Bitcoin With Jake 005: El Salvador’s Bitcoiners; Canada’s Property Problem; Intellectually lazy criticism; & more.
How do the financial decisions of Central America’s smallest country set a precedent? What happens when you manipulate a market you’ve already manipulated? Why do we react to farcical Bitcoin content?
El Salvador’s Bitcoiners
How do the financial decisions of Central America’s smallest country set a precedent?
Simply put, this last week we witnessed a huge moment in the history of Bitcoin, as El Salvador made the cryptocurrency legal tender. Whilst we knew this development was on the horizon, after the passionate announcement made by Jack Mallers at Bitcoin Conference 2021, to see it become reality cannot be underestimated.
Seth Galia’s piece “How El Salvador has become a Bitcoin Pioneer” gives a nice summary of the situation there, whilst making one point that I would like to emphasise: “passing of the Bitcoin Law will reduce the dependency on USD”. Yes, this means small nation states now have a new form of financial leverage, empowered by access to a monetary network that is not at the whim of a foreign government.
Of course we must temper our positivity with a touch of reality, which Shinobi does nicely here, and recognise the perilous path ahead given the backlash from the status quo. Selfishly it’s the opinion of the UK and Australian tax authorities I am most interested to watch, who in theory cannot charge capital gains tax on a foreign countries currency, meaning I could trade in and out of the asset without triggering a taxable event; a boon for Bitcoiners globally.
Canada’s Property Problem
What happens when you manipulate a market you’ve already manipulated?
Justin Trudeau @JustinTrudeauHouses shouldn’t sit empty when so many Canadians are trying to buy a home. So, we’re going to ban foreign ownership in Canada for the next two years, and tax the existing vacant, foreign-owned properties.
Physical real estate is one of the easiest assets for Government to control, a fact we were reminded of loud and clear by Canada’s Prime Minister, as he announced their latest set of policies. They’re proposing to force existing international property owners to accept tenants, whilst banning additional international buyers, riding roughshod over the pre-existing private property rights.
For those of us studying monetary history, it’s clear that the increase in money supply is the critical driver of price inflation, which of course the Canadian Government is keen to downplay; if not outright ignore. This is a situation in which I see an already manipulated economy, being patched up with additional policies, that aim to lessen the symptoms of poor management rather than solve the underlying problem.
Michael Saylor arrived right on time with this tweet, reminding us exactly why Bitcoin is so important as a new form of digital property, which cannot be altered at the whim of Government. In the future I believe we will see a huge transfer of wealth from highly controlled assets such as physical real estate, into Bitcoin, further compounding hyperbitcoinisation.
Intellectually lazy criticism
Why do we react to farcical Bitcoin content?
Whether you were a horse salesman downplaying the importance of cars, or an incumbent landline company ignoring the growth of mobile, every big idea has its critics. With that in mind I intend to always remain levelheaded on this Bitcoin journey, open and ready to answer questions of every kind, however there are moments when you just think: “is that a f**king joke…?”
The Gravel Institute is a left-wing think tank in the US, who openly state they want to achieve an “equal and just economy'“, however this week they tweeted a farcical video calling Bitcoin a scam. Their political affiliation and source of funding although relevant are a distraction, what amazed me, was that the premise of the entire story was incorrect; it was intellectually lazy.
Not once were so many of the problems we’ve already discussed in this newsletter mentioned, such as price inflation, growing inequality, and government over-reach. Whilst it failed to recognise the impact that Bitcoin is already having, for millions of people, all over the world; I know the citizens of El Salvador believe they live in a more ‘equal and just economy’ today than yesterday…
Read: “The Crypto Anarchist Manifesto” by Tomothy C. May