Put the price of Bitcoin aside for now. Assume that Bitcoin's purchasing power (per BTC/per sat) continues to 'go up' for the forseeable future... so just put that on the mental back-burner.
Instead imagine some of the political and economic implications of real Bitcoinization in global markets. Bitcoin becoming a 'world reserve currency' or 'world reserve asset' that's neutral and available to all...
  • Large businesses
  • All large governments (and small ones too)
  • Banks
  • High-Net-Worth People
  • Pension Funds, Retirement Accounts, Brokerage Accounts 401Ks etc...
The amount of capital yet to flow into Bitcoin must logically be... insane. It is very, very large. The world has never had a neutral, decentralized, energy-based asset like Bitcoin before - maybe Gold - but Gold is slow, not digital, cannot really be transported quickly, and it has a malleable supply that varies with its price and physical mining.
Bitcoin does not have such a supply shortcoming... it is engineered to be perfect capital across all borders and languages and truly scarce as an engineered store-of-value. It is perfect capital within its technical limitations... and likely has no equal.
  1. If Bitcoin starts to compete (and there is reason to believe it will under Mr Trump) with US bonds and treasuries as a global safe-haven it will have very serious ramifications for interest rates, investment, the ability and desire of the US to borrow, and the demand for "risk-off" assets like American bonds over the longer term.
To the extent that Bitcoin is 'inflating' slower than the rate of the US economy (for example) in addition to its rate of adoption through institutions and HODLers... Bitcoin 'guarantees' a Risk-Free yield. In other words, it becomes more valuable in 'fiat' terms while remaining risk free just from holding it alone and it 'going up'.
It's not a "yield" (like Proof of Stake) because the one Bitcoin becomes nothing more than one Bitcoin... but because there is only so much Bitcoin and the supply grows slower than the US economy itself it will continue to go-up indefinitely in a deflationary-like way.
I believe this was the essence of the Minneapolis Fed's Anti-Bitcoin Paper of Late... that mathematically there can only be "one" global Risk-Free asset without competition... and to the extent there is Bitcoin and US Bonds the American bonds will be worth less and reduce the government's ability to borrow indefinitely.
  1. Microstrategy (yes OK spare me the fiat-maxi moans and groans) is already financializing Bitcoin and they are the only ones so far to do this. By offering a 'return' "in dollars" as a product of Bitcoin's adoption, combined with Bitcoin's "risk-free" inflation rate (inflation rate relative to US economic growth and Dollar inflation) buyers can be offered a low-risk yield just by holding Bitcoin and this is a radical idea. Except the 'yield' isn't small IT'S HUGE and low-risk. Or it can be 'tailored' higher or lower, in volatility as financialization of a neutral, global asset all the while remaining money for users. This "BTC Yield" is only offered by one company so far in the entire world (MSTR).
You don't have to like or agree with the financialization of Bitcoin the Money (TM) - it exists and is free for all to hold as they wish and the "Wall-Street-i-Zation" is inevitable to some degree.
  1. Bitcoin sits in a unique position as digital property, digital gold, digital capital with a high-growth and low-inflation set of fundamentals. Yes it is volatile... but it has the growth-like characteristics of a tech-stock, energy-company, and early internet company all wrapped into an SEC-compliant digital commodity. There is nothing else like it that exists: In short it is a legal, finite, digital monopoly.
Publicly-traded companies can only hold so many securities (other stocks) without regulatory penalties... and assuming the S&P grows at an average 12% per year... Cash, Bonds, and traditional commodities bleed out over time relative to the "cost of capital" - 12% per year.
An intelligent (and I believe realistic) interpretation of Bitcoin's network growth and adoption is faster and more rapid than Cash, Bonds, or Gold (+ other securities that CANNOT be held by public companies) and corporations with a 'Bitcoin treasury' all things being equal are going to vastly out-compete the others.
Especially if they are first. So save me the moans and groans. If Bitcoin is to become a global-reserve-currency the "early corporate adopters" like Microstrategy will vastly outcompete by offering intelligent products that skirt, if not also incorporate a Bitcoin Standard.
MSTR is the #1 performing stock in the S&P over the last 4 years and this is evidence this strategy is real.
So what happens to Bitcoin's price when eventually 100 other companies adopt the same or similar strategy? The "first" ones will potentially benefit the most... and all will to some degree but these network-effects are exponentially-graded towards early adopters. Which adopters, especially after Mr. Trump's election will potentially be the second US company with such a Bitcoin Treasury Strategy? Microsoft? Dell?
  1. Although it has not yet transpired... why can't Bitcoin be a neutral commodity traded for other commodities? Early Bitcoiners (H Finney) spoke of Bitcoin being the "high-powered" money for institutions. Well OK screw the institutions... however at the same time what's preventing Bitcoin from being traded for Oil, Gold, Soybeans, Pasteurized Orange Juice... other legal "commodities"... yes legally they are all commodities including Bitcoin. But to the practical extent that Bitcoin is Money (TM) does it really matter? It's value for value, and commodities being traded for one another has precedent for thousands of years.

"OK" you say. "You sold me" maybe some, or all or none of these things will happen in the future (although I would argue they are already happening). What gives? Why should I (as a Bitcoiner) care?
  1. I'm not going to quote the ECB Paper as I can paraphrase... and
  2. you already know what it says and if you don't you don't care (lol).
It says that Bitcoinization will increase wealth-inequality between BTC holders and non-holders - and that the theoretical exchange-rate of Bitcoin is essentially... unlimited. Multi-Million-Dollar Bitcoin is theoretically possible with enough time and adoption. And how many people in person do you know that hold Bitcoin especially that self-custody it enough to use Lightning? In other words take it seriously enough to have achieved some level of Mastery of Use (Zapping through Lightning?) It's not many I bet.

Questions to Ponder: What would Bitcoin appreciation, globally, especially if adopted by nations worldwide, do to the purchasing power of the Dollar in an inflation-like-scenario?
What, if any, security precautions would you take, or need to take, in a possible scenario where Bitcoin appreciates rapidly over the next 5 years?
How would Bitcoin appreciation and adoption effect Government's ability to borrow and lend? And specifically how would Bitcoin effect capital flight away from the European-Union to lower-tax jurisdictions (for example the United States). Wouldn't Bitcoin accelerate the capital flight... and non-performance of some EU countries especially especially if they are 'hostile' to Bitcoin or HODLers?
In other words, won't most of the Bitcoin just end up in the United States, China, in the hands of institutions and in the custody of steely-eyed HODLers exaggerating the United State's already relative out-performance?
  • Finally, I believe that Mr. Trump, although with good intentions and policies that are obviously popular with the American People... is likely accelerating this future, this Bitcoin future, whether it is intentional or not.
Mr. Trump's Tariffs are inflationary. Mr. Trump's 'Mass-Deportations' are inflationary (by removing many US workers legal or otherwise) Mr. Trump's continued borrowing, especially through the use of Tax-Cuts, have upward-pressure on interest rates which are inflationary/inflation persisting. Mr. Trump's pressure or 'influence' on the Fed (to keep rates low) could be inflationary through lower Fed rates... despite the supposed "independence of the Institution." Who's going to tell Mr. Trump "No" now?
Just last night the 10-year Treasury Yields spiked right along-side Bitcoin to a 6-month high as traders anticipate more inflation from Mr. Trump's policies.... all the while the American Voter thinks that Mr. Trump will bring prices down. Which would be deflationary and antithetical to the Fed's mandate... (Bitcoin spiked almost identically chart-wise to yields in the Wall Street Journal...)
In short it's madness. And it is, in my opinion, a perfect setup for a new and different kind of adoption of Bitcoin as global capital.
  • I'll go on: VP Vance's history as a protege of Peter Thiel... an early Bitcoin-Venture-Capitalist from the 2010s and PayPal. Mr Vance's financial disclosures include a six-figure allocation to... Bitcoin through public-disclosure records.
  • Mr. Trump has promised to free Ross U - legitimizing Bitcoin as a moral and ethical investment asset for many (if they were concerned previously, despite Mr. Trump's own recent brushes with the law...)
  • Mr. Trump has named repeatedly the creation of a "Bitcoin Strategic Reserve" for the United States. If the United States has one... why wouldn't other countries? And who is going to tell President Trump (at this point) "no" or not to deliver with such wide-spread political support?
  • Mr. Trump is not exactly a fan of international alliances and entanglements (for better or for worse) and it's logical other countries would want to de-risk from the United States (BRICS comes to mind) through a neutral exchange-medium that's not the Dollar.
This makes even more sense if higher inflation is anticipated or demonstrated through bond yields. Bonds also, can be turned off by their issuer. Bitcoin can't. What asset grows as fast, you can mine yourself, that's independent of the United States that can't be turned off... I'll let you answer that question.
In summary, some of the consequences of Mr. Trump's election, in my humble opinion while they may be wildly good for Bitcoin may not at all be anticipated by most American voters. American voters less impacted by asset inflation (those with stocks, bonds, real estate, Bitcoin etc) are probably those less desperate in today's economy... or less sensitive to prices. By encouraging the adoption of Bitcoin, especially through higher interest rates and debt, Mr. Trump is jump-starting the very asset that competes with the Dollar and could drive wealth-inequality vastly towards HODLers and Bitcoin-Oriented-institutions. Trade-protectionists want to protect their currencies... but that same protectionism in a world where Bitcoin exists could have the opposite effects if it accelerates Bitcoin HODLing, use, and adoption by 3rd-party nation states.
I have to wonder - is there any historical precedent to this? Where one group of people especially at the encouragement of a Central Bank takes a "disliking" to the wealth, prosperity, or good-fortune of others? If Bitcoiners (bear with me here) choose to leave their native homeland at some point where do they go? El Salvador? Switzerland? Portugal? The US? And where does that Bitcoin ultimately end up and to what effect... does it have on that average American who puts a great deal of faith in Mr. Trump's policies?
No-one knows the future, and history is full of unintended consequences and butter-fly-like effects. I believe this election will probably be studied for decades and the story of Bitcoin is right at the middle of it. It's going to be incredibly interesting.
Thank you.
1430 sats \ 8 replies \ @freetx 6h
Good write up and good questions.
Tangentially I was an early Linux adopter. I first installed it around 94-95. There are some interesting historical parallels to Linux and Bitcoin.
This has been largely forgotten to history, but up until 1999, there was constant FUD and legal threats over linux (in fact the term FUD itself was created during this time from a leaked Microsoft memo on how to combat Linux).
At the time, I had colleagues tell me "....we can never install linux here because we will get sued out of existence for that....".
During 95-98 acceptance increased and the linux ecosystem grew by leaps and bounds. In 1999 an unexpected and momentous thing occurred....something no one really predicted and it changed the course of computing history. IBM announced that it was working with RedHat to both port its applications to Linux as well as port Linux to run on System Z.
This was really a game changer. Within months Linux went from this fringe sort of quasi-hobbyist endeavor, to being fully embraced across the IT landscape. The rest of course is history....Linux basically took over 90% of the data centers....and invisibly worked its way into all sorts of embedded products.
Regarding Bitcoin, the US announcing the establishment of Bitcoin Strategic Reserve -- even if rather minor of a few billion dollars -- would be a similar situation. It would greenlight bitcoin and give it a permanent seat at the table. The resulting game theory would basically ensure that it got bid up orders of magnitude in value.....maybe 1000x. Particularly if corporations followed suit and each adopted their own "BTC Treasury" solution like MSTR.
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Thank you for your write-up. I agree... and I feel like the 'strategic reserve' even if mostly symbolic... if announced by a sitting president with an overwhelming political support would really 'legitimize' it for everyone. Businesses, countries... they would each want to have at least a little bit just to say 'they can participate' and 'are on the cutting edge too'...
While not the same as MSTR's treasury strategy it seems to me there will be more MSTRs... it will be interesting if the vote from shareholders in December (it's december) for Microsoft is in the positive that would be cool.
I wasn't familiar with linux's history as I was... young in the 1990s. It's interesting you compared today's events with Linux in the late 1990s. I guess you would say then that Bitcoin is the equivalent of 1999, 1998 in OS terms?
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77 sats \ 0 replies \ @freetx 5h
I guess you would say then that Bitcoin is the equivalent of 1999, 1998 in OS terms?
Well we don't know the future so either we are 1999-2000 and our big moment was the ETFs.....of we are 98-99 and our big moment is Bitcoin Strategic Reserve announcement.
Honestly, I think the BSR idea will happen...eventually. However, to be honest, I think it makes more financial sense for the Federal Reserve to decide to hold bitcoin rather than the Treasury / US Gov itself (obviously they could both decide to hold BTC).
Bitcoin would serve as a natural counterbalance to the Feds balance sheet....the problem they have now is their entire balance sheet (except for the gold holdings) is just other forms of debt. So they hold US Treasuries as their "asset"....but it all becomes a messy circular loop of debt. In order for them to get more "assets" the system must take on more debt, the increased debt then makes existing bonds more suspect, etc etc.
BTC being a "pure asset" escapes this cycle. There is a long-story to this, but this was originally the goal of holding Gold...it would be a pure asset that would automatically expand in value as monetary base increased....but Congress passed a law in early 80s forcing the Fed to value its Gold permanently at $42.22 per ounce. Congress did this because they were concerned that there was an incentive for the Fed to keep printing but remain solvent....so they stepped in to limit the value of their gold holdings.
The Fed could side-step the entire issue now and just hold BTC....
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Interesting, I did not know that is where FUD came from!
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Linux has been largely captured by corporates - the vast majority of proles use corporate surveillance shitware OSs ... because its been managed that way.
Much the same sad fate could befall Bitcoin.
It would not be a victory, but a case of the revolution being captured and controlled by the very entities it set out to provide an alternative to.
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this is a very interesting take. it is why we need to run our own nodes... while being serious about miner centralization and decentralized block construction if possible.
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You do not appear to fully appreciate the implications of ever increasing institutional custody.
Blackrock & co are buying up miner interests as well as accumulating custody and control of ever more Sats.
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ive watched this video several times and i'm a huge fan of anton. however i don't see any way to keep institutions from buying, and buying a lot,.
they want to buy ok so... that's it they will. global money means everyone will use it full stop
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Sure but that's no reason to ignore the obvious risks - given how most here are ignoring the risks its all the more reason to highlight them.
Unless you are only here for number go up fiat denominated speculative gain.
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the purchasing power of the Dollar
Prices trend toward their marginal production cost, that's 0 for dollars, with or without Bitcoin. Bitcoin is just a harmless place for devaluation to escape to, unlike real estate and other physical resources that get misused when monetized.
security precautions would you take, or need to take
Assume more psyops like the fake pandemic for each leg of the global realignment that comes as a result, prepping is definitely its own rabbit hole of threads.
Bitcoin just end up in the United States
Bitcoin isn't supposed to re-distribute wealth, it's a Cantillon cure. Since the US already has most of the wealth it stands to reason it'll have most of the Bitcoin. Now, instead of us exporting dollars for foreign countries to buy back our assets, we'll have the Bitcoin to buy foreign assets... in productive ways, not via Cantillon shell games that reward the worst people.
Mr. Trump's Tariffs are inflationary
Cope astroturfed by globalist bankers with no basis in economics, the pre-Fed times Bitcoiners should wax for was held up by tariffs which made it the the US the economic powerhouse of the world. Re-shoring increases supply and accelerates internal monetary velocity (destroys debt faster, replaces productivity taxes) making it deflationary. The Jawbone effect alone is already pumping the dollar and bitcoin at the same time which flies in the face of fiat economists. Less spent on imports -> more available to spend on corn.
Mr. Trump's 'Mass-Deportations' are inflationary
Government hand outs to them are inflationary, deportation is deflationary -> more money to put into corn. Imported labor is not free labor, its just a perverse cost structure, properly incentivized costs increase automation -> deflationary
continued borrowing, especially through the use of Tax-Cuts
Another retarded fiat economist take, tax cuts on productivity accelerate velocity -> increase tax revenue
inflationary through lower Fed rates
State banks were historically capped at 1-2% and lending was never causal to inflation, higher rates by the fed have been inflationary as the higher yield itself has to gets printed to be paid back to the lender.
wildly good for Bitcoin
Bitcoin exists to be wildly good for the world during this transition, just not in the way commies would think re: distribution
We're facing a confluence of deflationary factors, deflation is the natural state. Inflation has been manufactured to prolong an insider run system designed as a ponzi, Trump's election is the last nail in the coffin for that system which is why we're looking at civil war conditions.
Bitcoin was created as a place for those unneeded dollars to go without causing damage, the end game now is wages being what inflates, without creating a new real-estate / stock market / used car bubble that just hurts people without assets.
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without going into every point... tax cuts to an extent increase revenue. but only to a point.
i disagree that reducing trade with others, ie selling more stuff rather than buying it, will ultimately make the US more wealthy. money goes where it can be most efficient, and production of goods should be the same way
bitcoin is based on this same idea... it is global money that is everywhere all at once that knows no borders. earn it in one place, spend it in another that is one reason it is so great
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US more wealthy
"Stuff" isn't wealth, the ability to make stuff is. The means of production.
most efficient
And the globalist agenda manipulating supply chains with Cantillon impunity is extremely inefficient, producing things where they are consumed is a huge leap forward in efficiency and will dramatically reduce costs beyond the effects of being far saner policy than taxing productivity like is done now
Bitcoin
I think it was Erik Prince who recently pointed out why Bitcoin was needed for this because the dollar hegemon made trade partners have to try taking advantage of us, that will no longer be the case on a global Bitcoin standard
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with all due respect... I completely disagree. Bitcoin is the greatest example of free trade there ever was.
There is a reason most people don't 'mine at home' or companies don't mine in high-electricity-cost areas. it's not efficient.
It would be like saying... you have to use Bitcoin where it's mined. that's not the way Bitcoin works. It can be mined 'anywhere' in essentially any quantities... and then used anywhere the user wants - usually where the value for purchases is the greatest.
I respectfully disagree with the idea that production that is 'local' is more efficient. efficiency is global trade where some groups are better than others specializing Bitcoin is no different.
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Not sure what you're getting at, Bitcoin isn't a good in the import sense... It's numeraire
Taking a bad comparison to goods however, given it's use is storage and transport of energy then it's already produced where it's used
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ANCAPS... what is an ANCAP? Excuse my ignorance...
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stackers have outlawed this. turn on wild west mode in your /settings to see outlawed content.
I fear for pensioners.
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The scenario you describe could incorporate a ban on private custody- only institutions could hold Bitcoin. Thus Bitcoins fundamental purpose to be a censorship resistant P2P payments protocol would have been confounded. In fact the progression you describe makes a ban on private custody both more effective to apply and more likely. Is that what you really want? If so you, like many, are here for the fiat denominated speculative gain, not the revolution.
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it is impossible to keep the insitutions out of bitcoin. they are here.
as far as self custody... i may have earlier said OK sure self-custody will be under threat.
but not now. not now at all. there is more energy, more money, more political support, and more acceptance of self-custody right now than ever.
who wouldn't want to hold a lit bit of 'digital gold' soon to be a strategic reserve asset... in a shoebox in their closet? everyone, at this rate, will want it and a certain amount of custody for individuals will be natural
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The ratio of self custody is in steady decline. The number of hodlers who have not been KYCed is even smaller. The rationale for holding Bitcoin as a speculative asset is obvious and is the primary reason most private holding are held.
The description and perception of Bitcoin as a speculative commodity is a subtle but powerful undermining of what Bitcoin was established to achieve.
It makes it easier for a ban on private custody to be imposed. Why would anyone need to hold Bitcoin in private custody if they can have exposure via a managed ETF?
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private custody =/ institutional custody and etfs etc. private custody lets you spend it directly... and i completely disagree that folks do not know the difference especially now.
mr trump and co reducing/eliminating capital gains taxes on spending i believe is a real possibility now
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Private custody in the form of institutions holding Bitcoin while technically private can easily be differentiated from privately held Bitcoin.
Order 6102 was successful in large part because most of peoples gold was held by institutions which could be relied upon to co operate with the government.
If they remove the CGs on Bitcoin used for MoE I will eat my hat- happily- I do not see it happening but would be very happy to be proved wrong.
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anything is now possible now under Mr trump. repubs hold the house senate and now white house
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Nice and slow is great.
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i agree. however... that is not what we may get LOL
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Very true. It might get weird real fast.
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i think the democrats would agree with the statement "it might get weird fast" LOL
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