Read now to learn how Bitcoin addresses each of the goals listed in the U.S. President's recent executive order.
Our societies have arrived at the point over the past several decades where our lives are largely controlled by the whims of governments, some democratic, others tyrannical, or, in most cases, a combination of the two. Granted, we don’t see the government’s representatives hanging around at our bank, grocery store, or place of business too often. So it might be difficult for some of us to understand the amount of influence governments have on our day-to-day lives. But the government regulators and bureaucrats are always present in the background, mandating how the businesses we interact with can serve us and dictating which goods and services we can buy and sell.
We may not always be conscious of government oversight in our lives, but deep down most of us are aware that it’s there. It should come as little surprise then that countless individuals in the Bitcoin and Crypto communities have been anxiously awaiting an executive order from U.S. President Joe Biden regarding upcoming regulation of the industry. That executive order was leaked on Tuesday and then officially released on Wednesday.
The goals of the president’s executive order touch on several different aspects of Bitcoin and Crypto. I’ve heard varying opinions from pundits around the space and my goal with our discussion today is to cut through the noise and get at what I believe matters, which is the fact that Bitcoin already addresses (or at least can if the government steps aside and allows it to flourish) the U.S. administration’s stated goals:
We must protect consumers, investors, and businesses in the United States
It’s human nature to want to feel safe and protected. Governments have hacked that basic survival instinct in order to assert more control over citizen’s lives and to deploy social welfare systems to provide for society’s other basic needs. I’ll let each of you be the judge on governments’ success, but the state of the world these days makes me seriously question it.
Bitcoin provides protection to consumers, investors, and businesses by providing them with sound money that can be used with ease and without any interference. With Bitcoin, no one can confiscate your wealth if you don’t let them. Nor do Bitcoin users have to worry about inflation eating away at their ability to survive and thrive on their long-term savings.
Bitcoin provides users with an ability that governments cannot give and indeed do not want to give to their citizens: the ability to protect themselves.
We must protect United States and global financial stability and mitigate systemic risk
Our global financial system currently operates on top of a disjointed group of legacy and modern systems. Those systems are each controlled by a different government or corporation whose self-interested goals conflict with the self-interested goals of every other government and corporation that are part of the equation. Unfortunately for us, “protecting financial stability” means maintaining a status quo that benefits the few at the expense of everyone else.
Bitcoin certainly does promote financial stability through its sound money principles, but it does so in a way that is open and inclusive to all participants. No one entity can control the Bitcoin network. Instead each user on the network makes up an equal part of the system’s governance. All Bitcoin users have a vested interest in the network succeeding, because Bitcoin’s success ensures that their access to an open financial system can continue undisturbed.
We must mitigate the illicit finance and national security risks posed by misuse of digital assets
I have no issue with the goal of eliminating illicit finance and crime throughout the financial system. The problem comes with the fact that definitions of what is right and wrong in the world have largely migrated to the realm of opinion. Governments set themselves out as arbiters of truth, but the reality is that their “truth” is simply an opinion enforced by the might of the military and the court system. Case in point, when a hacker limits your ability to access your money, it’s a crime, but when the government blocks your money, it expects to be applauded.
So how does Bitcoin mitigate illicit finance? I propose that it does so primarily by making crime more transparent. Since Bitcoin cannot be created by the press of a button by central banks or through the convoluted gyrations of financial institutions, illicit activities will run out of funds much more quickly than they do when run on top of inflationary money. And Bitcoin’s public nature can make it easier for users to distinguish between network usage that creates true value and that which does not.
We must reinforce United States leadership in the global financial system
For decades, the U.S. government and, to a lesser degree, U.S. citizens have benefitted from the U.S. dollar’s status as the global reserve currency. Monetary seigniorage and the Cantillon effect are outside the scope of this discussion, but suffice it to say that the U.S. government’s ability to control the money used by most of the world allows it to absorb a significant amount of value created elsewhere that the U.S. had no involvement in creating.
Truth be told, I don’t believe that Bitcoin will reinforce the United States’ leadership in the global financial system. At least no more than any other country. The Bitcoin network is devoid of leadership roles and the benefits of the system are afforded to all participants equally.
If the United States has any interest in being a leader in the global financial system being built on Bitcoin, their only bet is on being one of the first countries to enter it and then leading other countries along their own path towards Bitcoin.
We must promote access to safe and affordable financial services
Even in modern times, when the traditional financial system has been vastly improved by new technologies, the financial system still excludes most of the world’s population and extracts significant tolls from those who are permitted to participate. Truthfully, no system in which a single entity or group of entities sit at the top exerting total control can ever be totally inclusive or economically efficient.
The Bitcoin network has already made huge strides in this area and is only restrained by the speed at which people around the world learn about it and opt into the system for themselves. Bitcoin excludes no one and has no gatekeepers. And the Bitcoin financial system is extremely economical by comparison. Technologies like the Lightning Network are making it possible to transfer value extremely economically without having to entrust one’s money to any financial institution.
We must support technological advances that promote responsible development and use of digital assets
In the interest of not repeating the same information I’ve already provided, I’ll cut right to the chase on this one: Bitcoin IS the responsible technological advancement that will allow citizens in the U.S. and around the world to flourish and take back the financial control that has for so long been withheld from them. I believe that there are few causes more noble than governments everywhere taking a step back and allowing their citizens to make their own informed decisions about Bitcoin.
In no small way, Bitcoin has the ability to ensure that our world reaches a place where people anywhere have the same chance as anyone else to be financially free and secure. That’s a goal that every government should support.
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This is not financial advice. This newsletter and related content are for informational purposes only. Cryptocurrencies and digital assets can be risky. Always do your own research before making any sort of investment.
