Over recent decades, one of the tools that the U.S. government deploys to handle international crises is the economic sanction. Because the U.S. is both the world’s biggest economy and owns the global reserve currency, it has incredible hegemonic leverage. Without necessarily shedding blood, Washington can extract compliance…that is until the so-called crypto wars blossomed.
Now that term has multiple connotations so let me back up here. By crypto wars, I’m first referring to cryptocurrencies. And by wars, I’m citing the international interest in utilizing these blockchain tokens to sidestep American monetary hegemony. After all, virtual currencies are largely decentralized, having no official administration. That makes responding to blockchain threats a convoluted affair.
More critically, cryptocurrencies have forged an incredibly viable market. If an end-user wanted to keep their transactions anonymous, they have practical opportunities to do so. Throughout the world, many merchants and service providers accept bitcoin in payment. So long as they don’t record transactions in the “real world” – such as cashing out bitcoin in popular retail exchanges – no one is the wiser.
Obviously, that has negative implications for U.S. foreign policy. Over the last few years, Washington has butted heads with several adversaries and rogue nations. The typical response again is sanctioning. However, these affected nations are fighting back, researching cryptocurrencies as an alternative pathway to conduct business and commerce.
That effectively limits the effectiveness of economic sanctions. It also points to the very real geopolitical threat of the crypto wars.
Crypto Wars Are Anti-Nation States and Pro-Freedom
At first, the concept of crypto wars should startle individual investors. Such threats only incentivize the federal government to crack down completely on the blockchain-based platform.
And they could do exactly that. At the same time, I doubt that they’ll go that road. First, such actions would run counter to constitutional rights guaranteeing our ability to conduct trade and commerce. But more importantly, a crack down would exacerbate the coming crisis.
Indeed, the best way to counter the crypto wars is to compete inside the arena. Because a crack down would only impede national technological development towards a sector that has broad appeal. In other words, our adversaries will continue to develop blockchain innovations while we sit on our hands for no reason.
Even worse, a crackdown won’t achieve desired geopolitical results. Like oppressive gun laws, they only serve to hurt the law abiding. In this case, our rivals and adversaries will continue to use cryptocurrencies to subvert our sanctions.
Like I said, the only real solution is to fight fire with fire. Such an approach doesn’t serve our hegemony, but it definitely advances monetary freedoms.