Bitcoin does not threaten the US dollar as reserve currency

Crypto assets, such as bitcoin, do not threaten the US dollar as an international reserve currency currency because they cannot function as a currency. To quote financial historian Adam Tooze:

[The dollar] is backed by "nothing" other than the trifling matter of tens of trillions of dollars in private credit, the rule of law and the power of the state, itself inserted into a state system. In other words, the entire structure of global macrofinance.

Since bitcoin cannot be used to issue debt products, denominate contracts or scale to act as a medium of exchange for commerce it lacks any of the properties of money that a reserve currency would have to fulfil. Bitcoin cannot upend the entire structure of global macrofinance any more than beanie babies or tulip bulbs could.

References

  1. Varoufakis, Yanis. 2021. ‘What Is Money, Really? And Why Bitcoin Is Not the Answer (Even If Blockchain Is Brilliant & Potentially Helpful in Democratising Money)’. Yanis Varoufakis (blog). 2 August 2021. https://www.yanisvaroufakis.eu/2021/08/02/what-is-money/.
  2. Taleb, Nassim Nicholas. 2021. ‘Bitcoin, Currencies, and Fragility’. ArXiv:2106.14204 [Physics, q-Fin], July. http://arxiv.org/abs/2106.14204.
  3. Corradi, Fiammetta, and Philipp Höfner. 2018. ‘The Disenchantment of Bitcoin: Unveiling the Myth of a Digital Currency’. International Review of Sociology 28 (1): 193–207. https://doi.org/10.1080/03906701.2018.1430067.
  4. Bratspies, Rebecca M. 2018. ‘Cryptocurrency and the Myth of the Trustless Transaction’. Mich. Telecomm. & Tech. L. Rev 1. https://doi.org/10.2139/ssrn.3141605.
  5. Diehl, Stephen. 2021a. ‘The Non-Innovation of Cryptocurrency’. 7 July 2021. https://www.stephendiehl.com/blog/non-innovation.html.
  6. ———. 2021b. ‘The Intellectual Incoherence of Cryptoassets’. 7 November 2021. https://www.stephendiehl.com/blog/crypto-absurd.html.
  7. ———. n.d. ‘The Case Against Crypto’. Accessed 17 February 2022. https://www.stephendiehl.com/blog/against-crypto.html.
  8. Krugman, Paul. 2018. ‘Bitcoin Is Basically a Ponzi Scheme’. The Seattle Times 30.
  9. ———. 2021a. ‘Technobabble, Libertarian Derp and Bitcoin’. The New York Times 21.
  10. ———. 2021b. ‘The Brutal Truth About Bitcoin’. The New York Times 21.
  11. Olson, Dan. 2022. Line Goes Up – The Problem With NFTs. https://www.youtube.com/watch?v=YQ_xWvX1n9g.
  12. Plant, Luke. 2022. ‘The Technological Case against Bitcoin and Blockchain’. Luke Plant’s Home Page. 5 March 2022. https://lukeplant.me.uk/blog/posts/the-technological-case-against-bitcoin-and-blockchain/.
  13. Stinchcombe, Kai. 2018. ‘Blockchain Is Not Only Crappy Technology but a Bad Vision for the Future’. Medium (blog). 9 April 2018. https://medium.com/@kaistinchcombe/decentralized-and-trustless-crypto-paradise-is-actually-a-medieval-hellhole-c1ca122efdec.
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