Bitcoin is more transparent than the Federal Reserve.
I was reminded of this yesterday when Federal Reserve Chairman Janet Yellen spent time ranting against Bitcoin at a Canadian finance conference. She went through the normal anti-Bitcoin rhetoric made popular by Economist Nouriel Roubini, which includes “Bitcoin is a bad store of value,” “Bitcoin is slow,” and “Bitcoin is not accepted anywhere.”
The funny thing is that people have been saying these negatives since the inception of Bitcoin almost ten years ago. We have to remind ourselves that Bitcoin is software and continues to improve over time. It is a better store of value, faster, and accepted in more places than ever before. But the most important thing is that Bitcoin has two things that no other currency in the world has: Decentralization and Transparency.
- Bitcoin is decentralized — No one controls Bitcoin or can change Bitcoin’s design without consensus of the network. This lack of centralization creates a more aligned incentive system that is likely to lead to increased global equality over time.
- Bitcoin is transparent — The monetary system design of Bitcoin is public. We can easily find every transaction ever executed since the day Bitcoin launched, we can see what is happening today in real-time, and we know the disinflationary monetary schedule of the future. This helps us (1) understand what is going on and (2) quickly identify if something didn’t happen that was supposed to.
The transparency of Bitcoin is in direct conflict with the Federal Reserve. Not only do we have no transparency into historical transactions in the fiat currency system, but we don’t even know how much money is being printed today. Additionally, we have no insight into future monetary policy decisions, nor have we ever had an audit of the Federal Reserve.
Frankly, how do we know the Federal Reserve is doing what they say they are doing? We don’t.
Historically, this lack of transparency has only been an issue for the fringes of society. It was reserved as a talking point for anarchists and conspiracy theorists. But now that the general population is being exposed to a viable alternative currency that provides full transparency, more people are asking the question — Why do we trust a system that refuses to provide transparency?
The beauty of Bitcoin is that it doesn’t need to replace the fiat monetary system. It is an alternative option that gives people choice. These individuals will eventually choose Bitcoin if they are looking for (1) transparency, (2) a deflationary system, (3) uncensorable & non-seizable asset or (4) a digitally native currency. Unfortunately, the Federal Reserve provides none of these.
The fact that Janet Yellen has to answer questions about Bitcoin every time she takes the stage proves that Bitcoin is already winning. If the digital currency was not viewed as a threat, the establishment wouldn’t feel compelled to verbally attack the idea or defend the status quo.
Remember, the US dollar’s existence as a non-commodity backed currency is 47 years old. The average life expectancy of a fiat currency is 27 years and almost every man-made currency in the history of the world has eventually failed. It would be unfortunate if the US suffered because our leadership was unwilling to innovate as a step towards retaining our global dominance.
Long Bitcoin, Short the Bankers.
