For over a century, the dollar has evolved, always adapting to the changing demands of the global economy. When one era ends, as it did for the gold-backed dollar in 1971, a new chapter begins.
President Nixon severed the dollar's link to gold in 1971 to among other things, protect shrinking gold reserves. The markets were thrown into a frenzy. Nations across the world were forced to reassess their economic strategies. The U.S. explored new avenues to maintain dollar hegemony. The fall of the gold standard gave way to the rise of the “petrodollar” in 1974, whereby oil sales were conducted in dollars – helping to cement the U.S. dollar as the world’s reserve currency.
Today, 50 years after the rise of the petrodollar and the fall of the gold-standard, we have a new opportunity to enhance U.S. dollar hegemony. We can reshape economies across the globe and empower billions of people by embracing the digital dollar. The digital dollar framework is very simple. Think of it as a faster, more secure Venmo or Paypal, that is widely accessible across the world from regulated exchanges, at any time. Digital dollars create financial freedom and stability and are free from limitations of traditional banking systems.
A resilient digital dollar economy is within reach. The path forward is through stablecoins. In a nutshell, stablecoins are cryptocurrencies designed to maintain a consistent value by being pegged to traditional fiat currencies – usually the U.S. dollar. The benefit of stablecoins is that they offer a steady value – devoid of the volatility that other cryptocurrencies typically face.
While bitcoin and other cryptocurrencies often serve as speculative investments or long-term stores of value, stablecoins represent the first truly widespread, real-world use case of crypto. Instead of mere investments stored on the blockchain, stablecoins serve as day-to-day functional, financial tools, blending the digital economy with the demands of everyday commerce. As noted in a recent Standard Chartered Study, stablecoins have become “the first killer app.” The authors note that transferring and storing stablecoins on the blockchain represent “an operating system upgrade of the way that money can be accessed and moved.” Stablecoins represent the best real-world use case crypto has ever seen, and pave the way for more inclusive, accessible, transparent, and efficient financial services. They have the power to provide vast benefits to society.
Dysfunctional governments with chronically high inflation have existed throughout history. In these countries, citizens need a secure and stable way to protect their money from decreasing in value. For the billions of people living in these regions, having access to U.S. dollars is a lifeline, but often out of reach.
It often looks like this: citizens in countries with unstable economies earn money, but before they can use their money to pay for goods and services in their communities, their money becomes severely devalued, thereby rendering it almost useless. Stablecoins allow people across the globe to convert their local currencies to digital dollars, protecting the value of their money against local inflation.
Unlike a traditional bank, you can convert your local currency to digital dollars from your smartphone, benefiting people who do not have access to traditional banking services. There are lower transaction costs, making it more economical for people to send, receive or store money. While traditional bank transfers can take days, digital dollar transactions on the blockchain are processed in real time — which is even more crucial in economies with volatile markets. The digital dollar ecosystem is decentralized, helping ensure no single entity — like a corrupt government — can control the banking system, thereby handicapping bad actors.
In Turkey, Argentina, Kenya, and elsewhere across the world, citizens have turned to stablecoins to keep their assets safe from currency devaluation, pay for goods and services, and protect their financial freedom.
Unlike its predecessors, the digital dollar is not burdened by the physical limitations of gold or the geopolitical conditions of oil. The digital dollar economy drives financial inclusion across the globe. With nothing more than a smartphone, the billions of people who live in emerging economies can keep their assets safe and participate in the global economy.
A future where financial stability is widely accessible across the globe at people’s fingertips is within reach.
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