It seems like every headline you read or have read this year is all about the competition that the USD now has. First it was just crypto as a possible competing currency but you now have BRICS and also a recent move by the petrodollar (which it's still up in the air if that ones even really true).

The most recent update now is that the Saudi's have entered a China-led central bank digital currency project which is starting to pump up the USA again to look into the possibility of their own CBDC.

This actully isn't that new of news but it never got main headlines until now. This new CBDC is a system between Hong Kong, Thailand, China and the United Arab Emirates. It's mainly a way to transact between countries via a all digital CBDC.

Macro Economics

For years now the petal dollar has been the glue that's held all of the worlds trading together. Every country has commodities like wheat, oil, gas, lumber etc. It's all traded on the world stage via what is known as the Petrol dollar which is USD backed. It's how things have been done for most of our lifetimes now but that might be changing.

The big takeaway from this is that it's allowed the USA to become a world power and really be the staple of the world in terms of sending money around the world in various factors of support. It also actully gives the FED some big time control over the world and with FED rates being crazy high the rest of the world continues to feel that pinch and are now backing out of it like we have seen with China etc this year as they continue to dump treasury bonds.

The Evolution Of Money

Throughout the years various physical items have been used in order to show value of something for trade etc. For example gold coins were often used but had flaws such as being heavy, easy to steal and even the ability to fake it. We then moved into paper money which at a time was backed up by gold held in countries vaults. This paper money represented gold value and it was harder to mimic, lighter and easier to transact with. From there we moved into a semi digital age with credit cards but these credit cards where mainly loans.

You also have a vast majority of your money in banks etc but you rarely carry around paper dollars these days. These payment gateways are really just IOU's that over time get moved through "middle men" which are your banks primarily.

These banks work on fees and boy is there a lot of them! Even credit card companies charge around a 3% fee which you as the customer never see but as a business 3% of the money you bring in is normally going right out the window in credit card transaction fees. In some cases it can be even higher like with apple pay, google pay etc. The downfall of this is that banks operate very limited hours and never on the weekend much like the stock market. It's a old almost dead system which is being replaced with 24 hour trading like crypto. But you're also starting to see a lot more "after hours" trading or the ability to make trades outside of normal hours becoming a little more common place but it's still not there.

Fast forward into crypto and the major adoption that happened with them. No middle man, 24/7/365 a day trading and fast 10 minute or faster money moving. Compare that to the banking system which can take 2-3 days to clear a payment and you start to see why crypto has become so popular over the years where people are sick and tired of waiting around on slow outdated banks.

This has sparked major crypto adoption which continues to grow to this day but still get some backlash from time to time only to be over powered by the people. This is creating governments to really consider CBDC's.

This is where the new China backed CBDC's could seriously put a challenge on the old petrol dollar and offer up trading outside of the system that has been around for such a long time.

The Three Pillars Of Blockchain

There's three core parts of blockchain that every blockchain works off of. Those being...

• Security
• Scalability
• Decentralization

A lot of what we hear about with blockchains are security and Decentralization but that often bottle necks scalability. There still to this day has not been a single blockchain that can do all of these things it's always two of them leaving one out. Think of any blockchain you want and run it through these three things. I bet there's one or two it does very well and then the third it just doesn't do at all or does horribly.

So will this new system overtake the USD? Most likely not but it for sure challenges it and will open up the USA to start investing into a CBDC or a system like it to keep its own dominance otherwise it very well could lose it.

Posted Using InLeo Alpha