Read now to learn how Bitcoin is the best money for everyone, even governments.
Much has been said by mainstream media and Bitcoin critics about how governments will resist against adopting Bitcoin as an alternative to their own fiat currencies. It’s easy to understand where that line of thinking comes from. Governments accrue significant amounts of wealth and power through their ability to issue and manipulate their currencies. Bitcoin, an independent currency, eliminates the seigniorage that governments extract from countries that use their currencies and from their own people.
That said, there are innumerable reasons why governments, and anyone else for that matter, would want to adopt Bitcoin as currency. Bitcoin, while obviously not ideal for governments that want to control their peoples, is demonstrably better money than fiat currencies are in every way that matters.
Recent research by a PhD candidate in Harvard University’s Department of Economics has highlighted a rather potent reason for government adoption of Bitcoin: defending against sanctions.
A Brief Exposé On Sanctions
For those who may be unfamiliar with the term, or at least unfamiliar with it in the context of finance and global markets, “sanctions” are penalties, often of a financial or economic nature, that are levied against governments, corporations, or individuals by another government that believes the sanctioned entity has done something wrong.
“Done something wrong” is purposely vague, as there are abundant examples of sanctions — that sometimes seem justifiable, and other times don’t — being put in place in response to political, societal, financial, military, (etc.) issues.
Sanctions are powerful motivators for those who fall victim to them. Victims are oftentimes forcibly removed from financial and trade markets, inflicting significant economic distress and hardship, not only on the receivers themselves, but also on potentially innocent bystanders like a nation’s citizens, a corporation’s employees, or an individual’s family and friends. Regardless of whether specific sanctions are “justified” or not, it should come as no surprise that sanctioned entities will look for any number of ways to change their fate.
Bitcoin: The Fates Realigned
For better or for worse, Bitcoin couldn’t care less about financial sanctions or who wants to put them in place. Bitcoin is simply software after all, running atop a decentralized network of computers and users that’s distributed across every country in the world.
At any given time, the vast majority of Bitcoin users likely have little reason, let alone desire, to acquiesce to sanctions requests. Bitcoin is first and foremost a system for transferring value, in the form of money, across time and space, and sanctions have the express purpose of introducing friction into monetary systems. To put it mildly, Bitcoin users are unlikely to accept that friction since they can avoid it.
The reality of Bitcoin’s resistance to censorship gives Bitcoin a enviable status in the context of national currencies and central bank reserves, and that status is the primary focus of the aforementioned Harvard PhD candidate’s research. For example, he cites Bitcoin’s censorship-resistance frequently as a reason why he believes central banks will use Bitcoin as a primary reserve currency, such as in the following excerpt:
Decentralized cryptocurrencies are resistant to governmental financial sanctions. A fiat currency issuer can issue sanctions against particular cryptocurrency wallets…but as long as the issuers of fiat currency do not control the blockchain itself, sanctioned individuals can continue to send cryptocurrency from one wallet to another.”
It really is as simple as that. No matter who wants to remove you from the Bitcoin network, or how powerful they may be, they can’t actually do it unless you allow them to. That puts any Bitcoin user, big or small, in the powerful position of finally being able to control their financial future, today and everyday.
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This is not financial or business 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.
