The dominance of the US dollar has been increasingly contested in recent times. Rising US debt levels, coordinated de-dollarization efforts among BRICS economies, and the rise of Central Bank Digital Currencies (CBDC) and cryptocurrencies such as Bitcoin raise questions about dollar hegemony in the digital age.

A recent event hosted by the Institute for Humane Studies (IHS) put these questions center stage. Anchored by our recent white paper Interconnection and Rivalry in Global Monetary Networks, the sessions brought together economists, legal scholars, philosophers, and computer scientists to debate the compatibility of the fiat dollar and Bitcoin.. The workshop was centered around discussing what does the future of the dollar hold.

As Milton Mueller framed it in one of the sessions: the struggle over monetary networks resembles earlier struggles over internet governance. Just as the internet was once heavily US-centered but later diffused amid geopolitical pushback and institutional rivalry, today’s monetary networks face pressures of decentralization, fragmentation, and contested governance. The lessons of governing digital networking, in short, may have much to teach us about the governance of digital money.

Setting the stage: Interconnection as Strategy

We initiated the provocation with the following claim in the white paper: the United States can best preserve dollar dominance not by resisting cryptocurrencies, but by embracing them strategically. The paper argues that whenever multiple systems compete to become the dominant system, an interconnection agreement between two systems can isolate and outcompete a third. In telecommunications history, for example, AT&T secured its dominance not by excluding rivals but by interconnecting strategically with them and offering more attractive demand-side economies of scope.

Applied to money, stablecoins can function as such an interconnection agreement. By linking the dollar with Bitcoin, they can expand the dollar’s reach while isolating rivals like the digital Euro or any future BRICS alternative. The paper recommended the establishment of a federal regulatory framework for stablecoins, which later materialized in the GENIUS Act of 2025. In our view, interconnection is both an offensive and defensive strategy: it reinforces the dollar’s network effects, provides insurance against fiscal profligacy, and preempts rivals from capturing crypto’s growing user base.

Session 1: Does Bitcoin complement or threaten the dollar?

The first panel, moderated by Dr Milton Mueller, focused on a central question: does Bitcoin threaten the dollar, complement it, or somehow do both? He was joined by Dr Larry White, a prominent economist and a free banking advocate, and Eric Alston, a scholar in institutional economics.

One line of argument sees Bitcoin as a competitor to the dollar. Its volatility makes it impractical as a mainstream medium of exchange, but in places like Venezuela or Belarus, it has functioned as a less volatile and censorship-resistant alternative to these countries’ failing currencies. White mentioned that the Dollar and Bitcoin are fundamentally alternative monetary standards. In the absence of legal restrictions, the market for media of exchange tends to be a winner-takes-all market. The implication is that if Bitcoin ever becomes a routinely accepted medium of exchange, it will be engaged in direct network competition with the Dollar. Still, White noted, “Bitcoin does not serve much as a commonly accepted medium of exchange. Serving as a savings vehicle, though, is fully compatible with the dominance of the US dollar.”

The competing view is that Bitcoin can be a complement to the dollar. Eric Alston noted how stablecoins that ride on Bitcoin’s Lightning Network could help the dollar reach new markets in places where banking access is limited. As Alston argued, “If it increases dollar penetration into all of the contexts where Bitcoin transactions are currently used, I see that as complementary.” For Alston, the paradox is that competition can itself be complementary: “If we’re never going to impose this [fiscal] discipline on ourselves, then, if you believe we are stronger through competition, competition might actually make the dollar stronger in the long run, or at least provide a countervailing force against this relentless march toward more and more dollars in circulation.”

White emphasized that this niche role is not enough to displace the dollar. “It seems to me unlikely, unless the dollar moves into chronic inflation of, let’s say, 20 percent or more.” In such a scenario, he noted, the savers might shift to Bitcoin or gold, but historically, gold’s lower volatility and larger installed base of users give it the edge. Bitcoin’s inelastic supply makes it less interesting.

The policy debate over a strategic Bitcoin reserve brought out some of these tensions more clearly. White dismissed the idea as “foolishness” and “a sop to existing Bitcoin holders”. Whereas Alston countered that the main significance would be symbolic: “Possibly, one of the most significant outcomes would be its symbolic importance rather than its strategic use. This administration is clearly saying: we are open for business for crypto.”

The session ended with an intriguing discussion, but 60 minutes proved too little time to resolve this dilemma for long-term US policy

Session 2: Bitcoin Governance, Mining, and Energy Politics

The second session turned from macroeconomics to governance and infrastructure. Here, three issues stood out. The session was moderated by Dr Karim Farhat. He was joined by Dr Troy Cross, Dr Suyash Gupta, and Dr Mathew Ferranti. This session covered multiple themes.

Centralization risks – Bitcoin’s resilience depends on its decentralized design, but industrial-scale mining and concentration of hash power threaten that principle. If 51% of mining fell under one jurisdiction, governments could censor transactions. As Gupta put it, “The moment we move toward centralization, we risk one party holding sufficient power (…) this leads to what’s called a double-spending attack.” The official Bitcoiner line that a fork could always solve such an attack was dismissed by Troy Cross as “far too glib” because it abandons the trustless proof-of-work model.

Energy politics – Cross gave a strong argument stating that bitcoin is “uniquely price-sensitive” and therefore gravitates to the cheapest energy in the world, often stranded or wasted energy. And because mining is mobile and tolerant of intermittency, it tends to locate where surplus energy exists but cannot be consumed otherwise. In this way, Bitcoin can distribute mining geographically across diverse energy sources.

Security and sustainability – With block rewards halving over time, transaction fees are expected to sustain the network. Yet fees remain very low. “If Bitcoin grows 100x in the next 20 years and fees stay the same, the security budget will be tiny, that’s a real problem,” Cross warned. Solutions such as higher fees or integration with other services may alter Bitcoin’s character in ways that depart from its original vision.

On the question of Should the US nationalize or heavily subsidize domestic Bitcoin mining? From a US policy perspective, the lesson was clear: dominance in mining is not (and should not be) the goal. “In Bitcoin, dominance is insecurity,” Cross argued. Too much US concentration could backfire by making other countries mine at a loss for fear of transaction censorship. A smarter strategy that emerged from the session is to support open-source development and custody services domestically, while ensuring the network hash rate is globally distributed.

Why Does This Debate Matter Now?

These debates are not just academic. They connect directly to some of the most pressing policy questions in Washington and beyond.

First, the US Senate is actively considering digital currency strategies in a companion bill to the House’s CLARITY Act. The GENIUS Act provided clarity on reserve and licensing requirements for stablecoin operators, including monthly third-party reserve audits and AML/KYC requirements. As discussed in the event and in the Networks of Money paper, how these rules are applied could determine whether stablecoins reinforce dollar dominance abroad or fracture into a patchwork of regulated and offshore issuers. Will Tether be allowed to compete in the US market? Will the IRS issue a de minimis exemption on small amounts of dollar stablecoin transactions? Will regulation stabilize the market, or will it create an artificial on-shore/off-shore demarcation similar to China’s?

Second, the idea of a US Bitcoin reserve is still on the table. Senator Cynthia Lummis has floated a draft bill, and the Trump administration has signaled openness to exploring the concept. But as Session 1 made clear, experts disagree: would such a reserve be a dangerous gamble, or a symbolic signal of US openness that ends up shaping global expectations?

Third, the global context matters. BRICS countries are experimenting with alternatives to the dollar assets and dollar-denominated payments. These include options like bilateral currency swaps, gold accumulation, efforts to build alternative payment networks like CIPS, and cross-border CBDCs. Meanwhile, the European Union is debating the viability of its digital euro. Since the GENIUS Act was passed in the US, EU officials are “rethinking their plans” and may now issue the digital euro on public blockchains Ethereum, instead of private ones. The US faces a strategic choice: How open should the dollar-stablecoins-bitcoin interconnection be?

Fourth, the energy politics of Bitcoin mining intersect with climate policy, industrial strategy, and geopolitics. Should the US encourage domestic mining to ensure it cannot be censored out of the network? Or would over-concentration of hash power in America backfire by raising fears of US censorship, as Troy Cross warned? At present, the US hosts approximately 40% of global bitcoin hash power. It’s significant enough not to risk censorship just yet. So, instead of boosting it further with subsidies or other tools, policymakers should really just let the market determine the efficient allocation of energy between industries such as Bitcoin mining and AI data centers. The strategic priority should be to nurture the ecosystem by retaining fintech talent and supporting custodial and brokerage services.

The discussion surfaces key questions that remain unresolved:

• Can stablecoin regulation balance market efficiency and stability while leaving room for innovation?
• Is Bitcoin best understood as a competitor to the dollar, a complement, or a paradoxical mix of both?
• How much exposure to Bitcoin whether through reserves, mining, or infrastructure should the US pursue?
• What is the right governance model to ensure Bitcoin remains censorship-resistant if mining concentrates?
• Who ultimately decides currency dominance – states, markets, or users?
• And perhaps most importantly, would such an idea disintermediate the banking system eventually, shifting deposits and payment activity away from traditional banks?

What’s at Stake?

Ultimately, these debates are about more than the future of Bitcoin or stablecoins. They are about whether the United States can adapt its monetary dominance to a rapidly changing digital environment. If the US embraces interconnection by crafting stablecoin rules that reinforce dollar liquidity, tolerating Bitcoin as a disciplinary check, and anchoring development in open markets, it could preserve and even extend the reach of the dollar into new digital frontiers. Stablecoins could become the next great export of US financial power, just as Treasuries are. This raises bigger questions – would such an idea disintermediate the banking system eventually, shifting deposits and payment activity away from traditional banks? And better yet, is that desirable?

The stakes, in other words, are not about whether Bitcoin replaces the dollar tomorrow. They are about whether the US adapts to a networked, digital monetary order, or watches others shape it.

If you have any of these answers, write to us, we are open to discussion.

Also check out our response to the recent Senate Banking Committee Digital Asset Market Structure Request for Information here.

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