America Must Lead the Way to a Bitcoin Standard
This brief article is a response to Coinbase Brian Brooks article published in the New York Times “America Could Lead the Transition to a Digital Currency Reserve.”
Nearly 50 years ago the United States abandoned the gold standard. And suddenly, for the first time in human history every country became part of a worldwide experiment in fiat money. Unfortunately, history has not been kind to fiat. Each has failed either in complete collapse or through an unwinding to a commodity based currency. In the past, these traumatic financial events were local. Today, our interconnected banking system and economy creates planet wide systemic risk.
We need not look too far back to see how risk rapidly spreads resulting in cycles that have long term negative effects primarily impacting working men, women, and their families. Quantitative easing policies in response to the 2008 financial crisis have flooded the market with asymmetric easy credit fueling one of the largest multi-asset class bubbles in modern history. Despite this flood of money, historical low interest rates, strong GDP growth and record corporate profits, American workers struggle with the rising costs of living. They are forced to take on an inordinate amount of debt for education, housing, healthcare and transportation. Americans are struggling to save.
The United States need not remain in this precarious position. Instead, it has been presented with the opportunity to return to a sound monetary policy. A policy that allows men and women to work and grow their savings without resorting to speculation in equity markets. A policy that rejects rampant money “printing” and does not accept inflation and wage stagnation as par for course and a means to suppress citizens. One that does not create a lender of last resort for the banking industry allowing trillions of dollars of accumulated wealth to be vaporized overnight. A policy that must ensure the longevity of America’s achievements by gifting future generations with a commodity based currency: a monetary policy that is based on a Bitcoin standard.
Committing to Bitcoin would harken back to a time when wealth and prosperity emanated from the working class. A time less marred by warfare and one of technical and artistic genius. A Bitcoin standard is based on hard money. This eliminates fragile, dangerous boom and bust business cycles, mutes systemic imbalances, and allows the market to determine how money is valued and used. Bitcoin will unleash a wave of innovation yet it will not be confined to America’s borders. It will impact every corner of our shared world. Bitcoin is not just a financial revolution but one that will deeply affect how people value time — our most precious resource. It is an economic juggernaut and a social revolution with many yet to be discovered opportunities.
America’s history is one of fantastic discovery, growth and wealth immensely benefiting the country’s citizens. A Bitcoin standard positions America upon the cusp of another wave of prosperity.
Many in the nascent cryptocurrency industry tout the power of Bitcoin’s “blockchain.” However, the thousands of tokens in Bitcoin’s wake do not portend another new economic system nor sound money. They simply provide novel ways of accounting for value or information. Most are centralized, many are unproven, nearly all are vulnerable to malicious attacks. Though a few will likely become contributors to the ecosystem they cannot surpass nor supplant the immense amount of work that has allowed Bitcoin to grow year after year, uninterrupted, surviving a multitude of crashes and now drawing even Wall Street into its orbit.
Bitcoin’s impact cannot be understated. Bitcoin is not just the first blockchain. Bitcoin is an expression of property rights and explicitly the right to sovereign, apolitical money. Bitcoin has risen naturally sans government decree and is powered by a social layer that cuts across all demographics. Bitcoin is free speech encoded in math. Bitcoin is a gift to the children of this world, a promise to cultivate an economy that will reward their hard work.
However, this is predicated on working together to make Bitcoin the foundational element of America’s economy.
Fortunately, the United States has led in regulatory clarity but time is against us. The financial horizons are darkening. We cannot afford a catastrophic economic collapse without adequate preparation for the aftermath. Other countries are exploring their own cryptocurrencies yet these are no different than paper money. To encourage America to do the same is negligent and shortsighted. Bitcoin is already nascent money — a protocol layer upon which we can build an entirely novel yet familiar economic system based on sound money. It is proven with an ever expanding ecosystem. Perhaps more importantly it will not debase the earnings of its citizens and is resistant to collateralization and fractional reserve banking.
America is in the driver’s seat and can lead the world into an era of prosperity. A period where anyone, anywhere can buy or sell goods and services in a completely frictionless manner. A period where the unbanked can express financial freedom through a Bitcoin wallet application. A period where banking belongs to people and where we the people not Central Bank committees are the drivers of the financial system.
The world is under pressure. America must seek to to adopt Bitcoin as its standard — free from political and regulatory shackles. It is the only proven global cryptocurrency that meets the needs of the world. The United States can lead by example, cultivate Bitcoin and build a prosperous, vibrant economy based on sound money.
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