Less War
Daily Ramble
I caught the news that the US is dropping bombs in Syria. Then I saw someone post that Bitcoin had no part in those bombs. It got me to thinking how the nature of war is going to change in the decades ahead.
Without the ability to print more money to fund a war, governments have to raise the funds for war from taxation. When given a choice, most citizens, unless they’re being attacked, simply aren’t going to want to pay money to fight an impersonal war. It’s astounding to realize the US actually broke away from the gold standard by printing money to fund the Vietnam war rather than ask citizens for more taxes.
From 1944 until 1971, $35 could be redeemed for 1 ounce of gold at the Federal Reserve. An international consortium created this agreement at Bretton Woods at the close of WWII. The agreement was that 35 US dollars would be worth one gold ounce and all the other European nations would peg their currency to the US dollar. The European currencies’ prices would fluctuate on the market between each other, but the dollar would not change its relationship to gold. This system worked relatively well until the US, stuck in the quagmire of the Vietnam war, kept funding their efforts by printing more dollars — rather than asking for more taxes.
The French were the first to notice the discrepancy in the ratio of dollars to gold on the market. They began to call the US’s bluff requesting gold for the dollars they held. The US complied at first, but eventually realized that they were going to either give up all their gold as other countries followed France’s lead or jump off the gold standard. In 1971, Nixon unceremoniously bailed on the gold standard leaving the international community to pick up the pieces. Since then we’ve had a monetary system based on decree (fiat) instead of based on the laws of physics (gold).
It’s not a bridge too far to see how the adoption of Bitcoin, whose monetary policy is both transparent and outside government intervention, will reduce warfare. Politicians unwilling to ask for taxes to pay for war will be unwilling to even surface the idea and much more willing to settle international disagreements through diplomacy. Less war and more diplomacy sounds pretty good to me.
Favorite Thing on the Interwebs Today
Hahaha! A lint brush is all it takes folks…
Bitcoin Price Prediction
Yesterday: $45k - $55k
Today: $42k - $49.7k
Tomorrow: $39k - $49.7k
The second leg down on our price consolidation happened. After reaching as high as $52.2k yesterday, the price sold off, sweeping beyond range lows to $44k. I’m split on if this is the bottom of the bounce here or if we will drop down as low as $38k. The net flow of Bitcoin continues to be out of exchanges and into individuals’ wallets, which is a healthy sign that the bull market continues. Paired with the reset in both funding (a measure of leverage in the market) and sentiment, if this is not the bottom here, it won’t be much longer before we’re there. The last bull market had several 30%+ dips as Bitcoin scaled from $1k to $20k in 2017. We’re experiencing our second this year and the current dip is a 25% retrace. All is well with the bull market still.
Bitcoin Ed Bite
Q: Why is Bitcoin successful?
A: Because it rewards our greed.
The most ingenious aspect of Bitcoin’s design is its unparalleled ability to gain users by rewarding greed. A social network has been built around the Bitcoin protocol that rewards each set of actors for their behavior: miners, holders, developers, and business owners. Miners are rewarded with new Bitcoin for providing security. Holders are rewarded with increased asset values by holding a scarce asset. Developers are rewarded with recognition for developing the most valuable open-source software in the world. And business owners gain new clients by offering to sell products and services in Bitcoin.
Bitcoin absorbs human greed and rewards all its actors in kind.
Thanks for reading,
Kent
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