Economic frailty could soon give Bitcoin a new role in global trade

The turmoil we’ve experienced in global markets this year – a global crisis fueled by a combination of broken supply chains, rising prices and massive national debt – seems to signal the start of a new era. All of this is within the framework of the United States dollar which serves as the world’s primary currency, which currently accounts for approximately 40% of global trade.

But financial history tells us that several global reserves can exist at the same time. Many countries are eager to establish a solution to the world’s political problems. Bitcoin (BTC) can fit the bill, and if it is taken as another investment currency – even offshore – we will see the release of Bitcoin trading and the rise of a new geopolitical reality.

The Bitcoin network is ready this time.

What is Bitcoin-based trading?

There are many currencies to save in the world, from the US dollar to the Chinese yuan, the Japanese yen and more. But the dollar is the biggest in terms of popularity used for exchange.

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Bitcoin trading focuses on the idea that BTC can also function as a reserve currency that moves alongside other reserve currencies. The geopolitical outcome would be one in which demand and demand are at the forefront of international promotion. Those who have the raw materials, manufacturing skills or any other quantity necessary for international trade can negotiate based on the demand for the goods. This can be forced by the exchange unit, Bitcoin, to remain a stable political entity.

The importance of punctuality

There are many financial problems in the world. Two, in particular, are once-in-a-generation special events. The first is the need for a well-maintained, neutral, anti-corruption financial system. The second is the ever-increasing pressure on the global financial system. These are inputs such as raw materials, production costs, special production methods, protection of intellectual property, etc. Sources of information that are essential to all international trade are changing. The timing may be right to take advantage of the political momentum that has been building from the global demand for dollars to be significantly reduced by the new Bitcoin market.

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Whether the dollar will be removed from the current monetary regime is a matter for another time. Even a few years ago, thinking of Bitcoin as a meaningful addition to existing currencies was impossible. However, Bitcoin is now more accessible due to the size and number of networks.

Beyond any public skepticism or control over things, the Bitcoin blockchain was too slow and too powerful to become the world’s most secure currency. Up until today, the network has features that can provide the unique solutions needed for these purposes.

In short, the Bitcoin network is becoming stronger and more active every day. The rise of the lightning network makes it easier for the participants to manage their inflows and outflows. This is important because when countries and big businesses adopt the Bitcoin network, smaller countries and companies will follow. The Lightning Network continues to grow rapidly and will soon be able to drive this volume fast enough to compete with fiat currencies on several levels of commerce.

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The second major challenge is the increasing demand for commodities in the global economy. These are inputs that represent market share. These include raw materials such as oil, computer chips, lithium and aluminum – and specific manufacturing processes that require high technology or low cost production. Also included is the ability to legally protect ideas. There are many groups of very important things, but the main point is this: Without using the power of monetary policy and trade stability, the ability of countries with important aid to discuss international matters is greatly increased.

The sea change this will open cannot be overstated. This could mean that institutions like the Bank of International Settlements, the International Monetary Fund, the World Bank and many international financial institutions have lost their political power. This is important because, as history has shown, these organizations have a political influence that is out of step with the economic reality they claim to follow.

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Let’s take the example of the IMF. Alex Gladstein has done extensive research to better understand the complex relationship between institutions such as the BIS, IMF, World Bank and creditor countries. According to Gladstein, the IMF has extended loans “to 41 countries in Africa, 28 countries in Latin America, 20 countries in Asia, eight countries in the Middle East and five countries in Europe, affecting 3 billion people, or what was then two- one-third of the world’s population.”

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To do business with the IMF, a country must join the IMF. One of the requirements to join is money invested in the country’s currency and “hard assets” such as gold, dollars or European currencies. There are 190 countries that have joined so far. When a member state needs a loan for an emergency or major project, it often receives the loan at a rate of interest and at a payment that is difficult to meet. Countries that do not meet these requirements are penalized. Sanctions vary but usually include interest rate hikes, currency depreciation, government spending restrictions, and more.

Therefore, the borrowing country is more indebted and less able to repay the debt. Remember that the dollar is the international currency. It is the United States that has the most weighty votes within the IMF. And so, it seems, the world’s financial leadership is strengthened and maintained because of debt.

Thinking about this through the lens of game theory, it makes sense. Those who have power and those who will benefit from that power will do what they can and they feel that they should maintain that position. It was all business as usual until 2022, when complex inputs became more important than the exchange rate used to sell and manage.

The power has changed

The competition is being reorganized in the emerging paradigm. Important documents are more important than ever. Depending on the changes in US monetary policy, the income can move. Extreme interest rate hikes are wreaking havoc on global markets. Pressure is mounting on countries with dollar-denominated debt – such as the IMF. But most of these countries have the basic needs that the world needs. Countries like Russia, China, India and Saudi Arabia are now looking for alternatives to the dollar. Market analysts like Luke Gromen think some change is inevitable.

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Gromen suggests that the least expensive option will be gold. In the long run, it could become an asset like Bitcoin. Other methods may be explored due to changes that interested countries have and are willing to make full use of. Gold is considered a good option because history shows it. But as countries realize Bitcoin’s potential, the pivot to gold may be temporary.

And if that happens and we see a move to Bitcoin trading, all bets are off. A new geopolitical reality will emerge. A multilateral trading system around the world will give way to a new partnership between nations. The new agreement will mean that new trading partners will build new trading channels. The monetary policy as an extension will be disrupted. Countries that have the necessary resources will be more powerful than ever.

The change will be disruptive, and the outcome is impossible to predict. But one thing is certain: We are witnessing a once-in-a-lifetime revolution in global commerce.

Now is the time to pay close attention to where Bitcoin may take that paradigm.

Joseph Bradley is the head of business development at Heirloom, a start-up program. He started in the cryptocurrency industry in 2014 as an independent researcher before working at Gem (which was acquired by Blockdaemon) and then moved to the hedge fund industry. He received his master’s degree from the University of Southern California with a concentration in construction and alternative asset management.

This article is for informational purposes only and is not intended and should not be taken as legal or financial advice. The opinions, views and opinions expressed here are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.


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