How the US Gov proves a need for Bitcoin
What happens when the central banking system of USA i.e. the “Fed” decides to print more money? People’s savings go down in value. Older citizens who might have been saving for decades for their retirement see their savings slowly erode. And the worst part — who gets this newly printed money? The government decides. In this case, the Trump administration. A very small number of people in the US government can simply print US Dollars while everyone else has to work for it.
Corona virus has been tough on us all. People are losing jobs left and right. And to make things worse, they’re stuck at home and are unable to go outside to search for jobs or just get a breath of fresh air (literally!). Not to mention the effects this long term seclusion will inevitably have on our mental health.
Giving money to people in need so they can make ends meet in these catastrophic times is the humane thing to do. But governments from all across the globe are also bailing out huge corporations. In fact this article shows that it’s the biggest government bailout collectively, in 50 years. Giving money to single moms is justified but do we really need to safeguard the stock prices of major companies from falling? Just to protect the profits of hedge funds so millionaire investors don’t see the value of their portfolio go down?
By allowing companies to follow such a model, where they can behave irresponsibly just to be later bailed out by the government, we have made them into spoilt children and given them benefits from both sides:
“Private companies in USA, with help from the government have privatized their profits and socialized their losses.”
With this model the US slowly moves their economy from capitalist to socialist without all the benefits that come for common lay people like subsidised healthcare and education. Instead of bailing out these huge corporations, why not focus more on the ordinary person? Ex Facebook Executive and currently an ethical entrepreneur Chamath Palihapitiya couldn’t have explained it better here:
Or the short and sexy version:
What’s the Root Cause?
Capitalism when based on innovation, meritocracy and kept in check by active and aware consumers can be a beautiful thing. It can provide jobs to generations, create new products and even bring our species to new frontiers. Here are some private organizations doing more than their fair share for the world:
- SpaceX; Elon Musk’s brain child aiming to take humanity to Mars
- Beyond Meat; providing plant based meat alternatives to help lead to a more caring world
- Linux; the god father of open source software
- Tesla; leader in electric vehicles and clean energy innovation with Solar Roof panels
- Grail; a company that uses technology to track a staggering number of early stage cancers with just 1 drop of blood
However, private companies, like any other entity can also be cutthroat. For e.g. Nike with their sweatshops or ARAMCO which is responsible for 4.5% of the world’s industrial greenhouse emissions. But the worst situation happens when we transition from capitalism to Crony Capitalism, described on Wikipedia at the time of me writing this article as: “An economic system in which businesses thrive not as a result of risk, but rather as a return on money amassed through a nexus between a business class and the political class.” Or a TL;DR version:
Crony Capitalism is when the government gets into bed with corporations, which causes numerous instances of favouritism, nepotism and biased regulations.
So if you are rich, have a large company like many in the pharmaceutical, energy, or meat industry, you can lobby for the politicians that agree with you. Once they get into office, they have an implicit contract with you to ensure they can implement more regulations that help your business by increasing barriers to entry for new businesses and startups. And if that doesn’t work? They can print money…
How can Bitcoin help?
When USA places sanctions on their rivals, for e.g. Iran, they destroy their currency. The Irani Riyal fell astronomically over the past couple years and destroyed the savings of Iranian people. Here is a statistic from BBC:
“President Rouhani managed to get inflation down to 9% in 2017. But the IMF estimated that it soared to 30.5% in 2018 and projected that it would reach 35.7% in 2019.”
The US Dollar has now officially become a weapon to sanction any country that USA doesn’t agree with.
Bitcoin is immune to such manipulation by any country’s government. Bitcoin doesn’t care about which country you were born in, what’s your ethnicity, what’s your gender etc. It is simply a form of currency that is decentralized and thus inherently unsusceptible to any government or any other entity’s attempt to create inflation. In fact, due to its limited supply and halving, it is deflationary.
In addition to Governments, Bitcoin is also not dependent on Banks. If you are transferring money to a family member now let’s say from one country to another, you are dependent on your bank. They will charge you for a transaction, you are also at their mercy for what exchange rates they choose and the receiver of this money is dependent on their own bank. Banks have in the past refused to open a bank account for people who think are not “fit” for one, which is generally but not always because of these people’s credit scores. Bitcoin doesn’t care about your credit score. It doesn’t need to know anything about you. The network of miners will approve and deny transactions anonymously without knowing anything about you and therefore there can never be any bias. People in poor countries don’t need to open a bank account and depend on their country’s government and bank to function normally. All they need is a flash drive to store their Bitcoin. That is the beauty of it all.