BR #13: Will they ban Bitcoin?

(2 minutes)

Many smart friends of mine have recently told me:

"I get Bitcoin. I get there will be only 21 million coins. But I think governments will ban it."

Intelligent, respected, and powerful men predicted bitcoin would be banned.

• Ray Dalio said it (ex-CEO of the biggest US hedge fund).
• Jamie Dimon said it (CEO of JPMorgan, the biggest US Bank).
• Larry Fink implied it (CEO of BlackRock, which we covered last week).

Let's consider the types of bans, their likelihood and effectiveness.

A global ban of bitcoin by all countries

First, I cannot think of a single issue on which all countries worldwide reached a consensus. What would make them agree on a unified global policy on a topic as important as money?

And even if many countries simultaneously ban bitcoin, this would create is a huge incentive for other jurisdictions to deflect. They do not benefit from the dollar fiat system anyways...why would they defend it?

• We have already covered the ongoing dedollarization in Russia, China, Brazil, and others which do not benefit from the USD and are looking to push their own currencies.
• Meanwhile, El Salvador introduced bitcoin as legal tender and thus is attracting a growing number of bitcoin holders as tourists, immigrants, investors, and even missionaries inspired to build new businesses and models in a bitcoin country.
• Singapore, Dubai, small island nations, countries in Latin America, Africa, and Asia can easily mimic El Salvador's model and attract the growing bitcoin diaspora. The higher the bitcoin price goes, the more irresistible such a proposition will be for these countries. And we know bitcoin's price is programmed to jump every 4 years.
• Introducing bitcoin friendly laws is becoming an easy shortcut to attract tourists, immigrants, investors and boost one's economy.

For all reasons above, an outright bitcoin ban by all countries globally seems close to impossible to me. On the opposite, I expect that we reach an inflection point when multiple countries introduce bitcoin as legal tender and start competing to attract bitcoiners.

EU or US banning bitcoin

Let's be honest, most of us really fear a ban in the US and/or EU.

In the past year, however, we have seen clear signs of regulators and politicians recognizing bitcoin as an established asset.

• Heads of CFTC and SEC said "Bitcoin is a digital commodity".
• Heads of the US & EU Central Banks recognized bitcoin as a digital asset.
• 4 candidates for the 2024 US presidential elections openly defend bitcoin!
• What is more, 2 of those candidates are Republicans and the other 2 are Democrats.
• Bitcoin has literally become an important point on the agenda of both US parties.

Nevertheless, imagine the USA forbidding you from selling USD for Gold !!!?

How ridiculous would that be?

Oops, that actually happened in 1933.

At the time the USA confiscated the gold held in bank vaults.

YES, that actually happened in the most democratic country in the world.

Still, I don't think this will happen again with bitcoin in the 2020s.

The world today is different than in 1933.

In 1933, USD was backed by gold, which made it easier to justify confiscation of gold.
In 2023, USD is not backed by bitcoin.

In 1933, gold was held in bank vaults, making it easy to confiscate.
In 2023, most bitcoins are held in personal self-custody wallets - making it impossible to confiscate at scale.

In 1933, information moved very slowly via newspapers and word of mouth.
In 2023, information moves at the speed of light. Bank runs and protests happen overnight.

In 1993, moving out of a country was hard and expensive.
In 2023, it is easy, cheap, and fast to move across borders & continents.

Hence, I believe governments realize that an outright bitcoin ban would be both ineffective and extremely counterproductive.

A ban would trigger a massive counteraction by millions of Americans and Europeans who already own bitcoin. And will thus turn Bitcoin into a central point of public discussion.

Knowing that, I believe governments' goal will be to simultaneously push:

1. Products like BlackRock's Bitcoin ETF which centralize as many bitcoins as possible in the elites (read more on that in last week's email);
2. CBDCs (central bank digital currencies) to increase monetary control on an individual level and exclude most people from owning real bitcoin.

By advancing these two fronts, they could try to maintain the inflationary monetary system and at the same time try to limit bitcoin's growth.

They could only succeed if the majority of bitcoins are held in ETFs, banks, centralized exchanges.

This is not the case today and I don't think it will become the case.

I will do my part in helping you acquire bitcoin, learn how to easily secure it, and pass it to your heirs without relying on any third party.