0/ What if, rather than destroying the dollar, decentralized cryptonetworks end up being the catalyst for amplifying it’s dominance in a wave of global dollarization?



How you ask? This idea just popped into my head, and God help me I’m going to think through it on Twitter.

1/ Sound money narratives and premature reports of its demise aside, it seems to me that USD is still the best money in the world right now. That is, all other things being equal, if you could hold your wealth in only one money you’d probably want to choose USD...

2/ Most in the world don’t, because they’re forced to transact in the fiat of their local jurisdiction. In places where a) the local fiat has been weak b) many have access to physical USD thanks to remittance, we’ve seen economies completely dollarie, see: El Salvador or Panama

3/ What if stablecoins, particularly decentralized ones like DAI, give virtually anyone in the world access to holding their wealth in USD? Might many more choose to do so? Could we see a wave of dollarization?

4/ Folks are keen to point out the many advantages crypto has relative to physical cash, gold, or digital IOUs: easier to secure, censorship resistant, & (with things like snarks), potentially even private as well. DAI has all these advantages.

5/ It *also* has the advantage of being a stable store of wealth, something no non-pegged crypto can claim right now by any stretch. Sorry Bitcoiners, not everyone in the world is a neo-goldbug expecting the imminent collapse of US hegemony.

6/ The real obstacle here is the on-ramp. It could happen via remittance, via folks working gigs remotely and getting paid in stablecoins, or just through the further maturation of global fiat->crypto on-ramps.

7/ Put it this way: If you were a Venezuelan right now who had some ability to convert your Bolivars to crypto, you’d choose DAI, wouldn’t you? Why take on the volatility risk of BTC or ETH when you can have all the benefits, plus the (perceived) stability of the dollar?

8/ Anyway, I’m talking myself more & more into this. Decentralized stablecoins could cement the dollar’s already dominant position as the global reserves currency by giving everyone in the world access to holding their wealth in a USD equivalent. Why am I wrong?

I never do this, but I’m CC’ing you smart folks because I’d love your thoughts on the above thread! @MustStopMurad @kaykurokawa @spencernoon @RyanSAdams @nic__carter @zooko @vikramQL @mdudas @_jillruth @nlw @AriDavidPaul @TuurDemeester @QWQiao @jeetsidhu_

You can follow @BenDiFrancesco.

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