Satoshi created Bitcoin as a response to the 2008 financial collapse. During that time, we saw the global economy tank due to the actions of the banking system. Since that time, the established system has only gotten worse.
Simultaneously, the world of cryptocurrency grew. The last decade, especially the last 5 years, saw this fringe asset class move into mainstream attention. It is now a regular part of the financial discussion. Over the next couple years, it is easy to foresee it branching out by orders of magnitude.
There is an interesting situation taking place in all of this. Many, both within and outside the crypto industry, are looking at what governments are doing. Some are calling for clarity in regulations. Others are wondering if governments will ban Bitcoin. There are a few even watching to see when nations start to buy cryptocurrency.
If we harken back to the days of Satoshi, we see that he (she, them) did not ask permission to create Bitcoin. This was not a situation where something was being created to invite governments and financial institutions in. On the contrary, it was designed to operate outside of them.
Of course, things change in a decade. Bitcoin was hijacked by the financial crowd and is rapidly becoming their token. As more of it is swallowed up by major corporations, that is where the control will be. It will not be the "people's money".
That is actually not a problem. The genius of cryptocurrency is anyone can generate it. No longer is this only in the hands of a few governments. We now see thousands of currencies in which we can operate, many providing value to millions of people.
There is a saying: make sure you own house is in order.
What is interesting in the government versus crypto tussle is that one is playing with broken weapons.
The governments of the world are in hot water. We are seeing things deteriorate very quickly for some of them. Confidence is starting to wane which is going to cause many social problems. When this happens, the elite, who are far outnumbered, will find their influence wane.
Another issue is that we see the economic pie struggling. There is no doubt that global growth has slowed the last decade. It is actually anemic. This is a major problem because debt levels exploded. Without the growth, there is no way for many entities to sustain this behavior. Central banks are backed into a corner with few tools left to get out of this.
The loss in confidence for governments is huge. This is something that many are overlooking. While they have guns and prisons, the thing that keeps it all together is confidence. When populations lose trust in their governments, the leaders have a much tougher time.
In many instances this is not an issue. However, when there are alternatives, the problem for them is compounded. Cryptocurrency is an alternative. Since it is expanding so rapidly while the only thing government has growing is debt, we are seeing a shift that could have profound implications.
Cryptocurrency's major value proposition is that it is peer-to-peer transactions. In an environment like this, that is powerful. Not only are governments, and their banking cronies, not invited, they are not even needed. In the past, they were central to economic activity. With cryptocurrency, this is no longer the case.
Essentially, the governments of the world are trying to take over someone's house while their own is on fire. This is a senseless thing to do when framed like this but it is exactly what is taking place. The thirst for power is so great that they are destroying their entire power structure. As the different pillars they depend upon keep deteriorating, their position weakens. Eventually, this accelerates to the point where they simply cannot stop it.
Does this mean everything is going to collapse? Not at all. There is plenty of money and production out there. Even a sharp pullback leads to a lot of wealth creation. There are capital flows though, which means many asset classes get hammered.
One of the biggest around the world is bond markets. Europe and Japan already torched theirs and the U.S. might be following suit. Thus, we will see capital move to other areas, as we are seeing with collectibles.
More importantly, in all this, is the technological advancements. We are to the point where a great deal can operate outside the hands of government regulation. As more is moved off central servers, the ability to control (police) the system dwindles. It becomes a game of whack-a-mole as each action on their parts results in two that counter it.
Governments are still trying to decide whether this is all a benefit to them. We can count on their arrogance to believe they can control it. Here we see a vital ally. Time is our friend if we keep developing, expanding, and growing. Unlike other aspect of society, this is not something that can harnessed and regulated.
They are spending a lot of time going back and forth as to what to do. Even a single government, like India, keeps altering their positions. The same is true in Nigeria, China, and South Korea. As the entire pie gets bigger, the views of governments are going to mean less.
Size and number are important. We like to view things in terms of the totality. For example, with crypto we look at the total market cap. However, it is more important to look at how things are made up. It is far different having a market cap where 2 or3 projects make up 90% of it as compared to one where the largest is only 10%.
When it comes to transactions, the governments strength is in less numbers but bigger sizes. Let us harken back to the ICO craze. The SEC can go after a Block.One when it raises $4 billion. However, what are the chances that it will succeed if there is $4 billion raised by 100,000 entities in $40K increments?
With crypto and the infrastructure that is being built, the later is only becoming more likely.
Simply put, we are developing a new system in which governments, and all their "friends", simply are not invited. We are not asking permission to do all of this.
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