What everyone should be reading right now are the written testimonies (linked on the Hearing agenda page) presented yesterday to the United States House Committee on Financial Services. What everyone should be watching right now ICYMI is the full day of testimony, questions and answers.
In particular, I salute Meltem Demirors, Chief Strategy Officer of Coinshares, whose written statement and oral presentation distinguished Bitcoin from Facebook’s proposed Libra blockchain token in clear and compelling prose. These differences are enormously positive for real cryptocurrencies and it seems from yesterday’s hearings that the vast majority of the Committee can see the distinction viewing bitcoin POSITIVELY.
It was clarified that Bitcoin is a network that is open for everyone and anyone to use. It is not controlled by any centralized entity, and cannot be altered or tampered with or restricted by any single entity (or group colluding to attack the network).
Concerns with Facebook have highlighted the benefits of having a scarce digital bearer instrument NOT “backed” by anything or anyone. Libra, by contrast seems to be an investment product like an ETF or mutual fund where the Libra Association managing the collateral pool should be regulated as an Investment Manager under the 40 Act, not to mention the regulatory regime that should apply to the custodian of sovereign currency and assets received and held in exchange for Libra.
Bitcoin (and similar cryptocurrencies) are a new kind of commodity. People who buy bitcoin are not trusting any company or particular group of individuals. People are trusting math, code and a decentralized system outside of our legacy financial system. The network is supported by a voluntary group of programmers, users and capitalist entities working in their own self-interest. The system is brilliantly designed through cryptography and game theory to be self-sustaining, immutable and censorship resistant.
Bitcoin’s price over the past ten years reflects the increase in TRUST in the Bitcoin network and system, an increase in adoption and an increase in use.
Bitcoin’s value measured in price is what people are willing to pay. Bitcoin is limited in supply - only 21 million will ever be created. It takes work and capital to create a bitcoin (through the electricity intensive computing process called mining). Bitcoin is fungible. Bitcoin is divisible to 8 decimal places - therefore transactions can occur as small as 0.00000001 BTC (called one “satoshi”). If bitcoin succeeds as a dominant global currency, expect to see prices denominated in satoshis when the cost of a bitcoin in fiat currency is significantly higher.
Since bitcoin is digital, it can support micropayments between machines and can travel anywhere in the world instantly at low cost. This is money for the internet, money for the digital age. Bitcoin’s open, global, decentralized and permission-less nature gives the world a “public good” and virtual infrastructure useful for trade, collaboration and communication on a scale and in a manner unprecedented in human history.
The Bitcoin adoption curve looks like all other technology adoption “S” curves. Price volatility and exponential rises should be expected to continue over the next ten years, and amplified if we have the added catalysts of traditional asset classes declining, or worse - sovereign and bank defaults, and currency failures.
Congresswoman Ayanna Pressley (D) from Massachusetts made one of the most startling and perceptive comments yesterday. She said that Libra was being introduced because the Federal Reserve has failed. Monetary policy has failed. It was suggested that the US dollar also has indeed failed to keep up with the times (which is why we see Central Bank digital currencies, CBDC, being developed).
What I saw yesterday was that Representatives from both sides of the aisle can come together in defense of liberty, fairness, equal opportunity, innovation, and accountability. Thank you, Bitcoin. Thank you, Satoshi (and Facebook!) for helping us remember that we in America have values in common no matter our political affiliation - values that will be protected and brought to bear for a brighter future.
NOTICE & DISCLAIMER:
All #fhomoney content here and elsewhere is for educational and entertainment purposes only. I do not guarantee the accuracy of any information posted, linked to or shared. Pretty please (with sugar on top), D.Y.O.R. - DO YOUR OWN RESEARCH. As a nascent technology and emerging asset class, all things “crypto” are extremely RISKY and VOLATILE. I do not accept sponsors, advertising or compensation of any kind for what I share or discuss.
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