BTC as the silent arbiter.
On the most basic fundamental level this is what crypto is designed to do: create a neutral economic playing field that anyone can use with a reasonable expectation that this underlying infrastructure can not be manipulated. We call this DLT, Decentralized Ledger Technology. A term I haven't uttered in years but is the foundation of most topics of discussion around here. Does it have to be a cryptocurrency? Nah, it just has to be a ledger. However, cryptography is currently the only way we know of to secure the Internet, so this seems to be the only option for now.
Of course when I say things like, "Can not be manipulated," everyone is quick to point out that the price gets manipulated all the time. It's a small market cap that gets pushed around constantly. Ah yes, sure, but that's not currency manipulation, and has nothing to do with what we are talking about. Market manipulation and currency manipulation are two completely different things that seem to get wrongfully lumped together sometimes, especially within the context of cryptocurrency where everything is so new, tiny, and unproven.
So how does one manipulate a currency?
- Print more money.
- Take out bad loans without paying them back (print more money).
- Manipulate interest rates in your favor (print money that doesn't exist).
- Boost export value while minimizing import debt.
It becomes clear that those who control money have a very limited toolkit in terms of what they can actually do with it. The legacy economy is firmly debt-based, so issuing loans with interest is the main legitimate avenue for generating revenue. However, things get a bit weird when we add central-bank abstraction into the mix. Slap on fractional-reserve banking and things get really weird and confusing.
All we need to know is that bankers and nation-states are very good at figuring out little loopholes and subtle ways to flex their power over money. Every once and a while a hole will get ripped open and hyperinflation will pour out of it.
So the main threat of centralized control of money is essentially just more money being printed out of thin air which devalues the current money in circulation. Most people seem to understand this pretty well, but at the same time they don't seem to understand any of the other nuances that go along with it.
If you could devalue my debt that would be great.
No one wants their currency to be devalued... unless of course their balance is negative. If you took out a loan in Mexican Pesos and tomorrow the value of Mexican Pesos crashed to zero... well then you can pay back the loan for $0. Pretty good deal. There's an expectation that the inflation rate will always be lower than the interest rate, which is true the vast majority of the time for this exact reason.
But also... we need more money though.
A lot of people think inflation and debt shouldn't exist. This is an easy statement to make when you're being thoughtless and only focusing on the problems created by inflation and debt without looking at all the other problems it solves. Notice how the complainers never come up with actual solutions: they just complain. Unfortunately this seems to be a majority.
Where would people be without debt? You gonna save up $30k to buy a car out of pocket? What about a house? The same people that spout nonsense like "debt shouldn't exist" are also the ones who use debt as a tool without even thinking about it. Hypocrisy abounds.
There's a reason why gold and silver aren't used as money anymore. Not only are they extremely inconvenient mediums of exchange but also their value lends itself to be hoarded speculatively. The wheels of economy will grind to a halt if not oiled by currency, and this type of hoarding and speculation is exactly what we don't want to happen, especially since the worst offenders engage in this behavior during the most inopportune times (recession).
But wait there's more!
It's a known fact that deflation is actually worse than the economy than inflation. How can that be true? Ah well read a book or something this is simply a known economic fact at this point. When money exists an economy bad things happen, contrary to classic supply & demand 101 theory would suggest. Less supply is definitively not a good thing when it comes to currency.
So why Bitcoin?
Well Bitcoin is the only game in town at the moment. ETH is a close runner-up but can it really act as a neutral platform for banks, corporations, and nation-states to play on? Of course not. Especially now with the move to proof-of-stake, the power dynamics are completely tilted. Several banks (most recently PayPal) are going to build on ETH because it has way more functionality than BTC, but still it can't "keep THEM honest". At least not in the current form.
Bitcoin has been chosen.
It's quite obvious at this point that Bitcoin really is the only option for these people. When the SEC says things like, "everything but Bitcoin is a security," they are lying. It's a quite blatant lie, in fact. Litecoin is no different than Bitcoin on a technical level. Hell, Bitcoin Cash is just Bitcoin with a larger blocksize limit. To say that these things are securities but Bitcoin isn't is completely nonsense, but they don't care about minor details like the truth. Bitcoin has been chosen and thus all other non-chosen things need to be attacked. It really is that simple.
The problem with this strategy is that it's a terrible one.
On a systemic level one can not embrace Bitcoin and then magically expect all other other networks to die off. Obviously if Bitcoin gets adoption then everything paired to Bitcoin within liquidity pools gets an automatic boost no matter what.
But how does it keep THEM honest?
Well, how does it not? Don't answer that because there are a million ways Bitcoin won't keep THEM honest. I can see the comments now, and I don't care. You can't tell me that banks, corporations, and governments all around the world using a public, borderless, neutral platform worldwide isn't going to come with some benefits. There will be several public Bitcoin addresses out there that have been self-KYCed by these entities and we'll be able to see where all the money is going. That alone is a pretty big win.
But why will they use it?
Because they have to.
At the end of the day fiat currency is in a constant stage of degradation. Bitcoin and crypto are catalyzing this degradation, which is what naturally happens when a solution inevitably presents itself.
Sure, wouldn't it be nice if you could get everyone to trade on the platform that you built and control. Yeah, except that's what everyone else is thinking as well. When there's a neutral platform just sitting their waiting for anyone to use... well it's going to get adoption eventually. Only a matter of time before the big boys jump into the pond and create an ocean.
The truly interesting thing about all of this is that it's not going to work how a lot of people think it should work. All of the research I've done over the past 5+ years points to this. Bitcoin may have solved the money printing problem, but is guaranteed to have some of the worst deflationary mechanics and outcomes we've ever seen as a result. Bitcoin will never be money: but it might be the world's best collateral for decades.
Bitcoin as collateral.
The truly fascinating thing about all of this is that collateral is exactly what a debt-based system needs to survive. All debt requires collateral in one for or another, be it a house, a car, or a person's reputation (credit score and KYC). It Bitcoin becomes the greatest collateral humanity has ever invented... then it can easily be leveraged into thousands of derivative assets that also have value, including more fiat currencies. So while everyone in crypto thinks that crypto is going to kill the legacy system... it might just become one of the most important tools of the legacy system in the end. Old boss, same as the new boss vibes for sure. Of course if that happens we'll all be billionaires so I'll live. They'll be trillionaires but I can live with that. As long as my robot maid does my laundry I'm good.
Bitcoin keeps people honest inside of Bitcoin.
So yeah if banks, corporations, and governments are using Bitcoin... it keeps THEM honest with each other. Some of that will trickle down to the rest of the plebs, but not much. Luckily the thing about open networks is that they're open. Anyone can use it, and the powers that be won't be able to burn the bridge behind them like they did with the current financial system. Just ask the regulators.
But will crypto replace fiat entirely?
Yes, it will, but that's going to take much longer than previously expected. Either that or someone will invent a miracle asset that just takes over everything. I've already explained what this miracle asset has to do:
- Remain decentralized and stop users from allocating money selfishly.
- Create an elastic supply that can expand and contract based on the market cycle.
- This creates the required stability for economic activity.
- Have an enormous ungodly amount of liquidity to complete with nation-states.
While these seem like simple requirements they'll actually be quite difficult to achieve. Mainly: how does one create an elastic money supply that expands and contracts based on the market cycle? That's literally a job for an economist. How does one make those decisions without the power being centralized and abused? These are not easy questions to answer, so I won't.
Conclusion
Bitcoin is the only asset big enough to be chosen for mainstream adoption. Actually Bitcoin is not even close to being big enough for this task, which is exactly the reason why nothing else would even be considered. Talk again in 10 years when the landscape looks completely different.
There are many bonuses that will come along with the powers that be using a neutral platform to transact on. Will it solve all our problems? Of course not. In fact it's guaranteed that these people are going to do what everyone else does and create shitcoins to trade for more Bitcoin. This seems to be the standard.
Where do I see Hive in all this? Eh, who knows. This network is a completely different animal than anything I've discussed thus in this post. I have faith we'll navigate the environment gracefully. Or not so gracefully as the case may be. One thing I am certain of is that Bitcoin's success will be a win for everyone, regardless of what kind of damage the regulators think they can muster to attack the 'competition'.
