Can Bitcoin Empower Individual Liberties?

The ongoing feud between China and the US

Following the US President’s announcement that he would raise tariffs on Chinese imports, bitcoin price rose by 26.5% within a week. The crisis in relations between the two countries continued to intensify, and on August 6th, Chinese companies suspended purchases of new US agricultural products - prompting the US to retaliate and accuse China of acting as a currency regulator.

As the feud continues, and people around the globe become increasingly wary that the situation might lead to a period of protectionism akin to the 1930s, there are some who happen to be benefiting from the tension...

Owners of Bitcoin saw its price steadily increasing as US based investment funds heavily invested in unconventional financial products including cryptocurrencies in an effort to avoid being struck from the backwater of this confrontation.

Or is it so?

Even though the cause of the US-Chinese crisis is the strategic competition between the two countries, the causation is the huge US trade deficit which burdens the American economy, with many claiming it is one of the main reasons for increased unemployment in the Central States, and the creation of the so-called “Rust Belt”.

American consumers decided to purchase products made in China over products made in the US for a vast array of reasons, including their cheaper price point and / or better quality. Respectively, Chinese consumers decided to purchase products made in the US over products made in China because they too believed in their better price and / or quality. Noone forced either side into purchase any specific product, with all transactions that resulted in the US deficit being entirely voluntary - as they should be.

The average consumer in both of these countries were thus acting within their civil liberties, awarded by the Constitution (in the case of American citizens at least), but - following this year’s earlier events - have since found themselves caught in the middle of a pretty nasty trade war, having to pay increased taxes to their governments in order to access the goods they had become accustomed to.

What’s a man to do?

Well, the answer is simple: bitcoin.

The power of bitcoin

Unlike in the recent past, where Wall Street brokers’ heavy investment into the cryptocurrency prompted the price of bitcoin to rise, this year’s increase was instead triggered by business owners across the US and China using Satoshi’s creation to circumvent the strict regulations imposed by both their governments.

This is an unprecedented phenomenon in world history. In the past, only smugglers were able to bypass government trade regulations, and in most cases, if caught, they were hanged. This is the first time that an individual can trade with another individual without the consent of their government, and without having a third government's or organisation’s support. It’s the first time economic borders are abolished without an international treaty or use of force.

It is interesting to compare cryptocurrencies with Europe’s Great Experiment, the European Union and, in particular, the Euro Area also known as the Eurozone where something similar has taken place.

The Eurozone’s purpose is to create a monetary union by eliminating national borders within its own borders, allowing for free movement of capital, goods, services and people. Despite its initial success, the European debt crisis has damaged the entire establishment and it’s future remains unknown.

The Grexit has been avoided, the Irish, Spanish, Portuguese and Cypriot economies are growing, but there is still a feeling of indignation among Europeans towards EU’s institutions. Proof of this can be seen through the outcome of the UK’s Brexit vote, Salvini’s policies and rhetoric, Poland and Hungary’s opposition to certain EU policies and the rise of far-right, anti-EU movements across most European countries - including high-GDP-per-capita Northern European countries.

Much of this indignation stems from that fact that the average European citizen can’t identify themselves with the EU's central government and policies, as in most cases such policies were not voted by the countries’ citizens but by the national parliaments strengthening this sentiment.

Bitcoin, and cryptocurrencies in general, can therefore provide citizens with the advantages of free capital movement, without the disadvantages of a centralised authority or system. There is no involvement from a third-party, leaving both stakeholders with more money to spend on wages, new equipment, or anything else they want.

Cryptocurrencies allow for frictionless transactions between individuals without the need for bank statements, passports or any other documentation, offering a solution to the problem facing American and Chinese merchants, without the side-effects of a centralised monetary authority like the ECB. It looks like Satoshi Nakamoto killed two birds with one stone.

What does the future hold?

After centuries of technological advances, finally, the individual is stronger than centralised authority. Individualism seems to be taking the lead over collectivism.

Milton Friedman would be overjoyed.

Considering that, for as long as we can remember, people have depended on large organisations for security, health services and pretty much everything, this is a historically unprecedented change of status quo.

And every change of the status quo is challenged by the old establishment. Sparta’s oligarchy started a thirty year war to stop Democratic Athens’ rise to power and maintain their prime position in the Mediterranean. Europe’s monarchies allied against the French First Republic in order to protect their interests. Today, central banks refuse to fully recognise cryptocurrencies, as it might make them obsolete.

But as history shows, the old establishment will sooner or later either adapt to the new status quo or collapse completely.


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Cloudbet

Posted on 2019-12-05

Cloudbet has a team of contributors that produce high quality content across a range of subjects related to betting and crypto.

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