I often quote Bob Diamond, the former CEO of Barclays Bank, who states:
“I can’t think of anyone who doesn’t believe that in the future a digital version of the dollar for institutional and corporate use isn’t going to happen and be far more efficient.”
It is a question I come back to regularly: what will be the future global currency?
It is a struggle to answer this question, which may seem strange when we spend so much time talking about payments and finance. My answer usually returns to “a basket”, but a basket of what? A basket of dollars, mixed with euros and yuan? A basket of dogecoins, bitcoins and eth? A basket of both … or just a basket case*?
TBH, the outlook is one where people will choose. They will choose to invest and store coins as value of their choice. Some may like yuan, some dollars, some bitcoins and some Shiba Inu. It’s their choice.
Some come with more risks – dogecoin being a good example, regardless of Elon Musk’s backing – and some are more stable, which is why most people and countries like the US dollar. The thing is that the world is changing and why is the US dollar the main currency? Because the United States is the main superpower. But that has only emerged in the last century and, specifically, when we removed the gold standard and the Bretton-Woods agreement.
Today, do we need a new agreement? Do we need a new currency standard? And what would it be?
Some say it’s bitcoin, but bitcoin is destroying the planet. For example a 2022 report titled Revisiting Bitcoin’s Carbon Footprint conducted by climate and economics researchers across Europe, estimates that “bitcoin mining may be responsible for 65.4 megatons of CO2 per year … which is comparable to country-level emissions in Greece (56.6 megatons in 2019).”
Others argue that this narrative is wrong: “bitcoin’s climate footprint pales in comparison to the digital technology industry, representing only 2.3% of total emissions. Compared to the global banking and gold mining industries, bitcoin only consumes 40% as much energy as either.”
For me, I sit in the middle. As an observer, you always sit on the fence. However, moving off the fence, the bitcoin proof-of-work (PoW) model clearly is unsustainable. I disagree with it. The future must be proof-of-stake (PoS), where things are backed by something that has trust.
This is why Ethereum was rebooted to be staked (PoS) and no longer just PoW. It is also why my belief is that currencies based upon Ethereum smart contracts are far more likely to succeed than those backed upon bitcoin or related currencies.
In other words, the future is smart. It is based upon smart contracts, which are backed by ETH (the Ethereum coin). That means we don’t need a dollar or euro or yuan. We don’t need bitcoin or a basked of currencies. What we need is a global currency backed by smart contracts which, today, are most likely to be backed by Ethereum and ETH.
* for my international friends, a basket case means someone who is not normal
Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...