The war of developers, hash rates, and internet money
Recently, Bitcoin and the whole crypto community have been making headlines with world leaders starting to pay close attention.
It started in June when China called Bitcoin a safe haven asset which is important news because prior to that, many headlines frequently surfaced about China banning cryptocurrencies. China currently has 60%+ of the Bitcoin mining market in the world.
Just before David Marcus of Facebook and Libra sat before congress to answer questions, Donald Trump, the current President of the United States tweeted the below about Bitcoin and then went on to negatively speak about Libra.
I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air. Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity….
— Donald J. Trump (@realDonaldTrump) July 12, 2019
The very first sentence of this tweet, which he says Bitcoin is not money, is an interesting message. There are two ways to look at money, either you believe money is something that government says is money or money is what the market decides is money. To me, I am of the belief of the latter that the market decides what it will take in exchange for something else and what it believes is the best place to store their wealth.
About a week later the United States Secretary of the Treasury, Steven Mnuchin did an interview on Squawk Box which he said that cryptocurrencies are used for illegal activities and argues that cash does not. (Joe is the man)
— Squawk Box (@SquawkCNBC) July 18, 2019
About a week prior, a ship owned by JP Morgan was seized with $1.3 billion worth of cocaine… We both know this is one story among countless others that involve parties using cash for illegal purposes. Just think to yourself if you were dealing in illegal activity. Would you rather use physical cash which is hard to track and easy to use or Bitcoin which has the ledger publicly stored to anyone to see? This interview is actually a comical representation of how stupid some politicians think we are.
One of the best tweets came from Jason Choi who simply summed up US vs Asia in regards to crypto:
In the past month…
– SG gov proposes friendlier crypto tax
– Korea's Kakao launches SC chain
– Hangzhou recognizes Bitcoin as property
— Jason Choi (@mrjasonchoi) July 19, 2019
Some more recent news in regards to this includes:
- “Japan’s government is leading a global push to set up an international network for cryptocurrency payments, similar to the SWIFT network used by banks, in an effort to fight money laundering.” click here to read
- Circle, one the largest crypto companies is relocating out of the USA due to lack of regulatory frameworks.
- Iran has legalized cryptocurrency mining as an industry.
The sentiment across the industry is really going against the dominance of the US as having the global reserve currency and leading authority economically and politically. Nathaniel Whittemore put it perfectly when he tweeted “De-Americanization”.
— Nathaniel Whittemore (@nlw) July 19, 2019
While the US decides whether to lower rates which in turn aims to drive economic growth but also increases inflation, Bitcoin continues to be deflationary with no centralized authority that can manipulate it for its own benefit. Countries like Russia and China continue to dump their US debt which is only adding to the perfect storm for Bitcoin.
Even during the congress hearing of Libra, many senators called for regulators to step up and move quicker before more companies decide to move to another country. The time to fight Bitcoin has ended. It is here to stay because the people have decided they want it. It doesn’t need to compete against USD or JPY, it is another option for people that do not want their wealth in the control of big institutions. It is time the US accepts that and adjusts regulation accordingly or they will continue to lose ground to Asia day by day, week by week, year by year.
It’s not all bad for the US. Some American leaders are starting to see the light…
"I like bitcoin … The real thing I like when it comes to bitcoin is I like blockchain because I like the security. I want the government to start using blockchain," House Minority Leader Kevin McCarthy @GOPLeader tells @JoeSquawk #bitcoin #btc pic.twitter.com/LeCi3Gg7Ro
— Squawk Box (@SquawkCNBC) July 16, 2019
Check out my interview with CEO of Liquid, Mike Kayamori where we talk about economics, Libra, and crypto.