Bitcoin is back above $10,000. But markets haven’t entirely accepted the foundational change cryptocurrencies represent, Trace Mayer argued on a recent edition of FS Insider.
Libra Not a Threat to Bitcoin
Facebook’s Libra is not likely to seriously challenge Bitcoin or the international monetary system, Mayer stated. As a stable coin it offers more value to Facebook through data collection than it will as a threat to the monetary paradigm. That’s the point of Bitcoin, Mayer argued. The powers that be want to control it, and Libra is forcing the issue, but it isn’t likely to play the same role as Bitcoin.
Bitcoin’s rise started a massive fight between Silicon Valley, New York City and Wall Street, Mayer stated. The fight’s extended further as more attempts are made to control and regulate cryptocurrencies.
“With Bitcoin, there are no bail outs. It's immutable. You can't roll it back. It's limited in amount and you can't really confiscate it because the cost of running a Bitcoin full node is so low,” Mayer said.
However, he continued, “Libra is centralized. You can censure it. You can't hold your own private keys. … I’m not sure government regulators fully understand what's at stake here. We're talking about the collapse of the worldwide monetary system which is based on the Federal Reserve Note dollar.”
Bitcoin As Potential Election Issue
We have unintelligible monetary science right now. When governments try to centrally plan interest rates through financial suppression schemes, Mayer explained, they result in misallocations of capital. Eventually we see shortages as pricing signals become distorted. But control is what Trump seems to want— recently claiming he is not a fan of Bitcoin. This could come back to bite him in 2020, Mayer posited, as a large portion of the electorate owns Bitcoin.
“What's Trump going to do?” Mayer questioned. “We have eight to 10 million AML-verified Bitcoin exchange account holders that are American. Is he really going to attack their money and alienate them in the middle of a massive bull market following? That sounds like a recipe for election disaster to me.”
Free Speech and Sound Money
Bitcoin and cryptocurrencies are frequently criticized as being insubstantial. While many argue these currencies have nothing backing them, Mayer said this isn’t the case. Bitcoin is made out of cryptography. It is backed by the mathematics underpinning its operation. It isn’t possible to fabricate Bitcoins, or easily manipulate their price.
Cryptography is a form of speech, Mayer stated, and it was protected as freedom of speech in the mid-1990s in the Crypto Wars cases. Bitcoin is not easy to manipulate, and its supply is relatively fixed and thus it serves as an excellent instrument to upend global monetary systems.
Mayer predicts 2020 to be a big year for Bitcoin. We could see an explosive move in Bitcoin's price from potential U.S. election pressure and Bitcoin’s ‘halvening’ (where miners’ rewards are cut in half).
“It looks like 2020 and 2021 could be just absolutely breathtaking,” Mayer said. “We could be looking at potentially a six-figure Bitcoin price. … If we're going to make America great again, then we need to have first amendment freedom of speech and we need to have sound money. And that's what the innovation of Bitcoin is. It's the soundest, hardest money the world has ever known.”