Blockchain has been rejected by governments and called a scam for a long time, said CEO of Ripple Brad Garlinghouse.
However, recent events have led governments to have more serious look at blockchain and what it can offer.
Recent events have forced most governments to start looking at blockchain differently. With the ever-declining value of the US dollar, investors demanding physical gold and also more and more people starting to invest in cryptocurrencies, governments began to work hard on digital currencies. Blockchain has shown that it can work very reliably in crisis.
Markets began to bleed in March, and the US government printed a lot of money to keep the economy afloat. But this is not sustainable in the long run. During the crisis, the value of the USD became very questionable. Because USD is used as a world reserve currency, this could indicate bigger problems in the future.
The need for competition
At the same time, Garlinghouse urged regulators and lawmakers to examine digital currencies that would enable the United States to compete with China. China now poses a real threat. It is working on its own CBDC (central bank digital currency) and it is ready to launch it as soon as the digital currency is ready.
Cryptocurrencies are highly volatile, but the Chinese digital yuan, which is called “DCEP”, could elevate the Chinese yuan to the status of a new world reserve currency, thus pushing USD aside.
Inspiration found in cryptocurrencies
It should be added that overall digital currencies have found inspiration in cryptocurrencies and blockchain. During the pandemic and quarantine, people paid more attention to cryptocurrencies as a form of protection against inflation. And this was also noticed by the banks, which resumed discussions about CBDC.
It has been mentioned several times that the system, where all is centrally planned by a central bank, which has under control the whole money supply, is outdated and no longer meets the needs of modern society. It is evident due to the latest development, where not even the trillions of USD printed out of thin air by american Fed seem to have longer effect on the real lives of people. Digital currency and blockchain already proved that they work in the times of crisis.