- Hayes explains that the recent sanctions on Russia make countries aware that it is better to rely on Gold and Bitcoin as a store of value instead of having reserves in the USD.
- Bitcoin will gain an edge over Gold with time due to portability, easy storage, and easy accessibility.
The global macroeconomic conditions and geopolitical uncertainty have forced financial experts into predictions on what’s coming next. BitMEX CEO Arthur Hayes has recently penned a detail articled explaining how the dynamics of global finance and monetary systems are changing.
Hayes explains the role of limited assets like Bitcoin and Gold during these crucial moments. Following Russia’s invasion of Ukraine, the West has put heavy sanctions on Russia, cutting it off from the global payments and settlement system SWIFT. Furthermore, isolating one of the world’s largest energy producers could have far-reaching consequences on global finance.
Hayes thus predicts the end of the SWIFT system used for economic warfare, a century from now. Furthermore, he predicts “outside money” like Bitcoin and Gold to thrive. He calls it “outside money” since they are not liabilities on any other country’s balance sheet.
Hayes believes that Gold will take a dominant position in facilitating global trade in energy and foodstuffs. The BitMEX CEO adds that post the Russia-Ukraine war, “money” won’t be the same again, and Bitcoin is likely to benefit from this scenario.
While both Bitcoin and Gold are hard money, Bitcoin is digital, physical gold is physical. If central banks start saving gold and using it in global trades, it will find it difficult to ship gold every time for making payments. This would gradually give a boost to the use of digital currency which Hayes believes would be Bitcoin.
Countries gravitating towards Bitcoin
Hayes argues that although Gold is great, storage becomes a big issue at an individual level. Thus, he believes that a more transportable hard store of wealth, Bitcoin, comes into the picture.
Hayes adds that countries “who lack the ability and access to trade and store gold efficiently, will gravitate towards Bitcoin”. He cites examples of a few countries like El Salvador who made Bitcoin a legal tender. The BitMEX CEO writes:
Whether you have 1 Satoshi or 1,000 Bitcoin to store, all that is required is a string of characters that comprise your public and private key. That weighs essentially nothing, and can be accessed anywhere there is internet. This is the value proposition from a storage and transfer perspective of Bitcoin over gold.
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El Salvador has opened the door for Bitcoin adoption. Many countries are currently watching whether they succeed in this experiment. Making a bold prediction for the future, Hayes writes: “For a single Bitcoin, my unit is in the millions. For an ounce of gold, my unit is in the thousands. Remember: it’s not gold or Bitcoin that is increasing in price, it’s a decrease in value of the fiat currency in which they are priced”.
But Hayes is not alone to believe that Bitcoin has an edge. Galaxy Digital founder Mike Novogratz recently said that the war will only boost crypto adoption and effectively lead to the marginalization of the USD. “This is a big deal, in a lot of ways. This is starting the acceleration of de-dollarization of the world,” he added.
