Bitcoin’s Philosophy and the Political Promise of Borderless and Resolving Inefficiencies
Most of the literature I’ve read on bitcoin mainly focuses on bitcoin as a store of value, medium of exchange, investment vehicle, shield against government excesses, etc. However, there is less literature on the philosophy of bitcoin and the politics it represents.
Modern political systems have made it harder for individuals to focus on what they are doing. In addition to working hard to create value and store that value for future use, the global citizen must work twice as hard to think about money and how it can be changed to preserve value and/or or increase the value.
This is mainly because political systems are anchored around the control of fiat money and cannot control the temptation to increase supply as citizens bear the burden of rising inflation and cyclical recessions. .
The average global citizen does not have complete freedom to do what they do best because they have to divert their attention to the subject of money. They understand that inflation erodes their purchasing power over time and that they have to spend a significant portion of their income hiring fund managers to invest their money.
Alternatively, they actively invest their money in the markets which is tedious and time consuming. A greater proportion delegate the function by investing their money in financial institutions and financial instruments that rarely beat inflation.
What if there was an effective store of value? Would it free the global citizen to focus on creating value in what they do best?
In my opinion, Bitcoin’s philosophy is based on freedom and the absence of borders. If it ultimately acts as a stable store of value, which it achieved over a 4 year time horizon and failed in that time horizon, the global citizen will have more freedom to focus on what they are doing best without ceding control to a third party. party or spend a lot of time managing their store of value.
Bitcoin is borderless. It navigates through multiple jurisdictions and possibly planets, well, if Elon Musk’s mission is successful. It makes a strong case for addressing global inefficiencies associated with different states using different fiat currencies of varying quality.
For example, the problem of emigration, where people living in countries with bad money move to countries with perceived better money, can be ironed out with the adoption of Bitcoin. For people working in the digital space, cryptocurrency payments (not just Bitcoin) have started to solve the problem of income inequality. Developers, content creators, artists and other online workers have begun to close the pay gap, wherever they are.
In Bitcoin’s philosophy, an individual’s country of birth or residence should not dictate their economic outcome. When working hard to create value, they should be able to store and create value on a relatively level playing field. A truck driver in a country like Nigeria should have a similar level of bottom line as a truck driver in the UK, for example. The value created must be without borders.
The inefficiencies resulting from the differing quality of fiat currencies and government systems should be addressed with wider adoption of Bitcoin. For example, an investor looking to invest in a cafe in a busy city like New York or Nairobi should find it easier to allocate capital to one or the other without worrying about the influence of the fiat currency used in the two jurisdictions or systems of governance that apply. . Bitcoin enables borderless investing without the headwinds associated with traditional financial institutions and systems.
In Zimbabwe, annual inflation was above 250% in July and the central bank raised interest rates to 200% to combat high inflation. What kind of business can thrive in such an environment? I am convinced that there are great companies in Zimbabwe that are solving critical societal problems and that they deserve to be able to access finance at competitive rates. As a result, they would set more competitive prices for their products, which would reduce inflation.
The lack of political influence over Bitcoin’s supply makes it the toughest asset on earth. This means that as adoption increases, the value increases since supply is capped. This eliminates the possibility that political elites could print more as they do with fiat currencies, leading to hyperinflation and subsequent recessions. It also makes Bitcoin a store of value and a trusted medium of exchange. Where am I going with this?
With wider institutional adoption, Bitcoin’s political promise solves inefficiencies. For example, according to the United Nations, the world produces enough food to feed all of humanity. However, waste and inefficiencies in storage and distribution leave an estimated 800 million people hungry or malnourished.
For example, with Bitcoin borderless, investments can be made in regions where there is excess food production at lower cost to improve standards, storage, and distribution channels. This would reduce food waste and reduce food costs worldwide. However, current financial systems make things more difficult due to taxation, currency devaluation and poor access to finance.
This promise of borderlessness is already materializing in the production and distribution of energy. Bitcoin miners invest in regions that have excess electricity generation at low cost and redistribute that value to other regions. Additionally, some miners act as grid stabilizers where they consume excess power when demand is low and switch off when demand is high, helping power generators gain value during power cycles. high and low demand network.
At the macro level, the Keynesian capitalist system that led central banks to print billions of dollars during the pandemic led to the current high inflation environment we experience today. While this has helped people survive, to some extent, during the pandemic, the ripple effects have led to the poor getting poorer and the rich getting richer.
The Bitcoin plebs who understand the philosophy of Bitcoin have accumulated Satoshis at lower valuations since understanding the fundamentals. They are able to quietly store value while focusing on what they do best. They don’t worry about the FED backtracking and printing more dollars, thereby devaluing their stored value. They have become sovereign individuals.
In my article on how Bitcoin helps people become sovereign individuals, I explained the problem of having no boundaries when it comes to spending your value, storing it, and reaching a playground. equal for everyone.
Disclosure: I own bitcoins and other cryptocurrencies.