A very interesting article in Coindesk, The Currency Cold War: Four Scenarios, explores four possible scenarios for the global currency landscape in the year 2030, based on possiblities that future of money guru David Birch proposes in his new book The Currency Cold War.
We asked a handful of futurists to share some thoughts on a few scenarios [for the future of global currencies and the internet], mostly in the name of a fun thought-experiment. The real world consequences are serious, though. “This is not just fun, it’s critically important,” says futurist Ross Dawson. “The world of money could change fundamentally in the next 10 years, and the implications could be massive. This is something we really need to be actively thinking about.”
See the full article to explore all four scenarios.
I was quoted most on the ‘Blue Scenario’, in which a non-government-backed cryptocurrency (such as bitcoin) gains dominance.
One of the most fundamental questions on the future of money is the degree to which independent cryptocurrency plays a role in personal and business finance.
The current total market capitalization of all crypocurrency is just over 1% of US M2 money supply.
In 10 years will crypto have a massively larger share of traded currency? Or will it be similar than now or even smaller?
The reality is that Central Bank Digital Currencies CBDC) are rapidly developing – they will inevitably a large part of the future of money.
As a futurist I consider the potential paths by which an outcome may come to pass.
In the case of a massive rise in crypto, that will be essentially because governments do not do their job in overseeing a well-functioning financial system, or they are not trusted.
Right now the prospect of loss in trust in government and social disruption, potentially even civil war, in some countries over the next decade is certainly plausible, unfortunately.
In that event there’s a strong chance that non-government crypto will do well, generating multiple new economies. I’ll write more about this another time.
International uncertainty may drive cryptocurrency usage. “If we have a stable geopolitical structure, where most people and most nations feel secure, then that will not encourage a large rise of non-government digital currencies,” reasons futurist Ross Dawson.
“Whereas if we have a deep social division and disruption – and civil wars in developed countries in the next decade, that’s very plausible, depending on how you define ‘civil war’ – this will fracture societies and trust in government, and could lead to wholesale shifts to cryptocurrencies.”
With apologies to the crypto super-bulls, this is not necessarily the Lambo Scenario or Moon Scenario. Dawson imagines a potential world of “dueling economies” – even within the United States – if a cryptocurrency emerges dominant. One will be the official legal economy that’s regulated by the U.S. government (like today), and the other an unregulated “shadow economy” that’s dominated by the cryptocurrency.
“There will always be national currencies,” says Dawson. “We’re never going to have a time when the government says, “Okay, we give up, we’re not going to do this anymore.” (He later clarifies that maybe “never” is too strong of a word, but certainly not in the next decade.)
So the question is what’s the balance between the shadow economy and the regulated economy? He points to Italy’s shadow economy as an example, which by some estimates is more than 12% of the nation’s GDP – largely the result of tax evasion.