights. China recently demonstrated how low its view of human rights are, as it blasted into Inner Mongolia to quash protesting students.
There are, of course, no reliable media reports from the region, as China only allows its lapdog press to create a public narrative that one would have to be brain dead to believe.
Although many have embraced China as a trading partner, that trust is evaporating, and many nations are beginning to create more political and economic distance as CCP run China shows its true colors.
By allowing the Chinese Yuan to become a global reserve currency – the world's nations would be giving the Chinese to power to print and spend – which would lead to more of the human rights atrocities described above.
If you want Chairman Xi to turn Tibet into Middle Kingdom land – complete with forced sterilization and de-facto ethnic cleansing – go ahead and support the Digital Yuan.
The USA is No Match for Many Nations in Blockchain Development
There is no doubt that Larsen was correct when he wrote,
“The power and privilege Americans enjoy from the dollar being the world’s reserve currency cannot be overstated. While the U.S. makes up 21 percent of global GDP, the dollar accounts for over 88 percent of global trade. Part of this privilege comes from America’s stewardship of the world’s financial infrastructure, giving the U.S. enormous power in international relations and advancing a global economic system based on American values of economic freedom and open access.”
Over the past few decades, the USA has used this privilege to punish nations like Russia, which may have been closer allies if given more respect. The US has undeniably politicized its monetary system – and now the FED is debasing the USD at an alarming rate.
As much as China can't be trusted (for so, so many reasons) the USA isn't in much better shape. As I write there are yahoos burning down the major cities, and the upcoming election could give rise to an actual civil war.
We probably aren't going to see anything amazing come out of the USA in terms of new payment technology – although it may have to adopt whatever platform is adopted over the next decade. The USA does still have some value-creating pockets in its rotting economy, and they will want to play ball with the rest of the world.
Remember – We are Talking About Decentralization
Nations like Singapore or Malta are more likely to become powerhouse nations in the world of decentralization – far more so than the USA or China.
Unlike major nations, smaller jurisdictions don't the same level of political liabilities, and don't engage in the same types of geopolitical adventurism. Small banking hubs have a good quality of life, and no major human rights issues to speak of.
This All Goes Well Beyond Blockchain
An even more likely – albeit distant – probability is that new political arrangements will be created in the coming decades. People who have money will want to be taken care of – and not subsidize the rabble that thinks they are responsible for the world's ills.
As nations have a harder time making their archaic political structure viable, things like passport laws will likely change, and we will see a rise of private armies. This isn't the world we live in today, but it is probably right around the corner.
The age of political dinosaurs is ending – and the smaller and more adaptable an econmy is – the more likely it is to survive the incoming cataclysm.
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