The birth of the artist was followed by its inevitable afterbirth – the critic. It is the critic who actually propels progress, contrary to popular belief that criticism is meant to hinder and destroy creativity. The juxtaposition of the critic’s actions with those of the creator can be placed in the context of Umberto Eco’s iconic novel ‘The Name of the Rose’, in which Venerable Jorge, who was blind, said “there is no progress in the history of knowledge, merely a continuous and sublime recapitulation.”
Venerable Jorge could not have been more wrong in his blind conviction in the stagnation of humankind and the deceleration of progress, as evidenced by the flourishing of the Renaissance and then the modern world. Still, his words continue to echo in the critics’ rhetoric of today. Some of these critics found fresh feeding grounds in the fields of finance, clinging to the old world, without even realizing that their criticism is ultimately serving its purpose of boosting progress, not hindering it.
An Old Order In Revolt
The world is currently divided, but not in a clash of civilizations kind of way, but rather a clash of narratives over governance and the meaning of human progress as a whole. The advent of a new technology capable of challenging the established financial system for the betterment of user experience, the optimization of payments worldwide and the redistribution of opportunity has stirred the proverbial critics’ hornet’s nest. Many of them are adamant and steadfast in their resolve to maintain the ossified traditional financial and banking infrastructure as it exists today with all of its shortcomings and blatant, gross abuse of power.
A bright example of the critics of the emerging decentralized financial system is US Senator Elisabeth Warren – a diehard opponent of cryptocurrencies who has been attacking Bitcoin – the most popular and capitalized cryptocurrency – trying to discredit it. The Senator has long been an outspoken critic of cryptocurrencies, comparing them to “snake oil”, while still acknowledging some potential benefits of the underlying technology – mostly to push the idea of a US Central Bank Digital Currency (CBDC).
The arguments the Senator relies on range from inefficient energy use and financial misconduct to the ethereal and fictional need for a bailout for an expanding cryptocurrency market.
The Senator is convinced that cryptocurrencies could pose a threat to the U.S. financial system and its participants, and by implication US hegemony, unless a proper regulatory framework is put in place – some would say a phantom of the native superiority complex that disregards the needs and aspirations of the global population in favor of the local minority elite and their financial masters.
And the ‘masters’ are doing much to discredit Bitcoin and its proponents through the entities they control, as evidenced by Moody’s recent decision, which downgraded El Salvador’s long-term foreign-currency issuer and senior unsecured ratings to Caa1 from B3 right after the country adopted Bitcoin as legal tender. No pressure.
Moody’s noted a “deterioration in the quality of policymaking,” stating that the country’s new law “weakened governance in El Salvador, raising tensions with international partners – including the United States – and jeopardizing progress toward an agreement with the IMF (International Monetary Fund).” Effectively, the agency places under doubt El Salvador’s ability “to access sufficient external financing ahead of bond redemptions”.
But the ongoing acceptance of Bitcoin as legal tender at the state level is not so much being thwarted by the giants of the financial system and their state puppets, but simply being delayed.
There is a great divide in perspective on priority and Bitcoin is still misunderstood or even undermined because of its raw potential to overturn the existing financial and geopolitical order. This makes it target number one for those fearing to lose their chokehold on the veins and arteries of the world’s monetary lifeblood.
No Permission Needed, Thank You
The adoption of private, decentralized currencies such as Bitcoin is all about streamlining financial transactions, bypassing the highly inefficient and costly gateways and services that turn payments into lengthy and fully state-monitored processes, and re-invigorating participants in the economy with the opportunities sound money has to offer. It’s about rebalancing power and, indeed, innovating at the foundational level of how we function as a society and economy.
The use of digital currencies has been proven to solve the underlying problems of remittances while adding an element of benefit and versatility to such assets beyond the base purpose of concluding transactions. It is this versatility and the vast potential of applications for cryptocurrencies that are making them the targets of critics who are in control of fiat flows.
The law passed in El Salvador was not about forcing legal tender, but about solving a remittance problem. Many of the country’s citizens, as well as two billion other people around the world, are unbanked and have no access to the traditional financial system, limiting their lives to eking out a meager existence on the periphery of the modern world.
Furthermore, if the right Bitcoin mining infrastructure were to be set up around communities and households to allow them to participate on a shared power grid, the opportunities of local wealth generation could effectively resolve many of the associated issues. Bitcoin as legal tender also makes it possible for Salvadoreans to work remotely for overseas companies and projects, and accept Bitcoin as payment seamlessly, without the need for financial intermediaries. It is not hard to imagine how these developments could positively impact regional migration issues.
Most importantly – Bitcoin is a powerful instrument for independent states that would allow them and the global economy at large to reduce their reliance on the US Dollar, foreign-dictated fiscal policies, and the strings that often come attached to so-called development funds, IMF structural adjustment programs and other such tools of influence.
The actions of Moody’s are a far cry and throwback to a decaying world order that is desperately clinging to the crumbling leverage mechanisms over countries, economies, and people as individuals. It also interprets El Salvador’s move either from an outdated framework or, equally plausible, it sides with the silent objective to maintain the status quo. However, as bitter as it may be for Senator Warren and her confederates to accept it, the status quo is bursting at the seams and will not hold much longer.
(Dis)Missing The Point
Elisabeth Warren is wrong in her convictions not because she is on the left of the aisle, but because she fails to see how very meaningful goals around human rights and community development can be served by Bitcoin and how Bitcoin’s ‘inefficient’ mining algorithm is not a wasteful, but rather purposeful use of energy.
Statistics are incontrovertible evidence in this regard, as barely 0.1% of global energy use is being used for making the entire Bitcoin network operate, according to a report by the Bitcoin Mining Council. A negligible fraction of the energy used by any other industry, and a noble investment for ensuring wellbeing, convenience and more autonomy for potentially billions of people.
Ironically, Senator Warren fails to make the effort to look beyond trying to appeal to her constituency and ‘masters’ and see that her constituency is best served by Bitcoin for all the right reasons and for all intents and purposes. The Senator has had a lot of opportunities to change her views, as she has been exposed to solid explanations, data and alternative perspectives. At some point, despite the possibility that she might have good intentions, her insistence becomes somewhat of a laughing matter — Bitcoin needs a bailout? Really? We’re going to use the word “bailout” here?
The users, adopters and advocates of Bitcoin are not being penalized. They are being called to strengthen their positions, dive deeper into the things that matter, refine their arguments and thereby grow in resolve as Bitcoin continues to trail its adoption curve – as did the printing press, as did the car, as did mobile technology, as did the Internet.
If the history of human advancement over the past 150 years is of any indication, it is merely a matter of time, not too much time, before Senator Warren buys her first latte with Bitcoin.
Ben Caselin is Head of Research and Strategy at AAX, the first crypto exchange to be powered by London Stock Exchange Group’s LSEG Technology and the first exchange to switch to a Satoshi Standard to drive the adoption of Bitcoin.