I recently joined a Twitter Space that had some Bitcoin fanatics in it, and Tulsi Gabbard even stopped by to listen, among many other big Twitter names (not a high status to hold). The Space’s name, entitled “Bitcoin is Digital Energy,” really drove the point home that this would be some technospiritual jibber jabber from an egregore of apatheist libertarians and anti-establishment types who are wooed and awed by Bitcoin even if they don’t “understand it.” Nonetheless, it was exactly what you’d expect; crypto worship, and a whole lot of modal libertarianism.
Bitcoin has been around for so long, with enough bearing on the financial system, with enough of a presence to be known by everyone, and yet no one understands it. Everyone is either enamored by it, much akin to your mom or dad not understanding this new thing called the “Cloud” (which is just a server somewhere in Silicon Valley that holds your data), or distrusts it due to its clandestine origins and lack of centralization.
It’s a product of our pseudo-techno, nostalgic era, where we still dream of space, but borrow all of our fantasies about our future from Star Wars and Star Trek. It’s the digital age! The digitalization, and ideaization, of wealth has become the norm. Only poor people show off their wealth with nice cars and big houses. No, if you’re rich, you live in a pod, eat bugs, and store all of your wealth in digits on a screen. The future is here! Unfortunately, though, wherever you look, the explanation behind how cryptocurrency works, and how it will function as a means to hold wealth, is always too esoteric. It is so esoteric, when you go searching for explanations, it becomes a hall of mirrors.
Some will say its benefit is it is an honest currency, as your purchases and transactions are all stored on a decentralized database, that no one has control over. Some will say that the anonymity keeps there from being any oppressive forces, so not only is it honest, but it also hides the transactory parties. However, the biggest argument that is made is how it cannot be printed; it cannot be debased, nor manipulated.
These are all wonderful attributes to an ideal currency. There’s no way for any party whatsover to hide or debase its money, so there aren’t any surprises. That’s great! Why won’t we adopt it now? Well, to your typical crypto fan, who generally either likes Ethereum, Bitcoin, or Ripple, will, like any good altruist, speak about how its the oppressive forces of the state and its central bank that’s “like totally trying to chain us down, man, and like, keep us from having our wealth, bro.” And only if we just got rid of these states’ powers and their oppressive central banks, we could have a thousand years of freedom and prosperity due to Bitcoin/Ethereum/Ripple’s superiority as a world reserve currency.
What they don’t tell you is the massive downsides to cryptocurrency, that make it much more undesirable as a currency when compared to fiat, or even tried and true gold. What they don’t tell you is how crypto is basically just the same exact monetary system we have now, but with no one who is accountable. What they don’t tell you is that since there is no central bank, but rich whales who own the vast majority of this will have all of the power. What they don’t tell you is the worst aspects of Eurodollar Problem I have talked extensively about will only be exacerbated under crypto, and ultimately, a globalist, centralized cryptocurrency would, itself, even be more desirable than decentralized finance/cryptocurrency. These points are what I’d like to talk on, because no one seems to be eager to criticize this clearly broken, blown-out-of-proportion currency war that can’t and shouldn’t be won by the crypto worshippers.
What is Cryptocurrency?
Ultimately, what is crypto? What is it backed by? Simply put, it is a ledger system of transactions made in whatever code (sorry, not a programmer, just a monetary autist) a cryptocurrency uses. It’s a database. Some are more scammy than others and should be treated as regulated securities like stocks, because they aren’t decentralized databases, but rather databases owned by a company (scam, lol, fight me). Nonetheless, crypto is a very simple idea. Rather than using gold, which is the ultimate Schelling Point, you use something as money that is intangible like fiat currency, but theoretically has the same hardiness as gold or silver because it cannot be created by fiat of a central government.
We do not have fiat currency in this way, as we have central banks to act as an independent printer of the money, and even then, it doesn’t print the money, and only makes money based on bank demand the vast majority of the time (converting Central Bank Reserves, CBRs, or other assets, into cash). Buying power isn’t really printed/debased, anymore. That phenomenon is antiquated, as governments used to be directly able to print money if they really had to (normally in times of war).
All of us know someone who is really into cryptocurrency. If you’ve spent enough time on Twitter, Trading View, or Reddit, you will come across these, normally young, men and even teenagers, who have a undying worship of their chosen Crypto god. Much like the Elon Musk and Trump worshippers, and those who worship meme stocks, there are people who worship crypto, but these are the OG cultists. They’ve been around for over a decade now, and have built the entire framework to their existence, everything they do, to this semi-libertarian, anti-government worship of this “money.”
Normally they grew up in a nonreligious, or apatheistic, household, and developed a worship of some person or idea in their teenage years because the lack of interested parents, and the knowing of a God who loves them, created an emptiness where spirituality and community normally fill. They lack meaning and placement. You see this with people who worship Gamestop and AMC stock. It is all they think about. Their idea of meaning is drawn from their monetary god, and once they can garner no more meaning (money) from it, they move onto another. The same phenomenon is seen with crypto worship. These people do not really see a tool that can be utilized for the betterment of humanity - they see a god that they dance for and praise as to draw more dough. The end goal is that this god will reign supreme over the entire world and make this person rich.
Yes, we have essentially reverted into cargo cult mentality - Techno Cargo Cult (has a nice ring to it!).
What is Money?
When I was a little kid, I asked my dad how money worked. He’s a smart enough guy, but told me how it relies on our faith. He didn’t really have much more to say about it, and I was left puzzled up until I was about twenty or so, and realized not only was that simple answer all I needed, but that’s how every system of human infrastructure functions. Faith is the reason our ancestors were so hardy, adaptable, and motivated, regardless of what horrible disasters, manmade or natural, were inflicted upon them. Faith holds together nations, economies, and most certainly currencies.
You follow the money, and it will take you on a psychedelic trip with a million pathways. There is no one answer that can truly get to the nitty gritty of why money works. All it goes back to is faith- the Schelling Point. Before fiat currency, and for much of human history, many of the greatest empires were built on gold and silver standards. This didn’t stop them from debasing it time and time again through crafty ways (normally to ward off debt they had to financiers), but generally the Schelling Point was always gold. As in, it was the money everyone used. If you tried to persuade someone to use something else, you’d have to be a good salesman, because there wasn’t anywhere that didn’t use gold. Before gold, salt was a great money, but wasn’t as easy to carry, and you normally needed a lot for it to be worth anything. Gold, for some reason, functioned so perfectly, because there was just enough of it, but still rare, that it could act as a form of wealth storage that absolutely everyone on Earth agreed upon independent of one another. There wasn’t some great salesman who traveled the world four thousand years ago to convince Chinamen, Europeans, Africans, Semitic tribes, the Inca, the Aztecs, or the Maya to use gold.
It just happened. Gold worked. Nothing can explain it, other than faith. Without something functioning as a monetary Schelling Point, there won’t be any faith that wealth can be held, and therefore, we all revert back to the stone age. Faith is what makes money money, and it’s what makes humans human.
The Coming Sovereign Debt Crisis is Still Better Than Bitcoin
The US Dollar, and US Treasuries, are today’s Schelling Point, and have been since 1948. In addition to that, the way central banks function in tandem with commercial banks is ingenious. People do not give Keynesianism enough credit. They figured out how to keep banks so transparent and accountable, while also ensuring that they can become so powerful that even when they do do shady stuff, they can’t get taken down.
Why the current system is better than it has ever been is because there can never really be a clandestine ruler who owns all the gold and creates a monetary problem where he has all the gold, and he has all the leverage. Instead, we all know who has the “gold” - the United States. They have the currency that funds everyone, AKA THE SCHELLING POINT. Regardless of what happens, the US will always be who everyone has to go to to be made whole of their debt. It keeps things as fair as they possibly could be, because the US is in an existential crisis of its own where it has been able to live off of the rest of the world’s productivity while it has constructed, in place of the skeletal remains of its once-vibrant manufacturing industry, a giant, feminized managerial service industry. In addition to that, a people reliant on this very fragile system to keep their life so bovine and easy aren’t really in the best of positions.
Where the system fails, and we won’t talk about it much, is where there has been so much accumulated dollar debt, there is a giant lack of economic growth problem. A great way to see this is to envision yourself in 2004, where growth seems to be skyrocketing, and everything looks magnificent, like nothing bad could ever happen. Then, cut to now, where all that assumed growth is gone. People have forgotten what an economic boom even looks like - all we know is economic stagnation.
That is the issue with, what is known as the Eurodollar Problem (AKA, the Impending Global Sovereign Debt Crisis). This is where crypto worshippers will butt in with that old chestnut, “Bitcoin fixes this!” Boom. Wrong.
Bitcoin Doesn’t Fix This
Bitcoin (and I am using this interchangeably with crypto, it’s all the same scam), past being a monetary god to many of its holders, and easy money to many speculators, doesn’t fix what it was supposedly invented to fix. We can talk about how flawed Keynesianism, Central Banks, and Fiat Currency all are until the chickens come home to roost, but the ability for this global central banking system that purely functioned on faith to go for as long as it has is nothing short of a miracle. The trust has ran out, though, and that’s where we really see it faltering, past the growth problem.
Let’s say the Dollar was gone, though. Either it nebulously “crashes” or the entire world says to hell with the Dollar Standard, and chooses to start using Bitcoin. Now, assuming they do this without any issues, currency wars between the thousands of cryptocurrencies out there, and somehow we magically restore faith and trust in this broken down global financial economy where all parties would have a hard times rebuilding confidence (in other corporations, banks, governments and their ability to honor their contracts/pacts/covenants), there is one massive glaring problem that cannot be avoided:
Bitcoin is not centralized, therefore it will always be owned by separate parties; parties whom are anonymous, suddenly extraordinarily, inhumanly powerful, and have total dominion on all of the planet’s wealth. Uh oh!
There’s no real way to rectify this situation, which is why we would never even attempt this ever. The way the modern economy functions, there has to be transparency, and all cryptocurrency offers nothing but an opaque brick wall where its majority holders will be able to lay claim to the world’s wealth. This is how you get technotyranny where Elon Musks types run everything. Wow! Sounds like a libertarian paradise!
This problem leaves no one accountable as there is no central power that can have some semblance of where this money is, how it can be regulated, how it can be distributed, how it is being spent, and so on. Ultimately, the economy would function completely untrusting of other parties, and uninterested in loaning. Interest rates on loans would be sky high because there’s no way you’d be obliged to honor a contract. You could literally just steal money and run.
In the system we have, the money in your bank account is as transparent as broad daylight. Your bank deposits are literally digits that are created based off of an equivalent amount of central bank reserves. When you withdraw your money from an ATM, all you’re doing is converting those bank deposits into cash. This is why when moronic thieves transfer money from someone else’s account to their own, both banks literally watch as it is happening. The system we have is so beautifully transparent, it has been able to maintain accountability of every party on the planet, from penniless paycheck-to-paycheckers to millionaire tycoons, from small Mom and Pops to giant mega conglomerates. There really isn’t anyway you can improve this system, other than making the surveillance part more efficient, and cutting out the part that makes the system anonymous - paper fiat currency.
Physical cash is basically what Bitcoin replaces. It allows for you to be anonymous, which is why gangsters would always carry cash rather than bank with a commercial bank (or they’d bank with underground banking and shadow banks). In this case, crypto functions very efficiently as a means of hiding wealth digitally.
Fedcoin is Still Better
Cryptocurrency fixes nothing. All it does is offer a bigger problem in place of the dollar and current Keynesian monetary system we have now. Likewise, the bogeyman of Modern Monetary Theory, while it is very real, is not a threat to anyone’s liberties. It is a system that would fail the minute it is initiated due to a laundry list of civil liberty, religious, and existential reasons that have nothing to do with the monetary system. Likewise, if you think commercial banks don’t trust each other, then take away any level of them having control over the monetary system by allowing the government to have theoretically 100% control over money, and those commercial banks are going to pitch a fit. Sorry, but Jamie Dimon isn’t going to just let you replace him with some appartchik. Likewise, the faith that holds up the current system would be annihilated if you literally forced people to use a government cryptocurrency (Fedcoin, or whatever).
Ironically Fedcoin would do much better at repairing the issues that DeFi attempts to fix, which is the debt problem. I’d argue it would collapse the second it was enacted, but theoretically, it prevents there from being clandestine Bitcoin Techno Kings that have effective control over the world’s entire wealth. At least in Fedcoin, you know who owns all the wealth - that’s right, the Glorious State! It’s basically communism without the workingman brotherhood aspect or the really cool aesthetics and military culture. Yeah, just a mix of purgatory and hell, but at least you probably might get Avengers movies or something.
So as you can tell, I’m not the biggest fan of crypto, but the fact we are even discussing monetary solutions says something about the time we are in. We encountered this problem before, when gold was inefficient as a means of transacting globally. Gold could still offer as some solution to restoring trust in the fall of the dollar, but I’m not here to offer a solution, but rather a critique of what would only make the problem worse. We might be able to find something better down the line. For now, it is good to have these currency wars, and as people learn that crypto is nothing more than a fun way to learn Technical Analysis (astrology for men), and not a solution to the world’s deepest spiritual problems, the closer we will get to the bubble finally popping.
Do not listen to doomsayers. Doomsayers always pump fear, and some imminent feeling of destruction, so that you will buy their pet asset, stock, or fund. People who are trying to decipher the truth have nothing to sell, and not much advice to give, and that’s all I’m attempting here. If you want to like Bitcoin and live in a fantasyworld that it is the solution to these problems, then fine, but there’s one thing that is a constant throughout history, and that’s that wealth will always be controlled and sucked on by some government, so at least do your best to have a good, trustworthy, transparent government. Not only that, but take from the good of the dying Leviathan, because he didn’t make it to power without having a few useful tricks up his sleeve.
“Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes.”