1/ There are a couple things that make Bitcoin different from any previous top dog in the money hierarchy, which will create a different financial system than the one we've seen before, which Brendan describes here.
https://twitter.com/bhgreeley/status/1365626129596506118
2/ Anyone can verify their Bitcoin holdings or the global monetary supply from cheap equipment at home. So, unlike gold, citizens and institutions can easily custody their BTC w/o relying on third parties. This creates a stronger demand for actual BTC versus promises to pay.
3/ Also unlike gold, there is a liquid 24/7 global market for Bitcoin accessible to anyone with an internet connection where you can sell BTC or buy BTC + withdraw quickly into self-custody. With vibrant global p2p markets, you don't have to deal with slow, regulated gatekeepers.
4/ So, yes, there will continue to be boom/bust cycles in the underlying BTC price, but there is no lender of last resort, and no consumer protection beyond what citizens are willing to pay for or what regulators provide. (Bitcoin insurance may grow to be a huge industry)
5/ These key differences will create a different financial climate than what we've seen before with more power shifting to individuals versus corporations or governments. Which is important, because Brendan's point about "democratic oversight" is based on a false assumption.
6/ In reality, 4.3 billion people across 95 countries (53% of the world's population) live under authoritarian regimes where there is only tyrannical (not democratic) oversight of money. Bitcoin allows people to escape these systems and take their finances into their own hands.
7/ Bitcoin is a tool for people to store their wages and savings in a way that can't be devalued, censored, or easily confiscated. And they can teleport this value to anyone else on earth in minutes. Very different from existing monies.
8/ We are just in the past year seeing the dawn of a new Bitcoin money market with collateralized lending through services like BlockFi. Yes, this is going to be HUGE. People are taking out USD-denominated loans against their BTC or loaning it out for interest.
9/ But these services are risky. You are giving up control of your Bitcoin. Not everyone will participate. And there are already nascent ways to get yield (if BTC's absurd risk-free rate earned by just hodling is not enough for you) without giving up custody of your funds.
10/ For example, by providing liquidity to Lightning Pools or JoinMarket. In the near future you will also be able to do trustless "DeFi"-like creation of other assets (stablecoins etc) by locking up your Bitcoin with smart contracts, creating entirely new markets.
11/ So, yes, in the end, many functions of the existing banking system will be replicated in the BTC world, whether in a custodial or non-custodial fashion. But underneath it all is the ability for people to control money that no government can abuse. This is incredibly powerful.
12/ Obviously, we are at the beginning of the Bitcoin era, and no one knows how it's all going to play out.
But it's worth careful study, with the certainty that it won't be like what came before, and that it's something in the hands of the users, not any "oversight" board.
But it's worth careful study, with the certainty that it won't be like what came before, and that it's something in the hands of the users, not any "oversight" board.
• • •
Missing some Tweet in this thread? You can try to
force a refresh
