The big news of the moment is the approval of a Bitcoin ETF. Money comes in and the price goes up. But not everyone is very happy.
Much is said about institutional capital entering the crypto space. In fact, the big news of the moment is the approval of a Bitcoin ETF. Money comes in and the price goes up. But not everyone is very happy. Apparently, there is a bitcoin “philosophy” that must be respected. However, for most, price is more important than ideology. The old school says one thing. And the community does another. With a Bitcoin surpassing its all-time high, very few remember the old dogmas. Did ideology die?
A few years ago, this community was nothing more than a collective of libertarians talking about a new world monetary system. The bitcoin pattern was talked about as a solution to economic problems. And the battle was against private banks, central banks, and fiat money in general. It is a conservative revolution of the people against the evils of Keynesianism. For centuries, conservatives have defended the benefits of the gold standard. A hard coin is thought to be the secret to success. Which makes the current system a great conspiracy.
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Satoshi Nakamoto created a “digital gold” for exchange without intermediaries. The first bitcoiners embraced the old libertarian narrative, but with Bitcoin as the new hard currency. We are talking about a system with a lot of technological optimism and a lot of social pessimism. We have two pillars: The individual and the code. The middlemen are the bad guys. The individual and the code are the good guys. We also have the invisible hand of the free market: the decentralized network. However, any form of organization beyond the individual is avoided. More complex organizations are only possible with the use of technology (smart contracts). We can trust technology. But we cannot trust each other.
It is very important to understand from the beginning that this conservative current is based on social mistrust. The conservator hides his money under the mattress. Because all dependency is a form of oppression. Banks, governments, and corporations are unnecessary and harmful. The entire universe can operate without intermediaries. Sounds familiar? Of course. It is about the Protestant heritage. American Puritanism. The self-sufficient individual.
The individual and the free market. Everything else is superfluous. This explains such strange concepts as “owning your money.” Apparently, according to some in this space, people who do not have their private key do not “own their money.” In other words, custody is synonymous with property. Which implies that our money in the bank is not really ours. This, of course, is only possible in a world dominated by anarchist thought. In a world without intermediaries, the self-sufficient individual is the sole custodian of his property.
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Now this puritanism is possible. We can live on a self-sufficient farm, keep our money under the mattress, and stockpile weapons for our defense. However, this is an extremely limited life. Sooner or later, we must learn to trust others. It is possible, for example, that one day we need to apply for a loan to start a business. This would involve opening an account at a bank. In many cases, businesses must adhere to certain standards in order to obtain permits, insurance, bonds, or any other financial benefit. These measures, in many cases, require submission to a third party.
Suppose that the Firefighters Association of a certain locality decides to open an investment fund for its members. Everything should be done in the most formal way possible to avoid any kind of problems. For one thing, there must be a record of everything. And everything must comply with the law. The most sensible thing to do is to entrust that money to a professional. The Firefighters Association board must demonstrate that the members’ money is in the best of hands. That usually means audits, permits, endorsements, and corresponding certificates. Here there can be no informality of any kind. Because the regulators are very careful to protect the union members from possible irregularities by their board.
Here we are faced with two completely different worlds. On the one hand, we have an individual who does not want to trust anyone. On the other hand, we have organizations of a complex social fabric. For the young millennial, it is relatively easy to become radicalized. After all, the traditional bitcoiner dogma is very straightforward. It consists of saving the world without much effort. All you have to do is accumulate coins in a wallet. The lonely young man understands the bitcoin ideology as something natural and very sensible. Twitter is full of these types of bitcoiners. However, the world is bigger than that. The world is much more than a collection of isolated individuals.
What about institutional capital? Is the bitcoin philosophy compatible with the ways of institutional capital? Of course not. Banks, funds, governments and large institutions are investing in Bitcoin and not precisely because of ideology. They do so for speculative reasons. This invasion is changing the configuration of the community, thus creating an existential crisis. That is the detail. Bitcoin is a code. It is not a religion. Which means that to buy Bitcoin it is not required to sign any statement of faith. Which is inconvenient for orthodoxy. The libertarian revolution is being relegated due to the arrival of new actors.
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The narrative is changing. There is no longer talk of a libertarian revolution. There is talk of a new class of asset. It is an emerging market that is gradually gaining space and recognition. Bitcoin is now part of the fintech revolution. A technological movement more than a political one. A few years ago, to talk about Bitcoin, the press would turn to characters like Roger Ver, John McAfee, or Andreas Antonopoulos. An agenda very similar to the one handled by the gold brooms was handled. It began by criticizing the fiat system with a libertarian slant. In this sense, things have changed quite a bit. Now we have Cathie Wood, Elon Musk, and Jack Dorsey talking about the future of Bitcoin.
The approval of a Bitcoin ETF is positive, because it is a formal investment instrument. That implies that large funds can invest in Bitcoin without major problems. Certainly this directly contradicts the philosophy of the “self sufficient individual”, but Bitcoin is not a cult. That is, this philosophy is not mandatory. They are the ideas of a mining that do not necessarily represent the ideas of the whole group. As simple as that. Many love to dictate what can be done (or not done) with Bitcoin. But I’m afraid the ultimate power is with the user.