Bitcoin, Personality And Development Part Three: Bitcoin Truth And Speech

This is an opinion editorial by Aleks Svetski, author of “The UnCommunist Manifesto,” founder of The Bitcoin Times and Host of the “Svetski Wake Up Podcast.”

Part 3, Chapter 4 of the JBP series.

Tyranny cannot feed on truth, for it is poison to its system of lies. In that sense, Bitcoin is “poison” to the “rat” known as the state. — Warren Bitfet, the Bitcoin alter ego of Warren Buffett

The series continues. If you’ve not yet read chapters one through three, you can find them here, and of course read Part One and Part Two of this chapter.

Quotes with no source underneath are attributed to Dr. Jordan B. Peterson.

In Part Two, we explored how Bitcoin helps one enhance their aim and focus their attention on that which matters. This is the only real and lasting antidote to the hopeless helplessness of nihilism.

In Part Three, we’re going to discuss truth, tyranny and the moral obligation we as sovereign individuals have to speak up, as we emerge from this nihilistic world.

The Unholy Trinity Of The State.

In chapter four of “12 Rules for Life,” Peterson informs us of an evil psychological triad that we’re subject to as humans: arrogance, deceit and resentment.

When an individual operates within such a paradigm, or exhibits behavior fuelled by these emotions, their results and their individual orientation are suboptimal.

“It’s part of an evil triad: arrogance, deceit, and resentment.”

They may feel as though they’ve succeeded in the moment, but on an extended timescale, they’ve compromised their position, footing, integrity or their moral compass.

As outlined in Part Two, because we are largely blind, we cannot know what demons or monsters lurk downstream of each such decision or action.

This meta-idea applies to the macro scale. The State is an apparatus who is more blind than the individual, but has more impact on more people’s lives than an individual ever can.

It’s “Unholy Trinity” consists of the:

1. Monopoly on money,

2. Monopoly on violence,

3. Monopoly on morality / justice / law

Combined, this “evil triad” ensures that a territorial operator is insulated from market feedback and thus oblivious to the consequence of their actions and behavior.

Such an ignorant and static structure will slowly but surely transform a territory or society into a tyranny, just like deceit, arrogance and resentment will transform a person into a tyrant toward themselves and those around them.

How does one confront this unholy trinity?

By speaking truth.

Speaking Up

To speak up requires courage, and to have courage requires faith.

Knowing when to speak up requires wisdom, and wisdom requires maturity.

The path to becoming mature requires one to be responsible.

Bitcoin is “responsibility go up” technology.

“Resentment always means one of two things. Either the resentful person is immature, in which case he or she should shut up, quit whining, and get on with it, or there is tyranny afoot — in which case the person subjugated has a moral obligation to speak up.”

Bitcoin is our way of speaking up.

We are no longer content with the lot prescribed to us by the State. As free, mature individuals we seek to bear the responsibility of life upon our own shoulders. We seek to be sovereign.

We are mature enough, technologically speaking, to no longer require large-scale bureaucratic nation-states to tell us what we should think, do, eat, believe or say. As a diverse species, we have the capacity to solve problems that no bureaucrat or committee could ever hope to solve if we are left alone to solve them.

The computer I am writing on is one such example. Think about the complexity required for the circuits firing inside the hardware of this device to not only visually represent the thoughts I have in my head by virtue of me tapping plastic buttons on a keyboard, but to transmit them across time and space on an ephemeral network we call “the internet.” It’s just mind-boggling.

None of this came from the state apparatus. It emerged despite it. There was no central planner, organizer or panopticon. It happened because we were all aiming at things we individually valued.

Humans are capable of so much more when we’re not treated like imbeciles in a cage or rats in a maze.

It’s the moral obligation of those of us who understand this, to speak up, and Bitcoin is that voice in action.

Tyranny Versus Truth

Tyranny feeds on lies.

Tyranny is a map that ignores the territory and when reminded as much, the tyrant first ignores, then actively censors the signal.

Tyranny is a pilot removing the altimeter of the plane when it’s warning of low altitude or imminent danger.

Tyranny is the obfuscation and renunciation of economic consequences resultant from central planning, and their placement onto the populace by means of overt and covert theft (taxation and inflation).

Tyranny is the systematic theft by central planners and bureaucrats bailing each other out with the wealth of the people they purportedly represent.

Tyranny is wilful ignorance and coercion despite market feedback.

Tyranny wants silence. It develops mechanisms to censor signals, speech and action so it can have it.

“Because the consequence of remaining silent is worse. Of course, it’s easier in the moment to stay silent and avoid conflict. But in the long term, that’s deadly. When you have something to say, silence is a lie — and tyranny feeds on lies.”

Holding fiat money, cryptocurrency or any other form of permissioned and “approved” monetary asset or wealth issued by the State and their appendages is simply participation in their game.

It is a form of compliance, and therefore silence. Tyranny feeds on this.

Bitcoin is the antidote.

Tyranny cannot feed on truth, for it is poison to its system of lies.

Bitcoin is that “poison.”

Warren Buffet and Charlie Munger are right when they said “Bitcoin is rat poison,” only they don’t realize the “rat” it poisons is the tyrannical persona and the tyrannical state.

Both need to be cleansed.

#BitcoinFixesThis

Sophistication

Peterson makes the case that the quality of our values and morality are indicators of our sophistication.

I’m here to make the case that a Bitcoin standard may increase our level of interpersonal and social sophistication by enabling the organization of individuals and the world around us in accordance with more clear, precise and functional priorities.

In other words, Bitcoin may help us elevate the maturity of the human race.

This is why I believe it’s the most important invention (or discovery) of our lifetimes, and perhaps for centuries.

“Our values, our morality — they are indicators of our sophistication.”

Bitcoin will bring forth the fusion of the studies of matter and what matters.

We covered this in chapter two of the series.

It will open the door once more to the now-taboo non-empirical domain of value and quality. It will give us a chance to enhance and elevate our moral sophistication and thereby become better human beings.

And no — that will not happen in a straight line either. As humans, we shall make mistakes along the way, many of them. But fortunately, on a Bitcoin standard, we are subject to faster feedback loops and a stronger signal, so can more accurately course correct.

In the absence of a controlled money-issuing apparatus, the difficulty (cost) to hide or socialize losses is too great. One must learn the lesson, and in the future be more prudent or more accurate in their aim.

Which brings me to my next point, and one which we’ll explore further in Part Four of this miniseries.

Consequence

Bitcoin enables honest feedback in the game that 8 billion hairless apes are playing on a pale blue dot floating around in space.

A perfect Utopia will never exist and what Bitcoiners, at least those whose words are worth a damn, mean when they talk of a better world is not some panacea to all ailments such that everything is good for everyone all the time.

This isn’t some Marxist fantasy with Ethereum unicorns.

In fact, Bitcoin’s most important impact on society is the reintroduction of economic consequence. This will more often than not be painful and ugly but necessary.

“We can’t just get the one particular thing we especially just want now, along with everything else we usually want, because our desires can produce conflict with our other desires, as well as with other people, and with the world.”

On a Bitcoin standard we will get a blend of what we want, and more importantly, what we actually need, which are often two different things.

We will have conflict, but we’ll have no choice but to work it out on a more level playing field. At the very least, the systemic possibility of cheating by one player to the detriment of the others, without their knowledge or consent, dissolves. That alone is worth fighting for.

These conflicts will force us to prioritize, and take into account the market of values, which reminds me of John Vallis’s masterpiece “Money Messiah” in which he makes the case for:

Hierarchies as a prioritization and aggregate of values.The market as an aggregate and prioritization of hierarchies.

This rings profoundly true for me, and I suggest you read that piece once you’ve finished this one.

In Closing

In a social sense, we are playing a game with a score, and that scorecard is determined to a large degree by how well you “play” in the “market.”

I don’t just mean the quantum of money. Winning occurs across multiple dimensions. A stay-at-home mom can win the game of life with a lot less money than a stressed out, childless female millionaire CEO with menopause can, after she traded her youth for the illusion of “career success.”

Therefore the game of life is like an aggregate of aim, focus, attention, consequence, feedback and adaptation within the context of internal and external value hierarchies.

It’s complex, but the more sophisticated you become at playing, the better your results, or the better your overall score.

“We succeed when we score a goal or hit a target. We fail, or sin, when we do not (as the word sin means to miss the mark). We cannot navigate, without something to aim at and, while we are in this world, we must always navigate.”

For this sophistication to enhance and not distort and confuse the system, it is critical for a society to have a rules that the participants are all subject to, with a functional, scoring mechanism (unit of account) that is transparent and un-fuck-with-able.

This is the case for Bitcoin.

On that foundation, on that standard of truth, we will become better through each successive generation. I’ll see you in Part Four to close this chapter out.

This is a guest post by Aleks Svetski, author of “The UnCommunist Manifesto,”, founder of The Bitcoin Times and Host of The Wake Up Podcast. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

Bitcoin Blowback: A History Of Dollar Hegemony, Economic Warfare And A Bright Orange Alternative

Abstract

The United States dollar dominates world commerce. In 2019, it made up 88% of global trade, and no other currencies came close. This dominance gave the United States power over any other country that exports anything from anywhere. For example, due to the mechanics of the petrodollar, oil is settled in dollars regardless of where it comes from. Consequently, not only does this frustrate U.S. rivals by making them vulnerable to trade sanctions, but ultimately causes them to craft savvier innovations to conduct commerce. This is what the Central Intelligence Agency (CIA) calls blowback.

Blowback (a term which originated within the CIA), explains the unintended consequence and unwanted side effects of a covert operation. The effects of blowback typically manifest themselves as “random” acts of political violence without a discernible, direct cause; because the public—in whose name the intelligence agency acted—are unaware of the affected secret attacks that provoked revenge (counterattack) against them.

This article will chronicle the history of America’s dollar hegemony, the strides taken to achieve that position, and the unintended consequences that followed to this day. The main goal of this piece is to demonstrate how much of a fool’s errand it is for a single nation to maintain supremacy over the world reserve currency, and how the world is reframing the technological innovation of money as we know it. The short answer: #BitcoinFixesThis.

The Roots Of Dollar Hegemony: Economic Warfare And Debt As A Weapon

“Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some.” – John Maynard Keynes

Even before the dollar became the world reserve currency, America was able to wield it as an economic weapon and make other nations abide by its monetary policy. The dollar as a monetary system and network is unfair to those who are forced to abide by its dominance. However, history shows us that a single world currency was the best solution the global economy needed, mostly to win wars. It’s crucial to understand how we got to this point. Let’s look at the roots of how dollar hegemony came to be.

The root cause of other countries depending on the dollar was due to their decision to print more money to fund war efforts. Arguably, the only thing war is good for is printing more money. World War I demonstrated that Germany was forced to destroy their currency through hyperinflation. The German Deutsche mark was fully pegged to gold until it entered the First World War. Going to war is expensive, and printing unlimited amounts of money was (is) the only way Germany could finance their military actions. Economist Carl Hellfrick stated in 1915, “The only way to finance the cost of war is to shift the burden into the future via loans.”

Germany (and as every other government state does during times of war) defended their monetary policy by saying it was an “economic necessity,” and that once they secured victory over Europe, there would be an economic boom as they ruled over resource-rich nations and charged reparations to the countries they defeated. A fair argument in theory, but even the Marxist theorist Ed Bernstein understood in 1918 that “there’s a point in which printing money destroys purchasing power by causing inflation.” A Marxist, of all people!

When Germany lost the war, they were forced to pay reparations, which was paid for with borrowed money to pay on top of the debt they were already in. By 1923, the German economy went from having 8.6 billion to 40 quintillion Deutsche marks in circulation, all from printing to fight the war. Germany received between 27 and 38 billion marks in loans during the reparation period. By 1931, German foreign debt stood at 21.514 billion marks, with the main sources of aid stemming from the United States.

As for the German people, the rich got richer, while the poor suffered. The German middle and lower classes were left with no other choice but to barter for actual goods because their money became worthless. The rich on the other hand prospered because they owned assets and financed it with debt, which became worthless since they could easily pay it off due the hyperinflation.

Even Britain, who held the dominant currency at the time, began borrowing money for the first time to fund the war. Their banker of last resort was the United States of America, a foreshadow of the dollar hegemony to come in the next war. America used its monetary policy as a war strategy by forcing both their opponents and allies to bleed themselves into bankruptcy. As the economies of warring nations were destroyed, so were any chances of a military victory. In Germany’s case, the economic unrest from hyperinflation was a catalyst to the rise of populism, and eventually Hitler’s Nazi regime. Although a dependency on a single fiat currency was helpful in economic aid and cooperation in wartime, the strategy of dollar hegemony as a weapon would lead to more unintended consequences (blowback) in the future.

Bretton Woods: Dollar Hegemony Comes To Fruition

Since the end of World War II, the dollar has been the dominant leader in international trade and cooperation. It officially began in 1944, where 45 allied nations met in New Hampshire at the Bretton Woods conference.

The conference was an effort to avoid the consequences (blowback) that ensued following the end of WWI during the Treaty of Versailles in 1919. Britain owed the U.S. substantial sums of debt by the end of the war, which could not be repaid because the funds were used to support allies like the French. Since the Allies could not pay back Britain, Britain could not pay back the U.S. In response, it was decided at the conference in Versailles that Germany would make reparations to the French, British, and Americans for the debts. However, it was unrealistic for Germany to meet these demands having just destroyed their economy through hyperinflation to fund war efforts. If Germany couldn’t pay up, neither could the Allies. Thus, many nations’ “assets” on bank balance sheets internationally were actually unrecoverable loans, leading to a banking crisis in 1931. Continued insistence by creditor nations for the repayment of Allied war debts and reparations caused a breakdown in the international financial system and a world economic depression.

To avoid similar blowback, the political basis for Bretton Woods consisted of two key conditions: a failure to deal with economic problems after the First World War had led to the second and the centralization of power in a small number of states. The representatives of each nation agreed to peg their currencies to the U.S. dollar, while the dollar would be pegged to gold (hence, the gold standard). Similar to the First World War, America acted as Britain and France’s bank by selling them arms and supplies and lending them money to fight WWII. Once again, the Allies turned to America to help rebuild their countries after the war. Most of this financing was paid for in gold, and the U.S. became the dominant superpower by accumulating two-thirds of the world’s gold reserves from the allied countries.

As the dust cleared from the battlefield, the dollar was the most stable and plentiful currency remaining and the U.S. became the biggest economy on the global stage. America became the bank of the world as nations continued to deposit their gold reserves at the Federal Reserve in exchange for dollars (or treasury bills). Countries used these dollars to store their value by buying U.S. debt à la treasury bills. This created a U.S.-backed “gold standard” and worked fairly well with a gold-pegged dollar. This sound monetary policy created a golden age of capitalism, resulting in a post-war boom as trade flourished via a universal agreement for scarce money.

As global trade grew, so did the use of the dollar for conducting business to regrow the global economy. Even after the U.S. went off the gold standard in 1971, the dollar still remained the global currency of choice. But why?

Josseled In The Jungle

With the privilege of holding the world’s reserve currency, America continued to assert its dominance through funding war efforts. In 1965, the U.S. quietly launched a bombing attack in North Vietnam. For the next three years, the U.S. continued dropping bombs on the Ho Chi Minh trail under what would be revealed as Operation Rolling Thunder. The Vietnam Conflict was bloodier, longer, and much more expensive than expected. Naturally, the U.S. began rapidly borrowing money to fund the war and turned the money printer back on.

Having suspicions of having their gold reserves rehypothecated and the incessant printing of dollars caused other nations to worry about the state of America’s economy. Fearing debasement of the dollar, the Allies began requesting to have their gold reserves back. France’s Charles DeGaul was most aggressive on this by converting $150 million of reserves back into gold and threatened another $150 million. Consequently, this triggered a bank run on Fort Knox as more nations converted into gold, and the U.S. began making the same mistake Germany did as they continued to print more money and watch their ice cube of gold reserves melt away. In reaction to the blowback, Nixon “temporarily” suspended the convertibility of dollars into gold in 1971, and the dollar officially became a fiat currency. The hegemony of the U.S. dollar was hanging in the balance.

Enter The Petrodollar

In 1974, the Petrodollar was created as a last-ditch effort to maintain the dollar’s dominance. The Nixon administration made a deal with Saudi Arabia where they would only allow other countries to buy oil from them in U.S. dollars. In return, the U.S. would protect them by providing military support and selling them weapons. Furthermore, unbeknownst to the American public, America would provide Saudi Arabia preferential deals on treasuries if they promised to use dollars to buy back U.S. debt. This arrangement led to the formation of the Organization of the Petroleum Exporting Countries (OPEC) where the combined parties controlled 80% of the world’s oil reserves in dollars and would rush that profit back into U.S. treasuries—or a form of Petrodollar “recycling.” With OPEC, the U.S. was allowed to continue running up ginormous deficits to finance social welfare programs and the Military-Industrial Complex. Due to this newly created artificial demand for dollars, America could not devalue her currency. The dollar’s exorbitant privilege of hegemony over global economic cooperation was restored once again.

America’s position of dollar hegemony was threatened most notably during this time by the Saudi Arabian oil embargo in October 1973. The U.S.’s stranglehold on dollar supremacy was nothing compared to Saudi control of the oil supply. Although it only lasted until March 1974, the embargo had a massive impact on the world economy as gas prices soared from $1.39 in 1970 to $8.32 a barrel by 1974. This shock strengthened the bond between three main sectors: big corporations, international banks and the government. These sectors comprise the corporatocracy and were the catalyst of many policy changes and how the global economy would view oil moving forward in order to maintain the flow of petrodollars back into the United States.

JECOR

In addition to OPEC, America and Saudi Arabia had another arrangement. To avoid another economic catastrophe, the U.S.-Saudi Arabian Joint Economic Commission (JECOR) was formed as a strategic agreement for American corporations to provide infrastructure projects in Saudi Arabia. Former reporter Thomas W. Lippmann describes the agreement as such:

“JECOR’s mission was twofold: first, to teach the Saudis—who had no tradition of organized public agencies—how to operate the fundamental bureaucracy of a modern state; and second, to ensure that all the contracts awarded in pursuit of that mission went to American companies. JECOR would operate for 25 years, channeling billions of Saudi oil dollars back to the United States, but would attract almost no attention in this country because Congress ignored it. The Saudis were paying for it, so there was no need for US appropriations or congressional oversight.”

The interest Saudi Arabia made in their U.S. treasuries would be paid to American corporations to build their new infrastructure and paid for by the treasury department. This would reinstall the dollar’s dominance and strengthen American and Saudi relations by liberalizing the Saudi Arabian economy via the amount of money the oil embargo produced for the Saudi kingdom.

By the end of Bill Clinton’s presidency, JECOR discontinued operations. Saudi Arabia is now, by all technological measurements, a fully modern country. However, this new relationship with Saudi Arabia would complicate U.S. relations with neighboring countries in the Middle East and determine foreign policy decisions from here on. Dollar hegemony was restored, but it would not remain without its consequences.

Through strengthening relations with the Saudi royal family, the U.S. made an ally out of Osama Bin Laden, who had close ties with the Mujahideen, the guerrilla-type militant groups led by the Islamist Afghan fighters in the Soviet–Afghan War. In what would be documented as Operation Cyclone, the CIA would go on to train and fund the Mujahideen to fight the Soviets in Afghanistan. Although these efforts aided in the collapse of the Soviet Union in the 1990s, members of the Mujahideen would later join al-Qaeda and participate in the attacks in New York on September 11, 2001. Countless other unintended consequences (blowback) have followed, all for the sake of maintaining the economic interests that maintain the petrodollar and solidify America’s dollar hegemony.

How The Dollar’s International Transactions Work

Once the U.S. forced countries to settle crucial commodities like oil, coffee, and gold in dollars, the world became used to this coercive form of business. The dollar became very liquid, making it easier than any other currency to buy and sell goods all over the world. Bitcoiner criticisms of centralization and fiat chicanery aside, the U.S. banking system is still very efficient to this day. Thus, both its liquidity and banking efficiency are the two key points that make it easier and cheaper to buy and sell in dollars, but what exactly are the mechanics of the dollar hegemony system that makes it so efficient?

Imagine a Canadian Lumber Company sells boards to a French Home Builder. The seller’s bank (Canada) and the buyer’s bank (France) settle the payment in dollars via correspondent banks in the U.S. The correspondent banks have accounts with the U.S. Federal Reserve. The money is transferred seamlessly between the correspondent banks’ Fed accounts because their status as correspondent banks means they are seen as safe counter parties. In the eyes of the United States, the use of all the correspondent banks in other countries means that every transaction is being conducted (technically) on U.S. soil, giving it legal jurisdiction and compelling foreign countries to abide by its laws on money laundering and corruption.

The Dollar As A Weapon Today

The dollar still dominates global trade and causes friction between the U.S. and other nation states. The only benefactor of this system is America and her allies. You can see this in the standoff between the U.S. and Iraq. In a Wall Street Journal article by Ian Talley and Isabel Coles, it describes the following scenario: Iraq says it wants to throw U.S. troops out of the country, since the U.S. has occupied the country since the second Gulf War. In response, the U.S. can use the dollar as a weapon and just cut Iraq off from receiving dollars and remove Iraq from the U.S. monetary system entirely. One of the main reasons the U.S. invaded Iraq in the first place was because former Iraqi leader, Sudam Hussein, priced oil in euros instead of dollars. This protest was a direct threat to the dollar’s legitimacy.

Since the attacks on 9/11, the U.S. uses the power of the dollar to advance its foreign policy goals. The idea? Cut out the sources of funding for terrorist organizations. The U.S. uses its control of the dollar to

1. increase surveillance of global money flows, and

2. curb financing toward bad actors.

The U.S. accomplishes this by imposing sanctions on rivals. Under this system, if a business or country tried to trade with a sanctioned entity in dollars, the U.S. has the power to cut off their access to U.S. currency. However, other countries have been building workarounds.

Resistance To Dollar Hegemony

We have now arrived at the inevitable blowback of the dollar’s dominance: resistance. Some European Union countries oppose the U.S. sanctions against Iran. Sanctions on Iran were put in after the U.S. withdrew from the 2015 JCPOA (Iran Nuclear Deal) in 2018 and included banning dollar transactions with Iranian banks. As a result, the EU developed a euro-backed system, the Instrument In Support of Trade Exchanges (INSTEX) without having to send money across borders. However, the system didn’t prove to be as successful as planned and was disbanded.

In retrospect, the dollar has had a decent run for over half a century as the global reserve currency.

• The U.S. makes up 20% GDP.

• 40% all debt issued is in the U.S. dollar.

• 60% of exchange reserves is in U.S. dollars.

However, we can expect this to drop. Russia just announced they will completely remove U.S. dollar assets from its National Wealth Fund. In a research note after the announcement, Russian President Vladimir Putin stated that their messaging is “’we don’t need the U.S., we don’t need to transact in dollars, and we are invulnerable to more U.S. sanctions.”

Russia’s central bank governor, Elvira Nabiullina, told CNBC that digital currencies will be the future of financial systems because it “correlates with this development of digital economy.” Russia aims to have a prototype of their digital ruble out by the end of 2021, a sure sign that other countries suffering from the dollar’s policy will follow in Russia’s footsteps. Countries victimized by sanctions and strict trade laws will create alternatives beneficial to them.

No longer are foreign countries buying the majority of U.S. treasuries. The buyer of last resort is the Federal Reserve. The Fed will continue lowering interest rates and treasury yields will fall until monetary manipulation takes place and owning U.S. debt will become unattractive to foreign countries. On the domestic level, printing and monetizing debt will continue and asset price inflation (as well as health/welfare programs) will price out the middle class and poor. As for America’s economy, the Triffin Dilemma states holding the reserve currency means there will be less jobs at home since the U.S. exports cheap labor and more imported goods. America is dependent on the rest of the world for goods and is much less self-sufficient. As the reserve currency continues to inflate asset prices and dilute the value of investments, the only rational economic decision for American investors will be to store their wealth in bitcoin.

China still exports to the U.S. but doesn’t recycle their dollars like Saudi Arabia. They are losing faith in the value U.S. treasuries hold and are selling them to fund their own economic imperial efforts such as the Belt and Road initiative. The dollar hegemony has created geopolitical and economic blow back where more countries are doing business with each other outside of the dollar system.

Eventually, currency wars lead to real wars. China and Europe are competing with the U.S. by pumping more money into their systems. Every country is incentivized to devalue their currency to stay competitive. It’s a race to the bottom: the beggar via neighbor policy. Eventually, a country will run out of ways to weaken the currency, and hyperinflation is, therefore, inevitable. It is only a matter of time that every country will react to the dollar’s dominance and search for a greater alternative.

Bitcoin: The New Monetary Hegemony

In the future, the U.S.’s monetary hegemony faces a much larger threat, now that it’s victim-countries have found a new tool to chip away at the power of the dollar: bitcoin. The points mentioned above demonstrate how other nation states and Americans themselves will, and are, beginning to lose faith in the dollar.

The area in the world that is primed for using bitcoin as a monetary escape is Central America. With countries like El Salvador adopting bitcoin as legal tender, people can trade openly and freely anywhere in the world without having their savings diminished before their eyes. In the Kingdom of Tonga, remittances make up 40% of their economy but, in real terms, that’s approximately 20% after fees are paid to Western Union. Bitcoin will enable the elimination of all fees and bring more money into the pockets of the country’s people and yield real economic growth and prosperity. Talk about an unintended consequence.

Bitcoin has rules, not rulers. Instead of a nation state hegemon, there are strict rules of the Bitcoin network’s protocol that all participants of the network must abide by in order to participate in the world economy. These characteristics are what make bitcoin the ultimate form of blowback against dollar hegemony.

If the power of the dollar falls, it could hurt the United States’ ability to control the global trading system. All efforts before bitcoin have been proven futile. Now, with a completely open, permission-less, censorship-free, confiscation-resistant monetary network, any and all countries around the world can trade with each other.

Like the dollar, bitcoin is an economic weapon. Unlike the dollar however, bitcoin is a weapon of self-defense. Before bitcoin, countries had no other viable choice but to peg their economies to the dollar and depend on America for economic cooperation. As mentioned above, this has led to countless examples of economic hardship. Bitcoin gives people an option. Opting into the Bitcoin network guarantees the protection of one’s wealth and property regardless of any entity. Trade within the Bitcoin network cannot be stopped, and economic cooperation can flourish. Bitcoin is the inevitable blowback the world has desperately needed for over a century. Now, the wait is over.

Special thanks to @newzealandhodl.

This is a guest post by Phil Gibson. Opinions expressed are entirely their own and do not necessarily reflect those of BTC, Inc. or Bitcoin Magazine.