Why the government will try to stop cryptocurrencies
Everything is a system. Some systems are designed better than other. Some are not designed, but take form over time. Understanding how a system runs is essential to analyzing its future. The United States is a system. One where the U.S. dollar is a critical node, powering crucial sub-components and chain components of processes. The U.S. government will see cryptocurrency as a threat to that critical node and will try to stop, hamper, and do everything in their power to halt cryptocurrency once adoption rates reach a high.
The U.S. dollar is the world’s reserve currency. This allows the U.S. to print extremely large amounts of excess money without the penalty of inflation that any other country would face if they tried printing their currency. The U.S. will put its efforts into defending world reserve status rather than accept inevitability of its end and adapt to overcome it. The clock is already ticking and countries around the world have already started to thwart this by making deals in local currencies and creating alternatives to the SWIFT international banking system. Non-U.S. nations do not appreciate that the U.S. can simply print money away to solve its problems at every other nation’s expense. This brings us to a natural adaptation that has emerged in the world—Cryptocurrencies.
Cryptocurrencies introduced the concept of decentralized finance, which may come close to being on the scale of significance that the internet was in terms of human evolution. Crypto also threatens the U.S. ability to print money, though a multitude of crypto stablecoins, tokens, staking, and decentralized exchanges, which are transferring fiat (cash) dollars and wages from the economy and putting them into crypto-asset form. Of note, the crypto community is making larger profit margins than the general stock market, and we may see a slow exodus of wealth transferring from traditional dollar-denominated investments such as stocks, mutual funds, and in general, Wall Street. This exodus is small at the present, but is a trend that will increase because as money flows into crypto, it will continue to push up the sectors growth and profit, while stock profits will begin to stagnate. Often in finance, two asset pairs are compared to show relative strength against each other (e.g. USD/EUR, AAPL/USD, BTC/USD). Now think of this asset pair (CRYPT/WALL), comparing strength of Cryptocurrencies vs Wall Street.
Older generations tend to invest in a traditional, safe mindset, mainly in standard assets that they understand. The traditional stock market is a system they built and it worked to their advantage. However, new generations threaten that system, fed-up with perceived and realized disadvantages that the system has dealt them. These new generations gain strength in community, have an urge to “fight-the-man”, and most importantly, they understand the technology. However, it’s not only the young that have embraced crypto. Older generations, especially those that have a higher risk appetite or have studied bitcoin, have begun investing in cryptocurrencies via traditional methods such as Grayscale’s ETF, while major hedge funds are also altering portfolio composition to include crypto as part of the hedge.
While on the subject of older generations and systems designed to support them, we have an important subset to cover–politicians. Forefront technology is difficult for many young people to understand, but certainly is a challenge for older individuals. Many politicians understand the importance of the dollar as the world’s reserve currency and do not understand the importance of bitcoin and cryptocurrency. As often, when politicians need to better understand what they should do regarding an issue, they seek advice from advisors and government organizations, such as the Department of Treasury and the Federal Reserve.
The Federal Reserve, Department of Treasury, and other U.S. Gov financial institutions see crypto as a threat to them, and will legislate and lobby politicians against the crypto ecosystem. In fact, they already have. Look at the list of countries unable to buy ICO/IDOs and you will find the U.S. located alongside North Korea, Iran, Venezuela, and China. Legislation is not the way. The government, if it wants to survive, needs to properly adapt and evolve. The government should embrace the potential of crypto, blockchain, decentralized autonomous organizations and align their capability to augment core American values, like freedom and democracy. This is the ideal dream state and just that. The “system” that is the government won’t function to adapt like that. It must be done from the outside. From the blockchain community.
One issue with the blockchain community is that it is difficult to get advocates into the government. Many early adopters who fully understand it made or are making enough money because of their knowledge and timely investments. Others don’t want to deal with the burden and bureaucracy of being a government employee. Many of the talented individuals who understand blockchain and crypto potential have already made enough money to retire and have no desire to “fight-the-machine” that is government. Choices: chill out on a yacht, acquire secondary foreign citizenship or accredited investor status for full blockchain access and live a stress-free life, or work tirelessly through the depressing and unmoving machine that is the government.
So hopefully now you see some of the problems with blockchain and politics. They don’t mix… Or do they?
You can send emails and letters to your representatives all day. You can organize a protest. You can write angry posts on social media or donate some money to a crypto lobby, but in the end, will that change anything in the short-to-mid term? I am skeptical. The solution is to leverage the skills and resources available to your advantages and apply precise pressure. Political pressure. Make a Decentralized Autonomous Organization (DAO) for politics. Variants below.
The blockchain has incredible applications, especially with the introduction and application of smart contracts. Now Decentralized Autonomous Organizations (DAO) can be created and governed via smart contracts and participants. I suspect DAOs will enter the political arena shortly, as they represent a more pure form of democracy. It’s difficult for corruption to take place in a well-built, transparent system managed by smart contracts. However, as soon as they enter the political area, the existing two-party system will unite in trying to squash them. The two-party system does not want a third, but a DAO could make it possible. How?
First, participants can pool money together and vote on initiatives. This pool of money could be substantial and help launch unknown politicians into the foray. Smart contracts can help delegate funds and transfer the money power from failing candidates to those with more potential. Basically, smart contracts can tie-up fund releases and hold politicians accountable to the DAO’s preset conditions. A large DAO supporting a candidate also provides a good initial boost of public relations and publicity, which is often key in political battles.
The end goal is to take 5 Senate seats and 25 Congressmen seats. Why? Because it’s enough to force the ruling party to take what the third party seriously. A coalition will have to be formed, and a coalition means that the smaller party is able to make certain demands and conditions. Blockchain and tech development will be a core value of the DAO and what the representative will actively push in agendas. For non-tech related political issues, the DAO will vote and their representatives will use those to decide where to stand (after factoring in coalition demand weighting factors). The third party, when forming the coalition, will demand a free-market society, and passage of a cryptocurrency bill that will modernize and introduce fair regulations.
Taking 5 Senate seats and 25 congressional seats is not as difficult as one might think. The DAO would analyze and scout, searching for the most crypto-friendly states and counties in the United States. Then they would identify or put forth a representative from that state or county and begin helping them launch a campaign. The DAO would funnel money and PR into these focus areas and then create a large hype behind the candidates to help overthrow the incumbent two-party candidates. The DAO would help expand blockchain education and access in these focus areas, much like how Google Fiber picked out cities to become high-speed centers. Start classes and get DAO app installs to show how citizens can get their voice heard easily and directly. This movement will reinvigorate America’s democracy and support its ability to adapt and overcome.
If you are a developer, look into the requirements, structure, and code challenges of building a political DAO software structure.
If you are a mathematical, logician, or philosopher, think through the smart contracts that would need to exist, or political areas that could benefit from smart contract utility.
If you are rich, consider funding development of these group without attaching strings so that it can be truly independent. Sacrifice an idea of a reward other than knowing you are fundamentally paving the future. The impact and usefulness should be enough.
If you are an average joe-schmo commoner without much specific skills, consider spread the word about the need for such a system. Build the hype. Help be sounding boards for the others to vet ideas and find their breakpoints. Help the devs build it in a way that is appealing to the commoner. We commoners are more powerful than given credit and the average joe is the one that needs to adopt it.