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Making Bitcoin great again

Did the Federal Reserve assassinate JFK?

That’s what his nephew would like you to believe, per his comments in Nashville this weekend:

“Six months before his assassination, my uncle, President John F. Kennedy, signed an executive order that put silver coins in competition with the notes issued by the Fed. His intention was to [rein in] Fed discretion. He had been a critic of Fed policy and he hoped to end the discretionary monetary policy and the inevitable debasement of the US dollar...Notably, after my uncle’s assassination, the government immediately stopped issuing those silver coins and power returned to the Fed.”

TLDR: The Fed killed my uncle.

Like most conspiracy theories, this one is easily debunked.

Yes, JFK did issue an executive order to put coins backed by silver into circulation, but, no, his intention wasn’t to hinder the Fed, his intention was to help it; JFK didn’t hope to end the Fed’s discretionary power over monetary policy, he supported it; “power” never left the Fed, so it couldn’t “return” after the assassination; and, despite “debasement,” the US dollar remains entrenched as the world’s reserve currency — 60 years later! 

We could simply use our common sense as well: The FOMC is composed of economist bankers, not murderous, conspiring mafia capos. 

(Imagine the October 1963 FOMC minutes if RFK was correct: “I agree the hit is good for monetary policy, but how do we make it look like the Cubans did it?”)

Laughable as it is, like most conspiracy theories, lots of people will probably now believe the Fed is capable of murder (especially as RFK Jr.’s speech was delivered to a crowd predisposed to think the very worst of it) — and that might well have consequences (by further undermining faith in an important government institution).

Such is the power of ideas, both good and bad.

Such is also the power of Bitcoin because Bitcoin, first and foremost, is an idea. 

I think it’s a really good one: decentralized, censorship-resistant, self-sovereign internet money.

But you’d never know it from watching the keynote talks on the mainstage in Nashville this weekend, where the message was overwhelmingly “number go up.”

I’m sure there were a lot of other, more productive messages and ideas about bitcoin to be heard in Nashville, including many on how to make it better, like a series of talks on OP_CAT and the BitVM, for example (although I couldn’t find these on YouTube).

Having only watched from afar, however, and only able to access the keynotes, there seemed to be a super-abundance of questionable, contradictory and sometimes counterproductive ideas on offer.

In addition to spreading conspiracy theories, for example, RFK Jr. also called on the US government to buy at least 20% of the supply of bitcoin, which may or may not be a good idea (I suspect bad, as I might try to explain tomorrow).

But he also called on the rest of us not to buy ETFs — allowing BlackRock to custody our bitcoin will give them “undue influence over the Bitcoin network,” he explained.

If BlackRock holding bitcoin is a bad idea, how can the government owning it possibly be a good one?

I suppose RFK Jr. just hadn’t really thought that through, but if not, should he have been on the mainstage of Bitcoin’s biggest conference?

Because if Bitcoin is just an idea, muddled thinking like that doesn't make it any better.

Is there no second best?

RFK Jr. was not the only one sharing questionable ideas from the mainstage in Nashville.

Michael Saylor suggested that US dollars lose all of their value every 14 years — “the life is being sucked out of you, linearly, for 14 years.”

This is weird because I have some dollars from at least that long ago and I still seem able to buy things with them.

In fact, the purchasing power of the ones I’ve had stored in stocks and bonds is much greater than it was 14 years ago — and even the ones I have stored in risk-free money market funds are currently appreciating in real terms.

Saylor, however, would have you believe that in contrast to eternal and ever-appreciating bitcoin, stocks, bonds and real estate will all be worth zero over time (literally zero!).

True, I’d have done better if I had my entire investment portfolio in bitcoin, but past performance is no guarantee of future performance, right?

Saylor suggests it is. 

That’s the logic behind his financial advice that you should take out a 30-year mortgage to buy bitcoin as well as his advice to corporations that they should put their entire balance sheet into bitcoin.

Corporations, he says, should assume a “cost of capital” of 55%, because historically, that’s been the annual return for bitcoin.

I guess it’s possible that bitcoin could continue to appreciate at that rate (taking its market capitalization to $104 trillion in 10 years and $8.3 quadrillion in 20).

But even if so, it’s terrible advice. 

If corporations used bitcoin’s historic rate of return as their cost of capital, no corporation anywhere would do anything other than buy bitcoin.

That would be great for the price of bitcoin, of course, but it wouldn’t be great for anything else — no one would have a job and nothing would get built, invented, farmed or improved.

In Saylor’s dystopian vision, even bitcoiners would be worse off, sitting on their hoards of bitcoin with nothing to spend it on other than artifacts from before the year 2024. 

Fortunately, I don’t expect many corporations will follow Saylor’s advice — most will instead continue to invest in things and services we might want to buy.

I hope many bitcoiners ignore Saylor’s message, too.

All his message boils down to is that you should buy bitcoin because it will go up, and I find that thoroughly uninspiring.

Instead, I think bitcoiners would be better served aspiring to become what former President Trump told them they already are: “You are the modern day Wright brothers, and Edisons, and Carnegies and Henry Fords.”

I think that’s aspirational — it’s hard to argue that bitcoin is as useful as airplanes, electricity, steel mills or the automobile.

But maybe it could be inspirational, too?

Instead of seeking to inflate bitcoin by tearing down the Fed or gaslighting us into believing bitcoin is the only investment that ever makes sense, the admirable energy on display in Nashville this weekend could have been directed toward making Bitcoin cheaper, faster, more accessible, more useful and more comprehensible. 

In other words, we should ask not what bitcoin can do for our net worth, but what it might do for the world.  

I didn’t hear enough of that from the headliners this weekend. 

— Byron Gilliam

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