Cryptocurrencies have the potential to disrupt global money as the world shifts away from a dollar-dominated system.
That is the view of Nigel Green, CEO of independent financial advisory, asset management and FinTech organisation deVere Group.
He says the International Monetary Fund’s new Global Financial Stability Report is both right and wrong on cryptocurrencies.
The IMF says that ‘strengthening macroeconomic policies is necessary’ to fend off ‘cryptoisation risks’.
“The IMF is correct – cryptocurrencies are indeed ushering in a new world order,” said Green. “The times ahead are destined to be radically different from what we have all experienced in our lifetimes so far.
“One way in which we will see this each day is with currencies, which are mediums of exchange and store holders of value. Increasingly, there will be a mixed system. Some will be currencies from governments, including digital and non-digital, and some will be digital and decentralised, such as Bitcoin.
“The US dollar has reigned supreme for around 75 years. But there’s no doubt that the world is shifting away from a dollar-dominated system.
“This is because astronomic levels of debt, and the enormous, ongoing amount of money printing to monetise these debts, have caused the considerable drop in the long-term value of the global reserve currency.
“Investors – including individuals and governments – are therefore looking for alternative currencies, such as cryptocurrencies.
“Moving forward, these will increasingly compete with traditional, fiat ones and this will help trigger the decreasing dominance of currently leading international currencies.”
Green says the IMF should embrace Bitcoin, which will “inevitably play a critical future role” in the global monetary system.
“Bitcoin can also be a force for social good as it can offer a way out of both financial and political repression,” he noted.
“It’s estimated that more than one billion people live in countries that are suffering from out-of-control inflation, where the money they earn depreciates fast against the goods and services they need to buy.
“But Bitcoin can offer a ‘get-out’ for those whose national currency is plummeting in value in this way.”
Bitcoin can also serve those who face political suppression. There are countless examples around the world where those who are dissenting against ruling authoritarian regimes have their accounts shuttered and funds stolen.
“This is where Bitcoin can play a hugely beneficial role as they can receive and send it safely, securely, without censorship,” said Green.
“As a global, decentralised system, it affords anybody, anywhere, regardless of their political beliefs, nationality, ethnicity, religion, gender, or sexuality, the same level playing field. It can’t discriminate.
“This is helping not only the politically repressed but the 1.7 billion global ‘unbanked’ population. That’s almost two billion people worldwide who cannot access financial services because their data is not held on ‘traditional’ sources, largely due to legacy biases.”
He added: “Bitcoin has the potential to provide enhanced financial and political freedom. It has the power to create a better tomorrow.
“Why the IMF, an organisation whose remit is to ‘achieve sustainable growth and prosperity’ is scared of a future-focused solution, is baffling.
“Clearly, past methods in poorer countries haven’t been as successful as they should have been. As such, we need to look forward, not back.”