The giants are fighting for the soul of Bitcoin

Store of value or unit of account? Welcome to the Soulwars.

When the ETFs were launched by Blackrock, Fidelity and others a couple of months ago, many Bitcoiners immediately smelled an attack on Bitcoin.

That was to be expected of course.

Some Bitcoiners see Bitcoin under constant attack. Why should this seemingly Bitcoin-friendly step by the giants of Wall Street be any different?

We call Bitcoin a Trojan Horse of freedom. But what if Blackrock just inserted a Trojan Horse of control into the Trojan Horse of freedom?

Talk about 5D chess!

My view was always: Things like the ETF are inevitable, so why fight them? If Bitcoin is what we think it is, the new apex asset of humanity, then Wall Street is gonna get in on the action one way or the other.

But now we can see a new storm forming in the “highest” circles of Bitcoin. The giants are fighting for the soul of Bitcoin. The Soulwars have started.

At its center we see an age old question:

What is Bitcoin going to be?

“Just” a store of value: Digital gold forming the base layer of the next version of the financial system?

Or is Bitcoin going to be much, much more? A multilayer structure that can act as a financial system of its own? Could Bitcoin serve as a global currency and foundational framework for a decentralized financial system?

In other words: Are we rebuilding fiat on top of Bitcoin? Or are we building the Bitcoin world as a fully fledged alternative to the fiat central banking of old?

The debate is encapsulated by Jeff Booths recent statement on Natalie Brunell’s show where Jeff said he disagrees with Michael Saylor on this one crucial question.

I think Michael Saylor is wrong on it (Bitcoin) just being a store of value. If he is right, it means that all that happened is that the US went from gold to an oil-backed currency, the petrodollar system, to Bitcoin. And if that’s all it looks like and it doesn’t become a medium of exchange, then the theft will continue. - Jeff Booth

Saylor positions Bitcoin primarily as a store of value, akin to digital gold. He argues that the finite supply of Bitcoin makes it an ideal hedge against (monetary) inflation and a robust treasury asset. According to Saylor, as governments continue to engage in excessive monetary policy and fiscal stimulus, the necessity for corporations and individuals to protect their wealth becomes paramount. Thus, Saylor’s advocacy emphasizes Bitcoin as a reserve asset that can preserve purchasing power over time.

If you want to know more about his view, be sure to check out this chat we had in Prague on the topic of Bitcoin as capital.

It’s crucial to note that both Saylor and Booth are “talking their book” here. Both are literally invested into their view of Bitcoin. Saylor has amassed a large hoard of Bitcoin as a treasury asset for his company Microstrategy. Booth is invested in companies that want to take the Bitcoin technology much further via his fund Ego Death Capital.

This split comes as talk of a “Bitcoin Dollar” and Bitcoin as a strategic reserve asset on nation state level intensifies - not least because of Donald Trumps involvement.

We’re entering uncharted waters here. Are Wall Street and the US state going to use Bitcoin to reinvigorate capitalism, freedom and the pursuit of happiness? Or are the trying to reign in Bitcoin and eliminate a threat to their power?

I think this question will dominate the Bitcoin debate for a long time.

On the one hand Saylor is absolutely right when he says that we can’t have capitalism without functioning capital. From an economic point of view the arrival of perfect money in the form of Bitcoin is a godsend. On the other hand it’s very, very hard to imagine politicians, fiat bankers and government bureaucrats realizing this and embracing Bitcoin as a tool of economic freedom.

This might be why Jeff Booth echoes the time tested cypherpunk view of developing technologies to change the status quo. Of doing things first and asking questions later (or never).

We certainly don’t want to stop the development of the Bitcoin ecosystem just because Blackrock and (possibly) the US government have embraced the “Bitcoin as an asset” narrative.

In an ideal world both happens: Bitcoins official ascent to the apex asset of the financial world AND the rapid development of the decentralized financial system of the future.

But we don’t live in an ideal world. So Bitcoiners are right to tread carefully.

Right now, they own the vast majority of the Bitcoin out there. So they have considerable power in this fight.

There is a quote, I don’t know who it’s from tho:

“Bitcoin is a revolution ensuring success by making the revolutionaries incorruptable.”

I suspect this theory will be put to the test over the next couple of years.

Till next time,

Niko

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