TLDR. Last year, when Steve Bannon, Donald Trump’s adviser praised Bitcoin as “disruptive populism” and revealed he was working on his own cryptocurrency. It was evidence of something many people had long suspected: The forces driving the growth of anarchic, get-rich-quick digital tokens are very similar to those buoying Trump and his imitators.
Ten years ago, if you claimed that the President of the United States would be talking about digital money, people would think you were crazy. Well it happened. Last week the President Trump tweeted about Bitcoin and other cryptocurrencies:
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
…and International. We have only one real currency in the USA, and it is stronger than ever, both dependable and reliable. It is by far the most dominant currency anywhere in the World, and it will always stay that way. It is called the United States Dollar!
— Donald J. Trump (@realDonaldTrump) July 12, 2019
The President expressed his opposition to cryptocurrencies, specifically about Bitcoin and Libra. He doesn’t think cryptocurrencies are real money, because their “value is highly volatile and based on thin air.”
Is fiat any better?
Cryptocurrency is volatile. Cryptocurrencies are based on thin air, but so are all the fiat currencies in the world. Bitcoin cannot be debased due to its limited supply, but the US dollar can and continues to be, as large quantities are printed. Cryptocurrencies can be used for illegal things, but so can cash. But on the other hand, Bitcoin transactions can be tracked by authorities, US dollars used for illicit purposes, are often impossible to track.
Trump’s statements about Libra, were along the same lines of other governments. France also appears to be opposed to Facebook’s cryptocurrency plans. An official at France’s finance ministry said the country would not allow a private entity to set up the equivalent of a national currency. China’s central bank is reportedly developing its own digital currency in response to Facebook’s Libra, as it could pose a threat to the country’s financial system.
The market barely reacted after Trump’s tweets. Bitcoin and cryptocurrency markets were completely unaffected by the comments The price of Bitcoin slightly rose, as investors bet that Trump’s mention of Bitcoin will bring greater awareness to crypto and push prices up.
This is possibly, the largest bull signal for Bitcoin, ever. The President’s tweets coupled with the growing institutional adoption and investment, spell out a clear message “buy Bitcoin”.
Trump’s tweets come one day after Federal Reserve Chaiman, Jerome Powell, told lawmakers that Facebook’s plan to build a digital currency called Libra could not move forward unless it addressed concerns over privacy, money laundering, consumer protection and financial stability.
Bitcoin had a huge week. Some in the crypto world have interpreted Trump’s series of tweets as an endorsement of Bitcoin’s growing importance. Trump turned Bitcoin into a hot issue for the upcoming presidential election in 2020.
It looks like Trump is hammering potential threats to the dollar’s status as the world’s reserve currency. But, this doesn’t matter, because the value of Facebook’s coin is also pegged to the value of a dollar, they are essentially just dollars on a blockchain. For me, that’s more interesting. Not that long ago, the world’s reserve currency was gold, where the value of a dollar was pegged to the value of gold. But one day the US decided to unpeg the dollar from gold, paving the way for the dollar to replace gold as the world’s reserve currency. Could Libra or another cryptocurrency, do the same thing to the dollar? It’s possible.
But, I think the dollar and crypto can coexist, and will coexist for a long time. Currency competition is inevitable, but the dollar doesn’t need to fail in order for Bitcoin to succeed.
Ilias Louis Hatzis is the Founder & CEO at Mercato Blockchain Corporation AG. He writes the Blockchain Weekly Front Page each Monday and has no positions or commercial relationships with the companies or people mentioned and is not receiving compensation for this post.
Subscribe by email to join the other Fintech leaders who read our research daily to stay ahead of the curve. Check out our advisory services (how we pay for this free original research)
The post The US President tweets about Bitcoin appeared first on Daily Fintech.