Calculated risk-taking, bitcoin crude oil contracts, stablecoin backing, and SegWit:LN::Taproot:Taro
A discussion of four major themes in bitcoin front of mind.
When bitcoin is referred to as solely a currency and its failures as such are identified, critics are missing the point of this network entirely. Yes, the bitcoin software allows for transactions, and using a wallet to send or receive bitcoin certainly makes it feel like a currency, but bitcoin’s identity extends far beyond the transactions that fill its nearly half terabyte blockchain. Today’s note is a bitcoin state-of-the-asset report, traveling through four important narratives, each individually supporting future growth.
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The hypocrisy of bitcoin critics, especially from American and Western European politicians, can be, in a word, absurd.
Crude oil contracts denominated in bitcoin will be among us soon.
Terra’s stablecoin purchasing bitcoin as a reserve asset is groundbreaking and a classic example how bitcoin already serves as the world’s digital reserve currency.
Lightning Labs has blown my mind with its Taro protocol announcement today.
A most powerful financial tool
Do you like The Onion? Their fictitious headlines make me laugh, personally. It is troublesome, however, when headlines and tweets that should be satirical are instead delivered with exacting purpose. Congresswoman Norma Torres, from California’s 35th district and serving since 2015, made one such announcement recently:
Congressman Rick Crawford, from Arkansas’ 1st district and the other side of the aisle, joined Torres in an announcing an abomination of a bill about El Salvador’s bitcoin adoption. Our policy makers now want to mitigate potential risks to the United States financial system because a small Central American nation, already without its own currency, decided to employ a computer network merely alongside the United States dollar? This bill echoes of the IMF’s earlier critiques of El Salvador’s decision, with no balance in assessing the potential benefits.
The proposed “Accountability” Act is part of an agenda to discredit the efforts of millions choosing an algorithmic monetary policy over central banker and government promises to maintain purchasing power. Why a Democrat from California and a Republican from Arkansas feel the need to bully a small nation’s courageous economic experiment would be beyond comprehension if I was not so cynical as to think that Torres and Crawford have lobbyists drafting this legislation for them. Take your own guess on who these lobbyists represent, but I doubt they are citizens from California’s 35th district or Arkansas’ 1st.
My primary concern with the bill’s announcement is the characterization of El Salvador’s actions as a “careless gamble.” President Nayib Bukele is certainly a maverick, and I would not even disagree with describing his move as a gamble. But it is far from careless. El Salvador is long without its own currency and monetary policy. Its people use the dollar. Bukele has introduced an economic environment that allows for simultaneous usage of both the dollar and bitcoin. He’s investing the country’s reserves, in relatively modest amounts, in bitcoin, while also investing in mining expeditions that harness geothermal power from volcanoes. Does any of this sound careless? I believe it sounds calculated, and to quote Alex Gladstein’s new book title, these politicians must immediately check their financial privilege. As a collective of investors, businesspeople, and citizens, it is our responsibility to repudiate bitcoin critiques cloaked as protecting human rights. Whether Bukele is a saint or another headstrong, misdirected global leader is irrelevant—we should encourage the experiment and eagerly await any empirical data that proves it to be a failure or success.