Bitcoin's Role In Deglobalization
Amid the hype over the decentralization of finance is the less reported phenomenon of deglobalization. For the last 50 years, governments have worked to centralize nations, economic power, political consensus, and populations into a reformed ‘global community.’ Those structures are now fracturing, and bitcoin is a leading factor.
What is deglobalization?
Put simply, deglobalization is the breaking apart of global hegemony. It occurs when countries no longer realize profits from offshoring labor and producing goods in their own nation. Since the financial crisis of 2008, there has been a widening income gap, a leading indicator of deglobalization.
Centralized fiat currencies (especially economically weak ones) cannot keep pace with stronger currencies while acting together in a global community. Add in free trade and cheap offshore labor and it’s a recipe for economic fragmentation.
Deglobalization and bitcoin
Amid this atomization of sovereign economies, the need for a global currency is in high demand. A currency that is unmoored from the machinations of central banks and governments, that is borderless and safely transferrable. Three major current events highlight the need for Bitcoin.
Europe energy crisis
Russia is the single largest energy exporter. In response to the war in Ukraine, the EU cut off imports of Russian oil and gas. Subsequently, costs have skyrocketed as Europe has scrambled to cap energy prices.
War in Ukraine
Russian military aggression toward Ukraine has caused commodity prices to skyrocket in the former Soviet bloc; Ukraine is the world’s seventh largest grain exporter. Third-world countries and the EU have been hit hard by the high costs of Ukrainian imports.
Dollar strength
The U.S. dollar has reached a 20-year high and that is bad news for the rest of the world because it raises the amount of debt owed by borrowing nations. Poorer countries cannot borrow in their domestic currencies, nor can they afford a higher-priced dollar.
Economics of bitcoin
The benefit of the dollar is that it is strong and accepted in many countries; it is even the national currency of some countries. The drawback to the dollar is that it is a centralized fiat currency, meaning that its economic strength is applied equally in countries that are not economically equal.
By contrast, bitcoin is increasingly being accepted in more countries yet it is decentralized. As deglobalization increases, bitcoin is a fantastic currency because it is borderless.
Bitcoin can travel through time and space and be equally valuable in any country, unmoored from the whims of any central bank or fluctuating interest rate. As Ansel Lindner, host of the Fed Watch podcast, stated, “As deglobalization intensifies, credit becomes more scarce and dangerous. This will naturally push enemies to use a neutral currency.”
The role of bitcoin as an alternative currency cannot be overstated. It is significant for people who need to easily transfer money across borders without exchange rates and fees. Bitcoin is a grand solution for breaking away from corrupt power brokers and claiming true ownership of one’s money.
