Why gold wouldn't work in a multipolar world
It's as simple as this: settlement in gold requires physical transport which requires navies and armies to secure. And while international trade was guaranteed by the dominance of the British navy in the 19th century, and the US Navy thereafter, without a global hegemon, there would be no way to eliminate risk from the settlement procedure, making settlement too expensive and too risky to be conducted frequently, thus increasing the uncertainty of whether your country was going to get paid. Settlement in gold works fine if you rely on a tokenized system where digital tokens represent real gold in vaults as long as the third party holding the gold and accepting the tokens as redeemable are trusted. But that is the problem in a multipolar world, there is no universally trusted third party. This is why Bitcoin becomes so significant in such a world, because it would allow for the real settlement of trade while largely eliminating the risk, and dramatically reducing the cost, from conducting global trade. submitted by /u/Teraninia [link] [comments]
It's as simple as this: settlement in gold requires physical transport which requires navies and armies to secure. And while international trade was guaranteed by the dominance of the British navy in the 19th century, and the US Navy thereafter, without a global hegemon, there would be no way to eliminate risk from the settlement procedure, making settlement too expensive and too risky to be conducted frequently, thus increasing the uncertainty of whether your country was going to get paid.
Settlement in gold works fine if you rely on a tokenized system where digital tokens represent real gold in vaults as long as the third party holding the gold and accepting the tokens as redeemable are trusted. But that is the problem in a multipolar world, there is no universally trusted third party.
This is why Bitcoin becomes so significant in such a world, because it would allow for the real settlement of trade while largely eliminating the risk, and dramatically reducing the cost, from conducting global trade.
[link] [comments]
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