Bitcoin’s Potential Benefits

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Debasing the Currency

Bitcoin’s key selling point is the fact that, unlike fiat currencies like the dollar, it is not owned by a government and not subject to debasement through money printing.

Bitcoin meme: Money Printer Go Brrr

 

There will never be more than 21 million Bitcoin created and no government controls the issuance of new Bitcoin.  Bitcoin’s monetary policy is based on a schedule set by code.

Debasement is virtually inevitable because the debt level is unsustainable:

Debt is 4 times income (GDP).  Assuming a 3% interest rate, this requires unattainable growth rates:

4 x 3% = 12% growth rate (required just to service the interest).

  • The only way to bring debt down to a tenable level is to debase the currency.
  • Debasement isn’t doing to happen accidentally.  Governments have every incentive to make it happen, hopefully over a decade or more.

 

Non-financial benefits

Coronavirus
Coronavirus co-operation?

Given how little support the Democrats have been able to garner for their Covid-19 mitigation efforts, it seems unlikely that Democrats will be able to build support for the current anti-climate-change strategy.  And dysfunction seems to be the state of American government in general.

Therefore, any other alternative strategies for systemic change should be seriously evaluated.

 

But Bitcoin also has the potential to provide incentives for achieving some of the systemic change that are necessary for:

  • mitigating climate threats,
  • providing a better business model for media
  • reducing incentives for war and the military industrial complex
  • re-incentivizing export industries like the manufacturing industry
  • reduce the inequality caused by the financial privilege the Federal Reserve accords “Wall Street” and wealthy investors who are “close to the money printer”. (The Cantillion effect)
  • providing banking services for the “unbanked” worldwide and allowing people to avoid currency debasement.

 

Potential Benefits

Here are a few of the easier to explain potential benefits of Bitcoin.1  It has the potential to ..

 

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  1. One of the biggest thing about Bitcoin is that it is the first open network for money.  If you are a techie you will understand that open networks like the internet frequently beat closed networks like AOL and CompuServe. Bitcoin threatens to out-compete Western Union, VISA, and MasterCard unless they can offer some extra value.

  2. In 1975, the US didn’t just “offer protection” to Saudi Arabia and the OPEC nations, it threatened to invade the Persian Gulf because it wanted to force its way and thought the invasion would be easy.  You might call the “protection” offered a “protection racket.”

  3. If the US doesn’t care whether Saudi Arabia sells all its oil in US dollars, why did Saudi Arabia threaten in 2019 to “ditch” the dollar.  Would the US really be indifferent to Saudi Arabia’s threat to break the Petrodollar?