Blockchain technology is strengthening the strength of the U.S. dollar rather than weakening it, according to digital asset investment firm Pantera Capital.
In a new analysis, Jeff Lewis, Pantera’s hedge fund product manager, and Erik Lowe, the company’s chief content officer, write that blockchain technology will reverse a decades-long trend of international dedollarization.
“Far from eroding the supremacy of the dollar, blockchain technology has created a digital infrastructure that reinforces it. The ability to tokenize and mobilize dollar assets globally allows the dollar to remain indispensable even as geopolitical and technological forces put pressure on dedollarization.
As JP Morgan noted in its report, the structural factors supporting dollar dominance – the depth of capital markets, the rule of law and institutional transparency – remain unprecedented. Stablecoins extend these benefits to a borderless digital context.
Lewis and Lowe note that 18 of the top 20 fiat-backed stablecoins have the letters USD in their names.
They also note that Bitcoin (BTC) is now increasingly seen as a store of value rather than a medium of exchange and a threat to the US dollar.
“The stablecoin/RWA (real-world asset) phenomenon has grown to enable blockchain to deliver on the initial promise of Bitcoin, providing a stable and, ultimately, profitable medium of exchange. Rather than eroding the dollar’s relevance, it amplifies it.”
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