In 2019, a question was thrown at the US Fed Chairman, Jerome Powell, asking him how much has America progressed in terms of a Digital Dollar.
He was emphatic in stating tall all departments in the US government did not see any merit in the Digital Dollar.
In April 2020, immediately after China launched its Digital Yuan, the outlook of American Policy Makers changed drastically. The US Congress released an official statement stating that they are exploring meaningful ways to make the Digital Dollar!
There is no doubt that the two major superpowers in the world today- America and China are locked in a bitter trade and diplomatic war.
Sanctions, taxes, the Coronavirus mud-slinging has deteriorated the social, economic, political, and defense relationships between the two countries.
Many international relations experts are referring to this stand-off as the New Cold War.we look at digital currencies and the race between the US and China with regard to the same.
How Digital Currencies can give China an edge as an Economic Superpower?
For the last decade or so, China has actively transformed the country into being the manufacturing hub of the entire world. While it is closed against external influences, China has left no stone unturned into penetrating local markets in almost every country on the planet.
The world community has paid close attention to Bitcoin and Blockchain technology become significant over the last few years. The tech promise behind them is of immense promise in terms of its applications in different fields.
Just to give you an idea, 60% of all patents in Bitcoin and Blockchain technology have been filed by Chinese firms!
The US is not even close in terms of measuring up to the advancements China has already done in this regard. It has used the COVID-19 Pandemic destruction to silently launch and test its new Digital Yuan in the government transport department as benefits.
It is also working with MNCs like Alibaba, We Chat, and Tencent to actively promote the Digital Yuan and boost its acceptance levels.
Can the Digital Yuan take on the might of the American Dollar?
The American policy of imposing sanctions on different countries has made it increasingly difficult to do business with other nations. Countries like Venezuela, Iran, Turkey, and others have often been at the receiving end of America’s economic might.
The world is dependent on the American dollar in multiple ways. It is stated that 62% of all global finance flows in some way or the other through America’s financial infrastructure and systems.
A Digital Yuan is intended to be used as a global currency, which can help such countries work with other countries without having to pass through the dollar system.
Most nations peg their reserves by comparing it to the dollar, which makes it the pre-eminent global currency in the world.
However, China intends to change the status-quo with its Digital Yuan. As of now, as compared to more than 60% American control on global finance, China’s share of the same is a mere 2%!
The Impact of Digital Currencies in the near future
According to the 1k daily profit, all this means that the world should be ready to brace itself. It also means that cryptocurrencies are going to become much more popular and mainstream as digital currency warfare increases in scope.
Many speculators are commenting on the fact that since the United States has been slow in evolving the Digital Dollar, it might want to back Bitcoin instead, as the global digital currency, with strong American control.
This can explain the favorable stance adopted by US governmental authorities and lawmakers on Bitcoins. It can also explain why all of a sudden, the much-scared Wall Street has been shoring up Bitcoins by the dozens.
While China has a definite game plan regarding the same, we can be sure that the US is not going to wait too long to reveal its hand in the digital currency wars.