Trump Is Not Bitcoin’s Savior

The election is over, and Trump is now going to be President again. He pulled off something that hasn’t been done since Grover Cleveland in the 1800s, a successful re-election following a loss after his first term. People all of this space are celebrating this as some kind of victory for Bitcoin, but nothing could be further from the truth.

Ross will likely be freed, Trump is too full of himself to back out of such a trivial to deliver on campaign promise, so he will probably do it. It’s too easy, and something he can parade around and take credit for, so it will happen.

That is where anything substantial will end. A strategic reserve is not happening without the approval of Congress, even seized assets are by law required to be disposed of on the open market. Trump cannot from any reading of his authority I am aware of unilaterally push the federal government to begin accumulating bitcoin. Even if by some miracle that Congress did act to pass such legislation, what good does it do Bitcoin? A government accumulating bitcoin isn’t going to help make it more scalable, it isn’t going to make it more private, it isn’t going to protect it from government overreach and interference. It won’t even help us pay off our debt, the price appreciation necessary for such an outcome is frankly delusional.

Instead the most likely outcome is more of the same. More attacks on Bitcoin privacy. More encroaching regulation in the form of KYC and AML. Miners will likely come under scrutiny as Bitcoin’s elevation onto the global political stage continues. The question of their liability and involvement in confirming sanctioned or otherwise undesirable transactions has already been floating around Washington D.C. for a few years now, the tone of those questions will likely get more serious.

Exchanges and other on/off ramps will likely be pressured to engage in ever more invasive surveillance of their users in pursuit of stamping out terrorism, criminal use, child trafficking, etc. All of the traditional boogiemen of the digital world will be trotted out, and the regulatory noose will be tightened. Sure, Trump might push for enshrining self custody as a right, but does that on its own really provide any serious degree of freedom without privacy? Without censorship resistance?

Trump even spoke in Nashville about regulations, and the expansion and endorsement of stablecoins. “People who see Bitcoin as a threat to the dollar have it exactly backwards.” He wants to push dollar backed stablecoins all over the world, taking advantage of a new route for us to export our inflation without the need for diplomacy. People in other countries can just use them, they don’t need their government to choose to dollarize, or hold dollar reserves. Just download an app and start using them. The approach he wants to take to Bitcoin and cryptocurrencies will breath new life into the dollar, and push Bitcoin down a path to stagnation and capture.

People are cheering this on as a victory for Bitcoin, the reality is it is us entering the gauntlet. It is still an open question whether we can successfully run it and come out the other side without having to make serious and potentially fatal compromises. 

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