Bitcoin Will be Blamed

The Politicization of Bitcoin

In this letter, I state a prediction. The prediction is inspired by a number of opinions I’ve heard from other analysts. I wanted to take the opportunity to expand on their thoughts, with some of my own. The topic of Bitcoin has made its way in mainstream media on a much more frequent basis than ever before. In general, the media speaks very little about the positive effects Bitcoin is having on the lives of individuals using it as money. The media will demonize and criticize various aspects of Bitcoin such as its power use, and its volatility. I believe this to be just scratching the surface on what we will later see as an all-out assault on Bitcoin.

I think the catalyst for hyper-bitcoinization has already come and gone, that is, a country (El Salvador) has decided to adopt it as legal tender. Now, we will see Bitcoin politicized, demonized, and blamed for all manner of things. I regret this prediction, but Bitcoin will become yet another thing that divides the people on a political level.

Credit to Lyn Alden for inspiring this thought process

The Game Theory of Hyper-Bitcoinization

I must admit, I did not expect a country (any country) to adopt Bitcoin so soon. We finally have the catalyst in front of us that will trigger hyperbitcoinization. The idea is that once a single country begins collecting Bitcoin, we will see other countries follow suit, if for no other reason than to not be left behind. It becomes a risk for countries NOT to be holding Bitcoin in their reserves, because other are holding it in their reserves. we are in the early days of seeing this all play out, but the point is, the game has begun.

Let the Games Begin

For me, the adoption of Bitcoin on a country level is one of the most important accelerants to meaningful change in the world. We can have people adopting Bitcoin as an investment, but in my opinion this is not nearly as important as people using Bitcoin as money. The problem is, money has always been a tool controlled by the ruling class. Whether that be monarchs, dictators, oligarchs, or democratically controlled countries. This new game that we’re beginning to play, is one where money is separated from state.

Is Bitcoin a Left Wing or Right Wing Political Tool?

In the past, money has been a bipartisan tool of the government. However, the ruling party utilizes money differently depending on their political leanings. Since Bitcoin is self-sovereign, the people would be free to adopt, independent of which political part is in control. The questions that then arise are…

• What happens when the money the people prefer to use is outside the realm of control?

• Which side of the political spectrum would voluntarily give up control over arguably the most powerful tool of control (money)?

• What are the qualms that the different sides would have against Bitcoin?

• Which political parties would run on the platform of switching the national monetary policy to be based on Bitcoin?

On the surface this looks like political suicide just due to the sheer unpredictability of what this new monetary system would look like.

We have more questions than answers about what Bitcoin would look like on a country level. However, we do get to start acquiring answers because of El Salvador and neighbouring countries. Still, these are tiny countries compared to Canada, US, and European nations. Most of what we discover from their adoption will not translate into what would happen if larger countries were to adopt Bitcoin.

Bitcoin on the Left

I have a feeling that The Left will be hyper critical of the large power consumption of Bitcoin, regardless of how that power is generated. Who owns how much Bitcoin, and what that Bitcoin is used for is no doubt something that the left would focus on.

On the other hand, Bitcoin represents a massive win for the freedoms and individual liberties of citizens. Additionally, there is a good argument to be made for Bitcoin equalizing economic opportunity across demographics.

Bitcoin on the Right

Adoption of Bitcoin would ultimately result in less responsibility and control on the part of the government. After all, they’re relinquishing more of their ability to control the monetary supply. At the end of the day, I think fiscal control will be the crux of the issue for The Right adopting Bitcoin.

However, there is something to be said for Bitcoin increasing the GDP of a nation through reducing the friction of trading with foreign partners. Additionally, countries may attract Bitcoin miners through incentivizing them with cheap energy. This would be an infrastructure play, and would likely result in the creation of more jobs, and lower unemployment. If a solid case could be made for Bitcoin resulting in more economic prosperity, then this is something I can see conservatives getting on board with.

A Speculative Attack on Your Own Currency

Countries hold a basket of currencies in their reserves in order to “back” their own currency. The most common currency held in their reserves is the USD. When buying Bitcoin, it must be bought with some kind of currency, whether that be CAD, USD, EUR, or CNY. In the case of America, if they were to add Bitcoin to their reserves, they would have to buy it with USD. This is tantamount to a speculative attack on their own currency. For any other country, they might part with currencies that they perceive to be less valuable than Bitcoin. As countries part with one currency, then another, they may reach a point where they are forced to choose between their own currency, and Bitcoin.

Bitcoin Will Suffer Environmental Criticisms

It doesn’t matter which side of the political spectrum you’re on, there will be environmental criticisms from both sides.

End Game

When the dust settles, and the value of goods and services are measured in Bitcoin, there will still be division amongst the populous. The idea is that hyper-bitcoinization is inevitable, and will occur regardless of whether or not people, and countries want it to. I don’t see hyper-bitcoinization as something that will be voluntarily adopted by most, but instead it’ll be the natural conclusion of free-market economics. In the past, the hardest money wins the winner-takes-all battle of global reserve status. The hardest money used to be gold, and in the future, it’ll be Bitcoin.

Bitcoin Will Be Blamed for Economic Catastrophe

Because Bitcoin will become the reserve currency, not by choice but by outcompeting every other currency, there will be a fair amount of blame pointed at Bitcoin. I imagine the following headlines to future articles.

• Bitcoin causes global economic meltdown

• Bitcoin the root cause of fiat currency failure

• We must destroy Bitcoin to save the economy

You Will Be Blamed for Being a Bitcoiner

Because of the blame pointed at Bitcoin, anyone who was, is, and will be proponents of Bitcoin will then have the finger of blame wagged in their direction. You will be called irresponsible for adopting a valueless internet currency. It will have been irresponsible for you to adopt an unregulated currency in favour of your nations fiat currency. You will have participated in the crumbling of your own nation’s currency, and this is damnable. I hope that countries do not prosecute Bitcoiners for owning it, but I fear the more extreme nations on the earth will resort to draconian punishment. Individuals that adopt Bitcoin will be seen as partially responsible for the dismantling of the monetary power structure that underpins world governments.

Bitcoiners Become the Ruling Class

Nations that don’t adopt Bitcoin will crumble underneath their own weight. They will be unable to print enough money to acquire a sufficient amount of Bitcoin to sustain the size of their own government. Nations will take loans from Bitcoiners, and they will be denominated in Bitcoin. The entire time this crumbling is taking place, Bitcoiners will experience an unprecedented amount of growth in the value of their portfolios. This will put them in a unique position to do good, or evil in the world. The amount of resources that will be able to be acquired with their Bitcoin will be the kind of wealth that births a new nation. That nation will be digital in nature, and global by design.

Conclusion

We should resist the politicization of Bitcoin, however this effort may be futile. It seems as though a modified Murphy’s Law applies here. Anything that can be politicized, will be politicized. All we can really do is revert to first principles, and take comfort in knowing that whatever FUD, or attacks are perpetrated from either side of the political spectrum, Bitcoin was built to withstand it. The social community, the technology, and the network effects are all on the side of Bitcoin. These are the tailwinds that blow us towards individual sovereignty and freedom.

Regards,

Keegan