In July, I sat at the Bitcoin Conference in Nashville and watched Donald J. Trump live and in person for the first time. I have never been a great Trump fan, but the experience was electrifying. Love him or hate him, he has magnetism up close. I was impressed at his ability to weave approving statements about Bitcoin, ideas I hold sacred, with standard attack lines on his Democratic opponents. āIām thrilled to be here in Nashville to become the first American president ever to address a Bitcoin event anywhere in the world,ā Trump proclaimed. āOur country is blessed to have the extraordinary talent, energy and genius represented in this room.ā
That day at the Music City Center, the once and future president delivered Bitcoiners a kind of political catnip. He promised lighter regulations on crypto companies, breaking with the enforcement regime of Gary Gensler, chair of the Securities and Exchange Commission (SEC). Trump also pledged a Bitcoin Strategic Reserve, holding BTC the same way the government holds oil for national emergencies. And Trump said heād commute the life sentence of Ross Ulbricht, the founder of Silk Road, a dark web marketplace that helped to popularise Bitcoin. Ulbricht was imprisoned for distributing drugs and money laundering, and many in the crypto community feel he was treated unfairly.
I’ve been working in crypto as a journalist for 10 years and I’ve seen the interaction of the crypto community and US politics close-up. This was the first time I had heard a political candidate, let alone a presidential candidate, say crypto could finally have what it wants and needs: freedom. As Trump now prepares his triumphant return to the White House, itās clear his strategy paid off. Crypto is an increasingly powerful constituency right across American politics. Now it enjoys a friendly ear in the Oval Office, and it could yet spur wider transformations right across the economy.
Until about 2018, crypto was a political non-issue. Its proponents may have thought it mattered in DC, but the truth is almost no one cared. Few used it; even fewer understood it. As an editor of a crypto magazine called Breaker, I discovered this first-hand. If I ran a story on crypto and politics, only the odd advisor or politician would pay attention.
But, then, the industry began donating to political candidates. Sam Bankman-Fried, who later went to prison for an $8 billion fraud, gave money to one third of Congress, writing cheques to politicians on both sides of the aisle. That balance made sense: in Congress, crypto was still largely bipartisan. Neither side cared enough to take a more assertive position on digital assets.
Thatās where Trump saw an opportunity, claiming crypto for himself and his party. He recognised a rich and powerful community looking for mainstream acceptance, a community of innovators ideologically aligned on freedom and a belief in American capitalism. There was a clash between MAGA nationalism and cryptoās borderless ethos. But it didnāt seem to matter: each side was useful to the other.
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SubscribeThere are two sorts of money – promise money and token money. Promise money dominates, an institution, a bank or government, promises to pay you a sum of money. You take a risk on the institution meeting the promise and the value of a unit of money issued by a government. Traditional token money hardly exists – it was mostly a gold or silver coin where the value lies in the demand for the precious metal. Crypto currencies are token money, no one has promised anything. Its value is the demand for the token, a number that was tedious to calculate. Since the US election $2.5 billion of “real” money has flowed into the Tether stable coin that is most likely from the sale of Bitcoins. Ordinary savers gave up that money for a number that is tedious to calculate. The only certainty is that that money will not go back to those savers. They will have to hope they can sell their number to someone else who hopes that they can sell their number to someone else who…….
Many thanks JH.
Always value your comments about this particular flavour of Ponzi scheme.