To be clear, I'm not going to go into details concerning the probability of the US Dollar losing reserve currency status. There are far too many factors to consider and I'm not qualified enough to provide statistics to back speculation on this topic. Rather I'd like to focus on the effects such a shift would have on the cryptosphere and whether it would be a market positive or negative in both long and short term perspectives.
I am in fact based in the US and I'm not fortunate enough to travel abroad although I certainly wish I could, as such my narrative may be biased. Please keep that in mind. I am open to criticism and am always eager to learn.
Anyone who dabbles in crypto has inevitably come across stable coins. USDT, USDC, DAI, BUSD, TUSD along with many others. They all vary slightly in their backing, networks and technology but they all serve the same purpose. A peg to the US Dollar. These stable coins are meant to be exchangeable for USD on a 1:1 basis.
So that's a stable coin but what's a US dollar. A Dollar is basically a promise from the US government that a particular piece of special paper carries with it a particular value at any one point in time. I'll spare the nitty gritty details and assume most individuals here know how fiat works. We just need to establish a baseline for the time being.
At the moment transactions around the globe are settled in US Dollars as the agreed upon reserve currency. This makes stable coins pretty useful because they are pegged to the reserve currency but what happens if the US Dollar loses that status?
I find it exceptionally difficult to wrap my head around using anything other than USD as a settlement asset. Probably because this has been the status quo my entire life. Even when looking at trading pairs like BTC/ETH, the settlement asset being ETH is still valued in USD in the end.
This is probably where most individuals don't see the actual value of crypto assets in general. When all we see is BTC in reference to its value in USD this creates the generalization that it's just a speculative asset whose only value is in the settlement asset in this case being the Dollar.
If the Dollar is eventually dethroned it would be an opportune time to switch all crypto to be settled in BTC and completely separate crypto from fiat once and for all. Sure this would destroy the stablecoin markets but if they are all pegged to USD and the Dollar becomes worthless they are essentially worthless by default. This move would further validate BTC as its own independent store of value further enhancing adoption and utilization.
In the short term this would be hugely disruptive causing valuations to fluctuate wildly while a settlement asset is in a questionable state of authenticity. In the long term I see it as not only being advantageous but quite necessary in order to create the separation from speculation and more towards reserve currency as it should be.
I'm using BTC in this example not as a BTC maximalist but as a stand in for crypto generally. I could see ETH, XLM or any other crypto for that matter fulfilling this role as the settlement asset for crypto as a whole. As long as there are multiple settlement assets it will continue to be a speculative market where individuals are just looking to increase the settlement at the expense of the trade.
Crypto has more inherent utility than any one reserve currency not to mention it's programmatically resistant to inflation and government manipulation, which highly depends on the crypto in question but generally speaking holds true. How could the rest of the world not see the obvious value there. I love the argument that “Crypro is just numbers on a screen it isn't worth anything” because my rebuttal is always “And your money is just paper from the government which is no different than products from a toilet paper manufacturer” neither one actually has any value at all unless the general consensus of the people agree.
If the Dollar gets dethroned this analogy will be a lot more important than people think.
I for one think it's time, time to end speculation time to forge forward with the true mission of crypto: a governmentally independent, inflation resistant, trustless reserve currency.
