In April 2021, Tekedia wrote: “The United States government has been rattled by China’s push to develop a digital alternative to its currency yuan. Bloomberg reported that the Biden administration is stepping up scrutiny of China’s plans for a digital yuan, with some officials concerned the move could kick off a long-term bid to topple the dollar as the world’s dominant reserve currency, according to people familiar with the matter.” The step went further this week when China began to wean its personal, corporate and sovereign ecosystems of anything cryptocurrency, preparing the grounds for the ascension of e-yuan, a digital currency equivalent of Chinese currency.
But America is not going to just watch. Yes, the Biden Administration is opening the playbook. Interestingly, the Fed Chairman, Jerome Powell, who did not say many nice things about crypto is the one to lead the charge: “Federal Reserve chief Jerome Powell says the central bank will release research this summer that explores developing a digital currency of its own. The discussion paper would break down the Fed’s “current thinking on digital payments, with a particular focus on the benefits and risks associated,” then seek public comment”.
Powell said the digital currency, which won’t be a cryptocurrency, would need to be efficient, safe to use and offer “broad benefits to American households and businesses.” Fed officials say they’re focused on getting it right, though China’s creation of a digital yuan has raised the stakes.
This is my call: I warned that if e-yuan continues to advance, cryptocurrency will continue to struggle because without China, the cryptocurrency world will lose a big part of itself. If the US decides a future will include digital US dollars, Bitcoin and cousins will have major competitors, and I expect the US dollars to win in America just as E-Yuan will win in China. The same will happen when digital Euro will emerge.
So, to a large extent, as nations begin to move into cryptocurrency 2.0, the current generation of cryptos will struggle. That remains the biggest risk on cryptos as someone can make something which is better than what is currently available. And with that, adoption moves!
Finally, Bitcoin and its cousins have been heralded as being decentralized. Nothing like that. They are decentralized on technology stack but centralized on exchanges. Provided exchanges are regulated by nations since they are registered to operate with licenses, all Bitcoin accounts are under the control of governments (think Nigeria, China bans). The FBI has been seizing wallets through exchanges, and suddenly the decentralized myth looks like snake oil!---
1. Advance your career with Tekedia Mini-MBA (Sept 13 – Dec 6, 2021): 140 global faculty, online, self-paced, $140 (or N50,000 naira). Click and register here.
2. Click to join Tekedia Capital Syndicate and own a piece of Africa’s finest startups with a minimum of $10,000 investment.3. Register and join me every Saturday at Business Growth Playbooks w/ Ndubuisi Ekekwe (Sept 4 – Oct 23, 2021), Zoom, 4.30pm WAT; costs N20,000 or $60.