The Fight That's Yet to Come

Dear Bankless Nation,

The U.S. election is tomorrow.

There are a number of possible outcomes that political pundits are considering, each offering a varying level of certainty or uncertainty.

Certainty vs. Uncertainty

It seems to me that the ‘certainty’ vs. ‘uncertainty’ spectrum impacts crypto most. Let’s consider both possibilities:

A Joe Biden victory indicates higher taxes, which historically would trigger market sell-offs to avoid those taxes. However, a Joe Biden victory may also indicate more aggressive stimulus, and perhaps explicitly embracing MMT-type policies—a hyper bullish catalyst for asset prices at large.

On the other hand, a Donald Trump victory indicates lower taxes and also may bring its own stimulus, but likely less than a Biden victory.

The worst outcome is a narrow election. Such an outcome would cause a significant amount of uncertainty as Trump has indicated his readiness to deny the validity of his loss. Only a massive landslide for Biden would eliminate this path—and even that may not be enough.

And what of the relationship between the left and the right post-election? Do the rifts heal or do the cracks become chasms? Where do we go from here? More uncertainty.

The truth is, crypto and policies around it, is not part of the 2020 election. Crypto is barely a blip on the political radar. The most direct relationship between this election and crypto is the embracing or resistance towards money-printing MMT policy. (Hint: both parties embrace it)

So is this uncertainly good for crypto?

Maybe so. Crypto thrives in chaos. It grows under the fog of war. It develops in times of uncertainty. The longer the Political Eye of Sauron is ignoring the growth and development of crypto, the better.

The current chaos of the political world is one of cryptos biggest protective barriers.

But that doesn’t mean that crypto won’t have political battles ahead. The stage is set for crypto to fight for its own sovereignty from top-down Nation State control.

Nations want to neuter crypto

A recent example. PayPal now supports buying and selling of BTC, ETH and other crypto assets. You can now pay for goods with crypto via PayPal. Woohoo, adoption!

Here’s the thing: you cannot withdraw these assets to your own personal wallet.

PayPal built a walled-garden in order to maintain compliance with the Nation States.

The Nation State wants everything registered and documented, and external withdrawals of BTC, ETH to private wallets means moving assets outside of the government’s control.

That’s the opposite of the bankless ethos. That’s using some of the values of cryptocurrency (non-sovereign monetary policy) and diluting it with Nation State values (top-down centralized registry and control of who owns what).

Interestingly, PayPal expressed interest in purchasing BitGo, the major crypto custodian who operates WBTC. It’s a company that doesn’t limit the sending and receiving of WBTC from private wallets.

If this acquisition were to happen, it seems like PayPal will have to learn how to juggle these dynamics.

Similarly, we are going to have to learn how to reckon with the fact that the uncensorable, uncontrollable nature of Bitcoin and Ethereum transactions are inherently at odds with the agenda of the Nation State.

The Nation State wants you to ask for permission. But Bitcoin and Ethereum are permissionless platforms. So while we sit down tomorrow and watch the election unfold, we can relax because it seems that neither candidate is really going to impact our industry…yet.

But that’s because it’s not our turn. Sauron’s eye is turned elsewhere. As the saying goes “you may not be interested in politics, but politics are interested in you”.

This is especially true with an MMT, pro-stimulus environment and the intersection of non-sovereign, borderless digital assets. What if stimulus becomes the status quo, and we’re all getting $1,200 every month, but more and more people are taking those dollars and selling them for crypto?

The dollar devalues. The value of assets outside Nation State control appreciates.

The Nation State becomes jealous.

How far will the State go to retain its control over the world? Will our industry retain our sovereign values, or will the Nation control how we’re able to use these platforms?

So while tomorrow’s election is a critical event for the future of the United States, tomorrow’s election is not our fight.

But our fight is coming.

- David