The dollar's surge in global currency markets — it's up between 20 and 30 percent against the euro, yen and pound over the past year — is forcing crypto enthusiasts to reevaluate the idea that cryptocurrencies will undermine the dollar's hegemony . Instead, it now seems that, for the foreseeable future blockchain technology is poised to help the dollar at the expense of weaker sovereign currencies. That's because stablecoins are making digital dollars accessible in parts of the world with high inflation and unmet dollar demand, at a time when unbacked cryptocurrencies like bitcoin and ether are down to a third of their peak values. Though the estimated total market cap of all stablecoins amounts to less than 1 percent of the U.S. money supply, their persistence in the face of cratering crypto markets and the collapse of luna, a so-called "algorithmic stablecoin" show that at least some businesses and people in many parts of the world are eager to get their hands on blockchain-based dollar equivalents. "It's a pretty nascent market now, but it's growing bigger and bigger by the day," said Chinedu Okpala, the U.S.- and Nigeria-based founder of Oval Finance, which launched last year to offer crypto services to businesses in Africa. Given the rapid depreciation of some African currencies, like the Ghanian sedi and Nigerian naira — which hit 34 percent and 21 percent inflation rates in August, respectively — Okpala said dollar-backed stablecoins could pose a significant threat to the continent's monetary order. "Long-term, unless those currencies stabilize, they're going to continue to lose ground," he said. Okpala said efforts by Nigeria's central bank to fight back have been largely ineffective. After it cut off crypto exchanges from the banking system last year, users quickly pivoted to peer-to-peer trading. If stablecoin adoption grows further, though, it is likely to provoke a more sustained backlash from monetary authorities, according to Josh Lipsky, director of the Atlantic Council's Geoeconomics Center, which tracks the development of central bank digital currencies. "Central banks around the world are already thinking about that," he said. If dollar demand proves unquenchable, Lipsky said, central banks would prefer an official U.S. central bank digital currency to today's private stablecoins, because they are used to dealing with the Federal Reserve. While the original intention of Bitcoin's early adopters was to undermine government-backed currencies like the dollar, even some champions of the original cryptocurrency are welcoming the use of dollar stablecoins in financially troubled countries like Turkey, Lebanon and Argentina. Alex Gladstein, chief strategy officer of the Human Rights Foundation, which advocates Bitcoin adoption for people facing authoritarian governments or high inflation, called it "a very good thing." Like many crypto advocates, Gladstein views blockchain-enabled dollar adoption as a transitional phenomenon before Bitcoin eventually wins out, but he concedes that such an outcome is a matter of speculation, and could be decades away. In the meantime, even the most ardent Bitcoin backers are acknowledging the dollar's strength. Alexander, a hardcore crypto adapter (and resident of El Salvador's Bitcoin Beach) shares his musing in a private chat group on the messaging app Telegram. (He included me in the chat on the condition that I not use his last name.) He said the dollar has won newfound respect in the past week: "I usually say Cash is Trash, but," he wrote on Friday. "Cash is (currently) King."
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