Statecraft and digital currencies : strategic implications for national power, interstate rivalries and hegemony : a dissertation presented in partial fulfilment of the requirements for the degree of PhD in Defence and Security Studies at Massey University, Albany, New Zealand

Abstract

This thesis challenges the ‘new security agenda’ view of virtual coins as a low politics issue for law enforcement. This Neorealist research argues that, under structural anarchy, digital money matters for high politics because states can mobilise its operating systems, programmable protocols and FinTech networks to further relative gains. Decentralised nonstate cryptocurrencies, corporate stablecoins and Central Bank Digital Currencies (CBDCs) are being repurposed as sources of politico-strategic applications for statecraft. Such engagements are conditionally driven by the security necessities of state positional hierarchies and contrasting digital currency governance models. In a context shaped by complex interdependence, the Fourth Industrial Revolution and the proliferation of economic warfare, their instrumental value offers higher versatility, precision and speed in comparison to analogue monetary systems. First, in the arena of national power, the benefits of these currencies can strengthen state capacities for macroeconomic planning, intelligence-gathering, covert tasks, the diversification of reserve assets, industrial policies, the projection of prestige and international influence. Second, they can be wielded as offensive and defensive vectors under circumstances of interstate rivalries. Third, these currencies provide advantageous levers for status quo and revisionist great powers that want to advance their preferred versions of world order and distributive polarity. With structured focused comparison as an overarching methodological frame, this project examines the significance of Bitcoin, the failed Facebook/Meta-led Libra project and the Chinese e-Yuan for these three areas of power politics. These analytical case studies integrate both strategic predictions and empirical examples. This thesis aims to extend the analytical horizon of Neorealism in post-Cold War security environments in which resurgent geopolitical tensions and unconventional threats are increasingly converging.