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Cryptocurrency Will Never Become Redundant Even if the Digital Dollar is Introduced
There’s fear that once the Digital Dollar is introduced cryptocurrencies will lose its value, and will therefore become redundant. Obviously such sentiment is unwarranted but that will not stop detractors from bringing up the issue.
For example, Federal Reserve Chairman Jerome Powell talked about cryptocurrencies during a congressional hearing last Wednesday. There Powell argued that the Digital Dollar could replace all cryptocurrencies currently circulating in the market, and would therefore, will no longer be needed.
“In particular, you wouldn’t need stablecoins, you wouldn’t need cryptocurrencies if you had a digital U.S. currency. I think that’s one of the stronger arguments in its favor.” - Jerome Powell
It’s quite the bold claim coming from the Federal Reserve Chairman but considering that he’s in the government, one could expect nothing less. I mean, which government would not promote its own currency? If a government promotes cryprocurrency instead of their state-approved digital currency then that would be even weirder.
Nonetheless, Powell’s claim is just that, a claim. Cryptocurrency will not and cannot be replaced by the Digital Dollar unless they can control everyone in the world and force them to use the aforementioned digital currency instead.
Such claim is unrealistic no matter how one looks at it. And considering that the US is not China that could force its citizens to give up on cryptocurrency through threats, it’s even more so.
Cryptocurrency is a trillion dollar industry that’s already active for more than a decade and therefore has supporters from people in all walks of life from around the world. One could even argue that cryptocurrency has now a strong foothold on the market so even the introduction of the Digital Dollar could not easily shake its foundation.
Moreover, a lot of powerful and wealthy people has stakes on the crypto-market and would not allow themselves to be bullied by a newcomer like the Digital Dollar.
In my opinion, the statement of Federal Reserve Chairman Jerome Powell on that congressional hearing is an affront to the spirit of the free market. If the Digital Dollar is allowed to suppress cryptocurrencies then we might end up with a monopoly.
Monopoly is heavily frown upon in any industry as the one holding the monopoly could easily control and decide the value of a product or service whenever they wanted. In the Digital Dollar’s case, it meant that the government could just do whatever they wanted in the market and no one could anything about it which shouldn’t be allowed to happen.
That being said it’s easy to see why the US wanted to monopolize the digital currency market. The US Dollar is currently the reserve currency of the word, and they want to extend that status to Digital Dollar. But for that to happen they must first rid the world of cryptocurrency as it’s something that no government could control. If they succeed, the US could once again dominate trade through the help of the Digital Dollar.
Obviously, no one would want to see the US monopolizing the digital currency market as that would make them too powerful. Government around the world will surely challenge the Digital Dollar by creating their own digital currency. And countries that couldn’t be bothered to create, or doesn’t have to the technology to create their digital currency would surely support cryptocurrencies. Meaning, the US plan to replace all cryptocurrencies with the Digital Dollar is bound to fail from the very start.
Federal Reserve Chairman Jerome Powell’s stance on cryptocurrency and his latest argument about it is an indicator of the US government’s desire to control and regulate the crypto-market. But considering how slow the US was on the uptake when it comes to digital currency, Powell’s claim is kind of laughable.
After all it’s no secret that compared to countries like China, and even India, the progress of Digital Dollar is rather slow. Of course I’m not underestimating the US as many of the world’s brightest mind lived in the country so although they’re currently lagging in behind other countries from developing their state-approved digital currency, they could easily make up for it through sheer resources alone.
That being said can cryptocurrency and Digital Dollar not co-exist?
In my opinion, the two can actually co-exist without a problem. There are already hundred of cryptocurrencies in the market and although there's a steep competition between them they're all still co-existing without a problem. Only people like Federal Reserve Chairman Jerome Powell would ever think that the Digital Dollar should monopolize the digital currency market.
Such way of thinking is no different from how the Chinese government thinks. For a country that supposedly values freedom of expression and choice, Powell’s statement is rather similar to a dictator.
It’s no wonder then the popularity of cryptocurrency has greatly increased over the years while the trust on the US Dollar is decreasing. Compared to centralized currencies, cryptocurrencies promote freedom of choice due to its decentralized nature.
In a free market, people should be allowed to purchase whatever they wanted so Powell’s way of thinking is the furthest thing from what a free-market should be.
I always believed that instead of trying to control cryptocurrencies, or to monopolize the digital currency market, the US government should be magnanimous and allow its citizens to freely choose what digital currency they should use. And instead of suppressing cryptocurrency to promote the Digital Dollar, they should help to ensure that the two could co-exist.