The Dollar is Dead; Long Live the Dollar

Considering the potential of the Bitback, the dollar serving as the arbitrage currency for BTC and the crypto economy.

With the recent expiration of the fifty-year deal between Saudi Arabia and the United States whereby they agreed to sell oil internationally only for United States dollars, much has been written about the danger to the greenback in having lost its oil peg, or petrodollar status, much like it lost status as gold reserve in 1971.  The expectation many have held, including myself until most recently, is this would lead to the eventual inflation and mass devaluation of the USD, but now I have begun wondering if a strategy either insanely lucky or canny may allow the dollar to not just survive, but prosper in the days ahead.  Without claiming this is what happened by design or asserting this is how it will work, indulge a hypothetical retelling of history.

The problem with cryptocurrency, as we all know, is while it has certain utility cases like being a store of value, having a potentially limited supply to control inflation (21 million coins total for BTC to be mined - we're at 19.4 million now), and featuring some privacy components, is that much like fiat money, it had no intrinsic value.  As such, the single biggest hurdle for the would-be currency to overcome was to persuade people to use it.  This is where the story gets interesting.

Nobody knows with certainty who Satoshi Nakamoto was, but it has long been thought the enigmatic programmer whose concepts exist in BTC was in the orbit of the NSA or other appendages of the American Deep State.  Let's presume that is true for the purposes of this scenario, because if it was true, it would stand the reason the Federal Reserve Bank and its shadowy shareholders would have been supremely placed to benefit and be among the first money in when the nominal cost to entry was scant

I am no cryptocurrency expert, but the fundamental utility value that appeared to drive early usage was the need for illicit economies to have liquidity, shrouded in the desire for both good and bad actors who desired secrecy and needed a covert coin for covert transactions.  Whether it was for more heinous uses like drug or human trafficking, or as simple as people trying to beat oppressive taxation structures or government plundering, the reality is BTC, which I use here as exemplar for the crypto market as a whole, but for which other coins would be more or less under the same conditions, but less valuable because of market share limitations, is the reserve currency of the black market.

If you can remember before Silk Road, the infamous raid that set back BTC prices under the expectation that the American government would shut down operations one way or another in the broader community, the coverage of the coin was in how it was used to pay for bounties, ransoms, narcotics, chattel, and other dark ideas.  As ever, there were detractors who stated the American ethos "Just because something will be misused, if it can be used for good purposes, we must accept it."  As such, the coin continued onward, but bolstered by the very trades that so plague our society in many ways, and about which reams of evidence have been written that black budget operations primarily but not exclusively by American intelligence funded independent operators in the untraceable currency they wanted, BTC.  So, BTC continued to grow to the point where the market was too big to ignore, precisely because the weight of those transactions continued to grow as states have been destabilized worldwide through otherwise insane policies, especially in the wealthy west, serving as inducement for people to divest into currencies like BTC which appear nominally detached from the USD, Euro, or other coins.

One could argue I overestimate the value of these transactions and how they began because many more criminals might prefer cash.  But, the funny thing about the black market is where the white market, or overt market, tends to prefer a dominant coin with some competitors, the covert market prefers the ability to quickly convert into one coin likely to hold value, and into the currency in circulation by nations most demonstrated to hold value over time, which the USD has done in comparison to all other currencies since Bretton Woods that are publicly issued by central banking.  Consider however the more important relationship, the convertibility between the dominant crypto and fiat, where the massive amount of trades that happens are between the USD and the BTC.  For those who understand the market better, clear evidence of this exists in how the money is basically guaranteed for institutional actors, in the role Tether, the primary stablecoin, one of several linked 1:1 to the USD, serves as essentially insurance to keep capital outflows from leaving the crypto exchanges.  What has happened is that the greenback's value is now tied, perhaps more than to oil, and I'm questioning if this was fiendishly deliberate, to the BitCoin.

A little math here:  As I write the coin value is about $65,000 USD:1 BTC, which with a total amount of coins to be mined of 21 million, means the current total value of BTC as a store of value is nearing $1.4 trillion USD.  We have a trillion dollar market, which many believe will grow to 11 figures within the next few years given the instability (and keep in mind the value of the entire American economy is slightly south of $20 trillion USD - measured as GDP per annum, with the world economy perhaps being $70 trillion USD per annum.  If BTC triples in the coming years to $200,000, that means it would represent the purchasing power of about a tenth of the global economy, and its monopoly position as an informational transfer coin of preferred usage might be unassailable absent a major technological shift.  Consider how much that leverage might consume, representing the purchasing power of the black market, plus an increasingly large portion of the overt market making investments.

BTC, for the uninitiated, has always looked something like a gamble.  Yet, it has, over time basically proved a gamble one couldn't lose if they were willing to risk holding the bag when the valleys hit.  Every seeming threat of regulation has always been held back, allowing time for whales to purchase the dips.  Now, we have a functional multibillion dollar economy on trading alone between cryptocurrencies, but the real value from the institutional perspective, much like FOREX type trades over currency, is the $.01 every day that you see move so that BTC and Tether, the dollar by proxy, remain in exchange with one another.  Something about fully backed goes through my mind, as I think how much is being made as gasoline for the speed of transactions, or vigorish to the gamblers, and how much money institutions playing in this space could make off the Tether/USD pendulum to the BTC bonanza.  Small money, big volume, no risk, and the counterweight ends up being the covert market, those wanting secrecy, plus those wanting to make a windfall.  Could it be enough energy to serve as a perpetual engine, at least for a while, to make BTC invaluable based upon the harnessing of human desire?

If my intuition is correct, and someone more eloquent and with the proper vocabulary than I is encouraged to more clearly flesh out the technical lexicon, what we saw in BTC was a coin set up against which the USD could serve as the preferred arbitrage, or exchange middleman, against the weight of the covert market.  How much that was actually true is less relevant than the perception that drove and popularized BTC, which needed to happen somehow for this crazy scheme to work, yet we are clearly past the threshold for mass adoption.  As such, if BTC doubles every two years, which becomes more likely as 94% of all coins have already been minted, then the value of the American economy should be surpassed by the end of the decade, and the world by the mid 2030's, after our time of troubles will theoretically have been resolved one way or another.  BTC could be a monster.

The weak point to this system, ironically, is if America can hold out itself.  Between political unrest, cultural divides, increasing actual impoverishment, and a myriad of other factors known to many of us, that is not a certain bet.  Yet, in the best traditions of democracy to serfdom, if it can hold together enough, and as it falls apart, even more money goes into the blockchain, which would make the rich richer if they are who I think they are.

I read a book years ago that made me think differently about money: Silent Weapons for Quiet Wars, and in such, it said the innovation of the finance economy that the Rothschilds weaponized in their time was to see the entire system as an electrical exchange.  In a similar vein, you'll note I've used the word pendulum several times herein, and what I speculate happened here was the effort to create a perpetual motion machine using the only fuel without limit: human desire.  Leveraging the black market, with societies that now encourage vice, to create a coin of thin air that would make its partner wealthy and relevant for years to come, ensuring the dominant currency of today would have the clear ground to overwhelm both allies and enemies alike.  Illegal immigrants being welcomed to siphon money back home through illicit transactions builds a deeper world net than mere Western Union transfers.  Debauchery as an Avant guard orthodoxy encourages funnels which are never prosecuted, and mass money laundering primed a perfect wicked pump.  It was a tool that was too useful to be resisted, and now is too popular to be forgotten.  The dollar is dead - long live the dollar.

A closing thought: If there is any truth in what I say, then the new backing of the US dollar already has a tilt toward the worst tendencies in human behavior, those things too valuable to not happen which we all know better than embrace, and the secrets we choose to keep in a world that seems hell bent on making us have more each day, now whether you are degenerate or even if you want to squirrel anything away as a good person in a fallen world.  We keep playing Babylonian games, and I wonder what the Lord will reward as Babylonian prizes.  Jesus warned in the Bible about serving Mammon, or wealth (money) or serving him, and when we try to think of a world where we don't order our lives around finance, how hard is it to imagine living truly free from the devil's due?  All will be taken from you, whether by tax or foreclosure, and you can not simply live anywhere unfettered without the implication of property tax, save as a vagabond or a hermit.  Is this good - or do we even know how to question it?  It doesn't seem so, but we better learn soon, because this system in bits and bytes, may be enough to stay for all the days ahead.

For my schizophrenic friends, the Lord laid something on my troubled heart.  Years ago, He told me to get out of crypto, which I think I now only finally understand, because it is investing into something whose heart is so dark, we cannot imagine the poison we've swallowed.  But, in a simple anagram, maybe there is a hint: SATOSHI NAKAMOTO = SATAN TOOK MOSHIA (Hebrew: Savior).  This stuff happens too often; we're not crazy, but just unwilling to see the truth.