Bitcoin A Currency Without Political Color

Bitcoin A Colorless Currency Unaffected by Politics

Article Author: Brian Cubellis Article Translation: Block unicorn

Bitcoin price has surpassed $40,000, reaching its highest level since April 2021, while gold is creating new all-time highs. There are many reasonable explanations for the simultaneous occurrence of these two events – lack of confidence in the Federal Reserve’s ability to control inflation, ongoing currency devaluation, escalating national debt, unsustainable trajectory of interest expenses, increasing deficits, escalating geopolitical tensions, vulnerabilities in the banking system, and the realization that assets once considered “risk-free” now carry substantial price and counterparty risks.

The truth is, the recent performance of Bitcoin and gold is a combination of these factors, all of which share common underlying factors. People are revealing their cards, and counterparty risks are being assessed more rigorously. Overall, individuals, institutions, companies, nations, and people at all levels are realizing that storing economic power in assets that cannot be devalued, frozen, confiscated, or controlled by forces outside their influence is the best strategy for preserving value into the future (Bitcoin and gold).

Economist Zoltan Pozsar (formerly with Credit Suisse) wrote a prescient report at the beginning of 2022, proposing the beginning of a new world monetary order (the birth of Bretton Woods System III) and a shift from “internal currencies” backed by central banks or governments to “external currencies” backed by commodities. Another perspective on this emerging trend is the growing aversion to politicized assets and a preference for completely depoliticized assets. In a world seemingly skeptical of authorities and institutions’ motives and policies, institutions directly or indirectly influencing asset valuations, the case for supporting neutral, non-state assets becomes stronger.

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Block unicorn note: “Internal currencies” refer to currencies backed by central banks or governments, while “external currencies” refer to currencies backed by physical commodities or similar to gold.

Bitcoin is apolitical

An essential component of Bitcoin’s value proposition comes from its inherent neutrality. Bitcoin has many attributes that make it a unique asset, but one of the most important ones is its lack of political nature. Bitcoin has no central issuing authority and is not controlled by any unified authority. Similar to the internet operating as a decentralized network, not controlled by any single entity, Bitcoin has a similar foundation. As open-source software distributed across thousands of computers worldwide, Bitcoin’s inherent resilience is a feature of its underlying structure.

Bitcoin’s programmatic nature ensures that its monetary policy is not determined by fallible humans or ever-changing geopolitical sentiments. Instead, it is rooted in the consensus of the decentralized network. This consensus is crucial; it means that any major changes to the Bitcoin protocol, including its monetary policy, require agreement among the vast and diverse network participants, enhancing the system’s resilience and stability.

In addition, the currency parameters of Bitcoin are not just established rules, but are hard-coded into the protocol. Its issuance plan is programmed, open, known, and transparent. The total amount of Bitcoin will never exceed 21 million coins. Every four years, the number of new Bitcoins created and obtained by miners is halved, an event known as the “halving”. This transparent and predictable scarcity contrasts sharply with traditional fiat currencies, which can be printed unlimitedly at the whim of central banks and governments. The behavior of central planners diluting their currency through excessive money printing is well-known, and Bitcoin offers an obvious alternative – a virtuous store of value managed by predictable and immutable monetary policies.

The Nature of Politics

The common perception today is that societal divisions and opposition have reached an all-time high. Over the past few years, a persistent narrative has been that “politics” has seeped into every aspect of life, with us as a population more divided than ever on various subjects and issues.

On one hand, from a historical perspective, this is clearly incorrect – it is evident that there have been instances of extreme ideological differences that far surpass the modern era both within this country and globally. However, what is worth exploring is why it feels as though there is an unprecedented level of polarization today.

While we may not have reached the pinnacle of societal division from an absolute standpoint, the key differences inherent to the modern era revolve around a heightened awareness of our differences and potential political motivations. The advent of the internet, the proliferation of social media, and the widespread digitization of information have propelled humanity into an unprecedented realm of sensory overload.

The increasingly interconnected global landscape has made us sensitive to differing viewpoints and has also pulled back the curtain for individuals, revealing the inherently political nature of almost all social structures. Indeed, these structures that make up society, such as governmental entities, corporations, and academic institutions, have always been political, but now we have a clearer understanding of the various incentives at play and the ability to question or push back against the mainstream narratives propagated by these institutions.

Ultimately, politics is the way in which humans attempt to organize and govern themselves. When a subject, issue, discussion, or organization becomes “politicized,” it signifies that specific ideologies and affiliations have permeated previously neutral or apolitical subjects. From this perspective, politicization can be seen as a major catalyst for opposition and division – specific viewpoints emerge and naturally take the form of opposing forces.

Misaligned Incentives

While politicization is a natural reality of human interaction and coordination, it is important to recognize that individuals who hold power or influence within a societal structure may be incentivized to exploit or deprive the rights of their opponents or the entire society. Additionally, it is worth considering whether certain aspects of society should be regarded as apolitical or neutral.

Those in positions of power – be it in government, business, or academia – often have the opportunity to manipulate systems for their own benefit. This can be done in subtle ways, such as shaping public opinion through media channels, or in more overt forms, such as implementing policies that disproportionately favor specific groups. The potential for such exploitation tends to rise when political beliefs infiltrate areas that are typically seen as impartial or apolitical.

Currency may be the most significant example of a field that can be deeply affected by political influence. For millennia, humanity has rallied around a form of currency that is apolitical – gold – which is governed by its economic nature as a medium of exchange, rather than by political agendas. However, since the creation and propagation of fiat currencies, currency policies are no longer immune to politicalization. The ability to manipulate interest rates, restrict free markets through regulation, or arbitrarily devalue currency is often influenced by political motives rather than purely economic considerations.

The escalating inequality, erosion of trust in financial institutions, and widespread economic instability are primarily caused by our monetary system being used for political gains rather than as a tool for the economic well-being of society as a whole. These factors not only impact the economic health of a nation but also contribute to the division and polarization we see today.

Politicization of Traditional Assets

In the modern financial landscape, political factors have merged with traditional store-of-value assets to an unprecedented extent. The freezing of Russian financial reserves in the United States due to geopolitical tensions highlights a stark reality – national and international policies can directly affect the security and stability of traditional financial instruments. This politicization is not limited to sovereign assets. Public equities, traditionally seen as market-driven valuation fortresses, now find themselves increasingly embroiled in controversies surrounding social, environmental, and governance (ESG) guidelines.

Another prominent example of a political factor infiltrating the realm of financial assets is the case of Canadian truck drivers in early 2022, where protesters had their bank accounts frozen by the Canadian government. This severe response to individual opinions and actions raises questions about the reliability of the financial system and the potential interference of governments in democratic societies.

These developments highlight a broader trend – in short, the value and stability of financial assets are increasingly susceptible to the political climate and regulatory stance. The implications of this politicization include the devaluation and loss of autonomy for individuals and stakeholders. In contrast to the politicized nature of traditional financial assets, Bitcoin represents a unique apolitical alternative. Operating on a decentralized and transparent framework, Bitcoin functions independently of centralized financial institutions and political entities. Bitcoin stands out not only because of its technological characteristics but also because it is intentionally designed to be independent of centralized institutions and political influences, embodying a firm belief in financial sovereignty and resistance to centralization tendencies.

Although Bitcoin is based on a non-political stance, it has caught the attention and support of politicians who see it as a tool to counter the centralization of the global financial system. Notable advocates such as Jair Bolsonaro (the newly elected President of Brazil) and the Robert F. Kennedy team (ahead in the upcoming US Presidential Elections as an independent candidate) have reached a consensus on resisting control and manipulation of Bitcoin. This development presents an interesting paradox – politicians embracing an inherently apolitical asset. On one hand, Bitcoin’s design and principles directly contradict centralization and politicization. On the other hand, Bitcoin has become a symbol for political figures to showcase their commitment to freedom and individual sovereignty.

The political wave of support for Bitcoin stems from an understanding and appreciation of its core characteristics, which promote freedom, autonomy, and resistance against the abuse of central power. While politicians may use Bitcoin to appeal to disillusioned individuals with the traditional financial system, the reality is that their advocacy holds no impact on the network or the asset itself. Whether their support genuinely aligns with Bitcoin’s principles or is merely a strategic move to win support from the public, this trend is significant and likely to continue.

This means that as more people recognize the advantages of Bitcoin, the demand for it will continue to rise, marking the beginning of a monetary revolution. In this revolution, you don’t need to cast a vote in the ballot box, but instead show your support for Bitcoin with the currency units you’ve worked hard to earn.

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