Get this: a company that’s over $30 trillion in debt and whose ongoing deficit spending exceeds $1 trillion is launching a stablecoin. Well, that will never work, right?
Not so fast, now. If the stablecoin in question has the full faith and credit of the United States behind it… Those are the words of Congressman Stephen Lynch, whose recent exchange with Federal Reserve Chair Jerome Powell reminded us why we need cryptocurrencies.
It was interesting to hear Powell say he doesn’t understand why cryptocurrencies have any value to begin with. Or, maybe it wasn’t. After all, Powell represents the very reason cryptocurrencies were made: a centralized, mismanaged financial “authority”.
This authority is looking to yet again overreach and misstep as it seemingly unavoidably approaches a digital dollar. Powell’s beating around the bush on the subject can only fool the foolish. And Tom Emmer’s appeal against CBDCs (Central Bank Digital Currencies) on the grounds of bringing on a surveillance state will, like any piece of legislation that prioritizes person over state, fail.
It would take some kind of unforeseen event to halt the development of what Emmer is rightly worried about. In the absence of it, we’re going to have some kind of a digital dollar. To what extent? Can we exchange it for cash? What if we prefer banknotes over your space credits? Those are questions that have yet to be answered.
But what is clear already, and what isn’t clear to either of the participants in the aforementioned conversation, is that stablecoins and the surrounding crypto market will serve as a better alternative. Scratch that: they will serve as a refuge.
Lynch is right about the U.S. having both faith and credit. Faith is pretty much the only thing propelling the dollar these days, and the government is the definition of an entity with bad credit. What happens when you can’t pay your massive debts? You go to a federal penitentiary. What happens when the federal government can’t pay its debt? Let’s check the rulebook for that one…
Past just the economic side of things, crypto is obviously going to serve as a better alternative to what the government offers in terms of finance. Crypto is already serving as a better alternative to traditional banking to those who are willing to use it, and traditional banking is leagues ahead of the official sector.
Whether compared to the private or official sector, crypto offers nearly complete privacy and freedom when used correctly. Certainly, if a token has issuers, they are held in far greater accountability than any government.
So it would be a waste of time to worry how anything from the official sector will compete or shove aside the most advanced private sector. Any pondering on what a post-CBDC world will look like instead mostly involves Blade Runner imagery and fleeting reminiscing of the times when spooks in electric Ford CVPIs didn’t follow us on our way to the grocery store.
Crypto is looking to be the only beneficiary of the CBDC system if it truly takes hold, past the issuers themselves, of course. While not much to look forward to in the grand scheme of things, it does put into perspective why the market is here in the first place.
Photo by Markus Spiske on Unsplash.
