News arrives from the fancy schmancy St. Moritz Crypto Finance Conference that the super rich investment persons there discussed the global cryptocurrency and digital currency scene. One particular phrase caught my eye. Multicoin Capital’s Beijing-based partner Mable Jiang said China’s goal is to leverage the rise of cryptocurrency to “supplant the dollar and become the world’s leading economic power” and then went on to say that “It’s a kind of Cold War… Currency is the leverage”.
Interesting choice of language.
The former Commodity Futures Trading Commission (CFTC) Chairman J. Christopher Giancarlo, who according to the Wall Street Journal is known as “Crypto Dad”, recently became co-founder of the Digital Dollar Foundation to advocate for a central bank digital currency (CBDC) for the U.S. He said that the term Cold War was a bit “strong” for the disparity between the U.S. and China in the digital currency space. To be fair, however, he didn’t know about my new book on the topic. My book “The Coming Currency Cold War—Cash and Cryptography, Hash Rates and Hegemony” will be published in June and launched at Money20/20 in Amsterdam.
Crypto Dad went on to say that he generally agreed the economic rivalry around digital currency was reminiscent of “the race to land on the moon”.
Another interesting choice of language.
Here’s a short extract from the book…
The important of digital currency therefore extends far beyond narrow issues of payments efficiency and wallet brand and into the wider economy. Hence it becomes a lever in economic competition. The analyst Dan Wang set the context for this competition in stark terms saying that:
China finds it politically intolerable that the US has an at-will ability to cripple major firms like ZTE and Huawei. It’s now a matter of national security for China to strengthen every major technological capability. The US responded to the rise of the USSR and Japan by focusing on innovation; it’s early days, but so far the US is responding to the technological rise of China mostly by kneecapping its leading firms. So instead of realizing its own Sputnik moment, the US is triggering one in China.
I found Dan’s reference to Sputnik rather interesting, since he is not the only observer who sees economic competition in those terms. This makes digital currency a key element of national strategy. Indeed, the race for hegemonic digital currency may be best understood in those terms. Writing a couple of years before Dan, Erik Townsend said in “Beyond Blockchain: The Death of the Dollar and Rise of Digital Currency” said that “de-dollarization is a catalyst leading to a new space race”, expressing a similar sentiment about the importance of driving forward the technology to obtain leadership.
Looks like we’re all on the same page. Or, in my case, the same couple of hundred pages. You can pre-order the book here at the London Publishing Partnership.