The petrodollar forced the world to hold dollars to buy oil. It's visibly fraying now. Here's how it actually works, why it's lasted 50 years, where it's cracking, and why a BRICS bloc currency would be worse, not the fix.
This spring, an oil tanker crossed the Strait of Hormuz and was waved through after paying for its cargo in Chinese yuan instead of dollars, which I covered in the Bitcoin Brief at the time. Iran was throttling the dollar system at the chokepoint, picking which currency got to move energy through it. That detail tells you more about where the global monetary order is heading than any central bank press conference, because it shows the petrodollar being challenged where it actually lives, in the physical movement of energy, not in a think-tank white paper.
So let's define the thing. The petrodollar is the arrangement, built in the 1970s, under which the world's oil trades in US dollars, forcing every country that needs energy to first acquire dollars, which manufactures permanent global demand for a currency only the United States can print. Oil is the largest commodity market on Earth, so pricing it in dollars wires dollar demand into the plumbing of the entire global economy. Everything else is mechanism and consequence.
This piece walks through all of it: how the system started, the 1974-pact myth, why the world keeps using dollars even when it resents doing so, the honest case that the dollar isn't going anywhere, where the order is cracking, and what would have to replace it. I'm not a neutral narrator. I think the petrodollar is fraying, I think most of the proposed replacements are worse than the disease, and I'll tell you why as we go.
That standing global bid for dollars is the prize, and it's what economists call the dollar's exorbitant privilege, a phrase coined in the de Gaulle era by French finance minister Valery Giscard d'Estaing. The country that issues the world's money gets to consume more than it produces and pay the gap in paper it alone controls, while everybody else has to earn it.
Here is the subtlety the whole argument depends on: oil-in-dollars may not even be the biggest thing holding up dollar demand today. The deeper layers are the eurodollar system and the recycling of trade surpluses by Asian exporters. The petrodollar is the most visible, most politically charged layer of dollar dominance, the one you can watch fracture in a shipping lane, not the entire foundation. Anyone who tells you the dollar dies the day Saudi Arabia accepts yuan is selling you something.
The story doesn't begin in 1974. It begins in 1944, at Bretton Woods, where 44 nations agreed to fix their currencies to the US dollar and the dollar alone to gold at $35 an ounce. The US then held about three-quarters of the world's official gold reserves, per Federal Reserve History, which is what made it credible. The dollar became the world's reserve currency by treaty, gold as the anchor.
The flaw showed up fast. To supply a growing world economy with dollars, the US had to send more abroad than it took back, piling up foreign-held dollar claims against a fixed pile of American gold. By the 1960s those claims dwarfed the gold behind them, France under de Gaulle started redeeming dollars for gold, and the run was on. On August 15, 1971, Nixon "closed the gold window," ending dollar-gold convertibility. The Smithsonian Agreement that December tried to hold pegged rates together, but the system collapsed into floating fiat by 1973.
Into that vacuum came the oil shock. During the 1973 Arab-Israeli War, Arab OPEC members embargoed the United States for resupplying Israel, and oil, in the Federal Reserve's own history, went "from $2.90 a barrel before the embargo to $11.65 a barrel in January 1974," a near-quadrupling the State Department's Office of the Historian describes as oil "first doubl[ing], then quadrupl[ing]" before the embargo ended in March 1974. Now oil exporters were sitting on enormous dollar surpluses with nowhere to put them, the petrodollar recycling problem. In 1974 the US and Saudi Arabia set up a joint commission on economic cooperation, and Treasury Secretary William Simon arranged, initially in confidence, for the Saudis to buy US Treasuries outside the normal auction process in exchange for military and economic support, an arrangement first reported by Bloomberg's Andrea Wong from declassified Treasury records obtained under the Freedom of Information Act. That recycling is the engine that replaced gold as the world's reason to hold dollars.
The recycling part usually gets told as elegant plumbing. Oil exporters earn dollars, park them in Western banks, the banks lend them back out, the world keeps turning. What that telling leaves out is that the loop had a body count, and the people who paid were mostly not the people who built it.
The scale set the rest in motion. From 1974 through 1981 OPEC's combined current-account surplus came to roughly $450 billion, about ninety percent of it piling up in the Persian Gulf states and Libya, exporters with no domestic economy large enough to spend it. Where that money went was not an accident, and Washington's fingerprints are on it. The Federal Reserve History account of the debt crisis is blunt: the oil shocks created surpluses among exporters and deficits across the developing world, and "with the encouragement of the US government, large US money-center banks were willing intermediaries between the two groups, providing the exporting countries with a safe, liquid place for their funds and then lending those funds to Latin America." Gulf dollars went in one door as deposits and came out the other as loans to Brazil, Argentina, Mexico. The Fed puts numbers on the binge: total Latin American debt ran from $29 billion at the end of 1970 to $327 billion by 1982, until the nine largest US money-center banks were holding Latin American debt worth 176 percent of their own capital. The banks had bet their solvency on the loop never breaking.
The mechanism that turned the lending boom into a catastrophe is the part most people skip. The loans were floating-rate, and "near-zero real rates of interest on short-term loans" in the early 1970s made the whole arrangement look painless, so borrowers loaded up. Then Volcker took US policy hard the other way to crush inflation and "nominal interest rates rose globally." The borrowers could not print dollars, so when the rate on their dollar debt reset upward, the bill reset with it. The spark came in August 1982, when, per the Fed, "Mexican Finance Minister Jesus Silva Herzog informed the Federal Reserve chairman, the US Treasury secretary, and the International Monetary Fund managing director that Mexico would no longer be able to service its debt, which at that point totaled $80 billion." Sixteen Latin American countries rescheduled. The region got a decade of austerity, IMF conditionality, and lost growth for a debt pile that began as a way to give Gulf oil money somewhere safe to sit. That is the human cost almost nobody pricing the "elegance" of the petrodollar ever names.
The reason this is not just a history lesson is that the machine never went away, it only moved. Those developing-country loans were booked offshore, in dollars created outside the US banking system, which is the eurodollar market doing exactly what it still does. Emerging-market governments still borrow in dollars they cannot print, on terms set by a Fed they do not control, which is the 1982 trap with newer paperwork. If you want to argue that arrangement is finally cracking, this is the lineage you have to reckon with, and the standard I'll hold Bitcoin to later is the same one: does it actually escape this trap, or just rename it.
Here is where I have to be straight with you, because a lot of Bitcoin and gold commentary gets this wrong. In June 2024 a story went viral claiming a "50-year petrodollar agreement" between the US and Saudi Arabia had expired on June 9, 2024, that the Saudis were refusing to renew, signaling the end of the dollar. It's false. There was no treaty to expire.
PolitiFact traced the claim and found the 1974 arrangement was a Joint Economic Commission promoting cooperation and dollar recycling, never a contract requiring oil be priced in dollars. A GAO official, cited by Radio Free Asia, confirmed the commission "did not contain any formal agreement on oil trade in U.S. dollars." What expired in 2024 was that administrative body, not a pricing pact. The primary record agrees: the 1974 Kissinger cable describing the planned commission frames it as a cooperation framework covering investment and oil-supply projections, with no dollar-pricing mandate anywhere in it.
So why is oil priced in dollars at all, if not by contract? Because the dollar was already dominant. As historian David Wight put it, summarized by Birches Group, dollar dominance is the reason oil is sold in dollars, not the other way around. The petrodollar is a consequence of the dollar's reserve status, reinforced by it, not the secret cause of it. If you want to argue the system is ending, argue it on the real mechanics. Reaching for a fake treaty just hands the skeptics an easy win.
If the petrodollar is the layer you can watch fracture in a shipping lane, the eurodollar system is the layer doing the real work, and almost nobody outside the bond desks talks about it. Fix the oil-invoicing problem and leave this intact and you have changed the paint, not the building. So let me define it, trace where it came from, and show why it is the actual reason de-dollarization keeps failing.
A eurodollar is a US dollar created and held outside the US banking system, and the "euro" has nothing to do with the European currency. It is a dollar deposit or loan booked at a bank beyond American borders, most of it in London, that never touches the Federal Reserve yet functions as a full dollar in every transaction. A bank in London can lend dollars into existence the same way a bank in New York does, except the Fed is not in the room, no US reserve requirement applies, and no US regulator sees the entry. Most of these dollars are not paper and not central-bank money; they are ledger entries on the books of offshore banks, what Jeff Snider calls "ghost money," a claim on dollars that exists nowhere except in the accounting between two banks. The global dollar is mostly private bank credit booked offshore, which is why the official money supply was never the thing that mattered.
The first eurodollars were Soviet, and the motive is the part you should not skip. On 28 February 1957 the USSR moved $800,000 into a London bank because, as Wikipedia documents it, it "feared that its deposits in North American banks would be frozen as a sanction," and parked offshore "there would be no chance of the U.S. confiscating that money." Communist China had already run the same play during the Korean War, routing its dollars through the Soviet-owned Banque Commerciale pour l'Europe du Nord, telex address "Eurobank," which is where the name comes from.
Sit with that. The offshore dollar market was born as sanctions arbitrage by America's two biggest Cold War adversaries. The same instinct that created it in 1957 is the instinct that, after the US froze Russia's reserves in 2022, has every central bank on earth quietly building exits today.
Then it scaled, and it scaled on regulation. Through the 1960s and 1970s, US rules made domestic dollars less attractive to hold, chiefly Regulation Q, the Fed's ceiling on interest payable on domestic deposits during a high-inflation stretch. Offshore banks faced no such cap, so dollars flowed to London to earn a market rate, and a parallel, unregulated dollar-banking system grew up beside the official one. By 1997, per the same source, "nearly 90% of all international loans were made via Eurodollars." The dollar's global plumbing was built by banks chasing regulatory gaps, not by a treaty in Riyadh.
One number should reframe the entire de-dollarization conversation. The BIS Global Liquidity Indicators put dollar credit to non-bank borrowers outside the United States at $14.3 trillion at the end of 2025, growing 8.5% year over year, the fastest pace since 2014. And that is only the part you can see on a balance sheet. A separate BIS study found that dollar obligations hidden in FX swaps and forwards are "of a size similar to, and probably exceeding, the $10.7 trillion of on-balance sheet debt," putting the off-balance-sheet total at "some $13-14 trillion" that is, in the BIS's own words, "in effect, missing."
This is exactly what makes the system load-bearing. Nik Bhatia spent years trading these instruments, and his description of how emerging-market debt actually gets issued, from a discussion of the transforming bond market, is the clearest statement of the trap I have heard: "EM sovereign bonds are for the most part issued in the eurodollar market. It's the Eurobond market. It is a London issue." Foreign governments borrow in dollars they cannot print, out of a market America does not run but whose collapse America cannot allow. And the financing behind those positions is even less visible. As Bhatia put it, that repo financing "is done in the Eurodollar market, so we can't even measure it. And that, by the way, is why Libor used to exist," because the offshore banks needed "a London rate" to center their balance sheets around.
This is why Lyn Alden's line lands harder than it first reads: "there's more demand for dollars than there are dollars in the system," and "it's not as simple as a bunch of countries getting together and deciding to repudiate the currency." That demand is the eurodollar system. Every emerging-market borrower with a London-issued bond, every corporate treasurer short dollars through an FX swap, every bank in the offshore daisy chain is structurally short dollars and cannot vote itself flat. To de-dollarize is not to stop pricing oil in dollars. It is to unwind a fourteen-trillion-dollar offshore credit machine, plus a roughly equal pile of dollar debt that does not even appear on the books, that the entire planet is wired into. No loyalty, no treaty, just a global short position with nowhere obvious to run.
So the eurodollar tells you the world is mechanically short dollars and can't get flat. But the deeper question is the one that trips people up: if the petrodollar gives the United States a free ride, and plenty of countries resent it, why can't anyone just build a different one? The answer is the most important concept in this discussion. It's called Triffin's Dilemma.
Robert Triffin was a Belgian-American economist, and in 1959 and 1960 he carried a warning to Congress that nobody in power wanted to hear. He spelled it out in his book Gold and the Dollar Crisis, and the European Central Bank's Lorenzo Bini Smaghi restated it cleanly in 2011: "if the United States refused to provide other countries with US dollars, trade would stagnate and the world economy would eventually be trapped in a deflationary bias; but if the United States provided an unlimited supply of dollars, the confidence that it would convert them into gold would erode." Read that twice, because the whole essay hangs on it. The country that prints the world's money has two jobs that cancel each other out: supply enough dollars to keep global trade moving, which means sending more abroad than it takes back forever, while keeping those dollars credible, which means not flooding the world with them. Triffin called the expiration date decades early.
The 1971 gold-window run was that contradiction playing out the first time. I've made the same point in my own words, writing in Issue #812 that the reserve issuer "must flood the world with that currency, sending their current account balance completely off kilter," and that in the process "the nation with the reserve currency hollows out its local manufacturing base and shift its supply chains to far off lands." That hollowing-out is the mechanism the reserve system runs on, not an unfortunate byproduct of it.
Here's the move people miss in 2026: the dilemma didn't die with the gold window, it just changed which asset plays the role gold used to play. Lyn Alden draws the line exactly: under Bretton Woods "the cost was that we kept draining our gold reserves," and "in the current formation, instead we pay for it with our industrial base." Today central banks and surplus exporters don't redeem dollars for metal out of a US vault. They park those dollars in US Treasuries, and the Treasury market became the new sink the deficits flow into. Same trap, different collateral. Mark Goodwin puts the asset swap bluntly: "the reserve asset of the world is U.S. treasury," which is why the contest over the next monetary order is really a contest over what backs the system, not which flag flies over it.
That reframing makes the reserve numbers click into place. The dollar's slow bleed in official reserves and gold quietly overtaking Treasuries at the end of 2025 are Triffin's Dilemma working through Treasuries the way it once worked through gold, with the honest caveat I'll detail later that the crossover is mostly a price effect, not a Treasury fire sale. Luke Gromen reads the tape the same way: "the dollar is still primary reserve currency, but gold is now primary reserve asset." He's careful to call this the "end of the post-71 structure of reserve status," not the end of the dollar: the dollar stays the reserve currency, the Treasury bond is the reserve asset, and the second leg is the one giving way.
It gets uncomfortable when you look at who pays for that privilege. The deficits that supply the world hollow out American production. Lyn Alden, in the same conversation on the dollar's structural bind, is blunt about where the bill lands: the process of supplying all those dollars is "constantly taking economic vibrancy out of Michigan and Ohio and rural Pennsylvania." Bernanke's Brookings work puts the upside on the other side of the ledger: dollars held abroad function as "an interest-free loan to the United States" worth "on the order of $20 billion a year" in seigniorage, on top of "the ability to run sustained balance-of-payments deficits." The financial center captures that benefit; the manufacturing regions eat the cost of the deficits required to supply it. Bernanke also names the deepest moat keeping the arrangement in place, inertia and network externalities: the more others accept dollars, the more useful dollars get, which is why the unwind is glacial rather than sudden and why a credible successor matters so much.
I'd be doing you a disservice if I only gave you the bull case for the petrodollar's decline, because the strongest version of the skeptics' case is genuinely strong. Let me steelman it.
The bluntest statement comes from energy economist Anas Alhajji, who in a conversation on Middle East oil policy put it about as flatly as it gets: "BRICS is a paper tiger. The dollar is here to stay and the petrodollar is here to stay. End of story." He is not wrong about the data, and the data is where this argument wins.
Start with the reserve numbers. Per the Fed's 2025 assessment of the dollar's international role, the dollar was 58% of disclosed global official reserves in 2024, down from a 72% peak in 2001 but, critically, "basically unchanged since 2022." After the US froze Russia's reserves in 2022, every dollar bear predicted a stampede out of dollars. It didn't happen; the share held. The dollar still sits in roughly 88% of all foreign-exchange transactions, invoices about 96% of trade in the Americas, and backs around 60% of international debt issuance. The Council on Foreign Relations puts it plainly: the dollar remains "the currency of choice for international trade," with oil and other commodities "primarily bought and sold using U.S. dollars."
The decisive point is that there is no alternative, and even committed dollar critics have to reckon with it. The US Treasury market, at roughly $22.5 trillion, is by far the largest and most liquid on Earth, and as the CFR backgrounder puts it, "It's hard to compete with the dollar if you don't have a market analogous to the treasury market." The euro can't do it because eurozone government debt is fragmented across member states with no common safe asset. The renminbi can't because China's capital controls leave it highly illiquid; CFR concludes China "does not have the intention or the capacity to dethrone the dollar." And a BRICS currency is the least credible threat of all, which I'll come back to.
That incumbency is the network-externalities moat working in the dollar's favor, a self-reinforcing loop the eurodollar system only deepens. As Goldman Sachs' Jared Cohen put it in a separate Brookings analysis, if the dollar's position were to change, it would come from "evolution, not revolution"; the same piece notes most economists don't expect the dollar to lose dominance any time soon. If your model has the petrodollar collapsing next quarter, the data is against you, and pretending otherwise is how you lose credibility and money at the same time.
So is the skeptic right that nothing is changing? No. The honest read holds both truths at once: the dollar's dominance is sticky, and it is visibly degrading at the margin. The cracking is real, and you needn't exaggerate it to see it.
The reserve share, the cleanest measure of the exorbitant privilege, is bleeding. Per IMF COFER data summarized by Wolf Street, the dollar's share of allocated reserves fell to 57.4% in late 2024, its lowest since 1994, down from 66% in early 2015. The euro sits near 20%, the yen under 6%, the renminbi just 2.2%, which tells you the dollar's losses aren't flowing to a rival currency at all. The decline is real, and glacial.
The sharper signal is gold. The ECB's own June 2026 review of the euro's international role reports that gold overtook US Treasuries as a share of global official reserves at the end of 2025, 27% versus 22%, a figure that got picked up across the financial press. I'll foreground the caveat the way the ECB did rather than bury it: that crossover is mostly a price effect. Gold ran up roughly 60% in 2025 on top of about 30% in 2024, and the ECB spells out the counterfactual, that "using the gold price at the end of 2023, the share of the euro (16%) remains at par with the share of gold (16%), while the share of US Treasuries continues to be markedly higher (26%)." This is not central banks dumping Treasuries en masse. But the buying is real, and the intent data is the part you can't wave away: in the World Gold Council's 2025 survey, a record 43% of institutions plan to add gold over the next year and 73% expect a lower dollar share within five years.
Why gold and not another currency is the tell, and it brings us back to Luke Gromen, who in that conversation on the US-China debt spiral described the signature of the unwind: "When the dollar system is coming to the end of its life, you will see the dollar and gold rise together." Under the old framework, where gold is just the inverse of the dollar, that isn't supposed to happen. When both rise at once, capital is being squeezed into the dollar to service debt and fleeing into gold as a hedge against the dollar system itself, an idea Gromen traces to the FOFOA monetary writers a quarter century ago. That dual rise, not a Treasury fire sale, is what the crossover actually is.
Gromen put the fragility in numbers: "the treasury market will blow up in five to seven days, trading days, if there's a hard divorce with China," while "China probably would be able to hunker down and be all right for five to seven months." His evidence is not a model, it is April 2025: "Treasury market after Liberation Day went exactly seven trading days and then that led to the first Trump Taco." The record backs the timeline. The April 2 tariff announcement to the April 9 pause was seven trading days, and per the New York Fed's Liberty Street Economics, the 10-year yield rose "from about 3.9 percent to 4.5 percent, or roughly 60 basis points" over two days, with market depth falling "to the lowest levels since March 2023." The deepest, most liquid market on Earth seized inside a week.
What seized it exposes the plumbing. Per the Atlantic Council, hedge funds run the Treasury basis trade levered "fifty to one hundred times" through repo, and when prices fell they were forced to liquidate, "reinforcing the downward price movements." The tell that this was a system event, not a flight to safety, is that the dollar fell with the bonds: the dollar index "weakened from 104.2 on April 2 to 103.2 on April 9, instead of strengthening, as usually happens during market routs." Both havens failed at once, the Gromen signature showing up in the tape, which is why CNN's account of the retreat concluded that it was fear of a bond-market catastrophe, rather than the equity selloff, that convinced Trump to hit pause. The size that is supposed to be this market's safety got overwhelmed by the leverage stacked on top of it in days.
Behind that threat sits the strategic leverage: China holds the marginal input the whole apparatus runs on. Gromen read a Defense Department headline about buying a billion dollars of critical minerals as the opposite of reassuring, "250 million a year of critical minerals of inputs which, the removal of that shuts down a trillion-dollar-a-year" military, and cited Raytheon's CEO in the Financial Times saying the US "literally can't go to war without Chinese components." This lands on the Treasury market because the old enforcement mechanism is gone: "Historically, if you messed with the monetary side of the rules-based global order, US would send the military over and kick your head in." China spent fifteen-plus years buying gold and building a parallel gold-settled network through Shanghai precisely so that, in Gromen's words, when it changes the system "we need to make it impossible for the US to come over here." The monetary exit and the military leverage are the same move.
The oil layer is moving in the same direction. Saudi Arabia, the most important petrodollar partner there is, signed a roughly $7 billion yuan swap line with China, became China's largest oil supplier, and joined the mBridge cross-border CBDC platform. Yuan oil settlement is still low-single-digit and oil hasn't stopped trading in dollars, but the optionality is being built on purpose. And it turned physical at the Strait of Hormuz this spring, the tanker waved through in yuan that opened this piece. The Iran-closing-the-strait-to-the-dollar read is my extrapolation, not a documented toll schedule, but the documented part is damning enough: the world's most critical energy chokepoint priced passage in a rival currency. None of this is collapse. It is a load-bearing system whose backup supports are being installed in plain sight, by the people who would need them.
Here's where the de-dollarization conversation goes off the rails. The reflexive assumption is that if the petrodollar is fraying, the answer is some other country's money, or some bloc's, taking its place. That leads somewhere worse than where we are.
I wrote about this directly when the BRICS nations met to push "enhanced use of local currencies in trade," and observing what they're doing is not endorsing it. If a petrodollar world is bad, a BRICS-currency world is most likely worse for currency stability. To believe these nations won't get caught in geopolitical fights and will somehow manage a shared currency responsibly is naive: China and India clash at their border, Brazil and South Africa lurch through their own instability. A shared fiat currency among governments who don't trust each other is doomed, because every one of them keeps the incentive to debase its share and externalize the cost onto the others.
Any single-country or single-bloc successor inherits Triffin's Dilemma the moment it becomes the reserve asset, because whoever issues the world's money has to over-supply it, eroding its own backing, exactly as the dollar did and gold did before it. Swap the dollar for the yuan or a basket of BRICS currencies and you've handed the exorbitant privilege, and the eventual run, to someone less accountable. The problem was never which government holds the issuing pen; it is that whoever holds it has the incentive to abuse it.
Which points at the only real fix: a reserve asset controlled by no country or coalition. Triffin's Dilemma cannot apply to an asset with no central issuer, because there's nobody to over-supply it and no backing to erode, so the system becomes self-balancing instead of depending on one country to bleed itself to supply the world. That doesn't require anyone to like the United States less or trust China more, just a reserve asset that answers to no government.
Two candidates fit that description, and honesty requires treating them differently. The first is gold, which requires no forecasting at all. Central banks are buying it at the fastest pace in modern history, more than 1,000 tonnes a year for three straight years per the World Gold Council, double the prior decade's pace, because it's the reserve asset no government can freeze, the lesson Russia's frozen reserves taught every central bank in 2022. It is the empirically observed neutral-reserve winner right now.
The second candidate is Bitcoin, and I'll hold it to the same standard I held the petrodollar myth to, because the case is real but the track record is thin. By design it is exactly the no-issuer asset the section above described: non-sovereign, non-centrally-issued, fully reserved, controlled by no country or coalition, which is the precise property that lets it sidestep Triffin's Dilemma.
The more interesting argument is mechanical, and it's the one Mark Goodwin makes when he talks about a "Bitcoin dollar." Goodwin, the former editor-in-chief of Bitcoin Magazine and author of a book by that name, reads the petrodollar as an energy-commodity monopoly and nothing more romantic than that: "you want to buy oil, you got to buy dollars first. We can shovel all of this inflationary effects into Europe and into Asia and have all these people buying T bills and buying cash to buy oil." Force the world to acquire your asset before it can buy energy, and you manufacture demand for it while exporting your inflation to everyone standing in line.
Goodwin's claim is that the same machine is being rebuilt with Bitcoin at the center. He dates the handoff to March 2020, when oil futures went negative during the Covid crash and Bitcoin's next halving cut issuance below 2% a year, roughly the rate new gold and new oil come out of the ground and the Fed's own inflation target. In his telling the petrodollar "went tits up" that quarter, and Bitcoin runs "the exact same mechanism of an energy commodity" with "a monopoly of the exchange of the in and out." Energy in, settlement asset out: electricity and hardware go into mining, a bearer asset that answers to no government comes out.
Here is where Goodwin is more careful than the people who quote him, and where the honest version of this argument lives. He does not claim Bitcoin replaces the dollar. He claims it can replace the reserve asset underneath the dollar, the Treasury bond: "I don't even know if Bitcoin can replace the dollar. But what it can replace is the U.S. treasuries. It can replace Treasuries as a reserve asset for a new financial system if we do it right and if we do it well." That narrower claim lines up with what Luke Gromen sees Washington already doing, "standing up bitcoin de facto as a competing reserve asset to gold" and letting the two "duke it out." And Gromen, who thinks the post-1971 order is finished, is still explicit it does not mean the dollar dies: "I'd be using dollars and my grandkids and great grandkids will still be using dollars. They're just gonna buy us a lot less."
Lyn Alden frames the upside in the soberest terms available, because she undersells rather than oversells. Set Bitcoin against what the rivals are actually building: the BIS-backed mBridge platform and the various cross-border CBDC projects are, in her words, "closed solutions competing with each other," and "staring them in the face is this big open source settlement network that's capable of settling unlimited value." Then the caveat in the same breath: "it does come with risks, volatility and things like that up front." She also noted that Stephen Miran, Trump's chair of the Council of Economic Advisers, named gold and cryptocurrencies as neutral reserve assets a dollar-rebalancing would favor, while adding that Bitcoin at roughly two trillion dollars is "still somewhat small for a reserve asset." That's the ceiling and the floor of the credible case, from someone with no incentive to inflate it.
Now the caveats, which are not footnotes and which I'll foreground rather than bury. Bitcoin still trades like a risk asset in market stress, selling off with equities rather than catching a bid like a safe haven, which is disqualifying for the one job a reserve asset has. In April 2025 the Swiss National Bank's Martin Schlegel rejected it for reserves outright, telling the bank's general assembly that crypto liquidity "even if it may seem ok at times, is especially during crises naturally called into question," that the price swings are "very, very high," and that the software itself is exposed to bugs and security flaws. The World Bank reached the same verdict in a September 2024 study whose subtitle does the work: not today, and likely not in the near future. Its economists concluded that "for central banks, the answer today is no," that crypto "fall[s] short of meeting the basic requirements for reserve assets" on liquidity, stability, and crisis-time reliability. And the decisive fact: no central bank holds Bitcoin as a reserve today, while they keep buying gold by the thousand tonnes. Goodwin himself, the man making the bull case, spends most of that same conversation warning that the financial establishment is busy co-opting the thing through stablecoins and dollar-backed tokens, which is not the posture of someone selling you a sure bet.
So the defensible framing holds: gold is the neutral-reserve asset central banks are actually buying, and Bitcoin is the same idea with a harder monetary policy, a far shorter track record, and a real chance it gets captured before it matures. I think the logic runs Bitcoin's way over a long enough horizon, because a fixed-supply, digitally native asset is what a settlement layer with no sovereign issuer would eventually want, and gold's supply still responds to price while Bitcoin's does not. That last sentence is conviction, not evidence, and you should keep the two in separate columns.
If you want the full arguments behind the takes in this piece, these TFTC conversations go deeper on each thread:
And for the surveillance angle, how a digital dollar turns the reserve system into a control system, see the companion piece on the digital dollar, CBDCs, and financial surveillance.
