Bitcoin’s Fort Knox Moment

Original title: "Bitcoin's Fort Knox Moment"

Original author: Zuo Ye, Zuo Ye Waiboshan

After today, Trump will become the most powerful president after Roosevelt. It was during Roosevelt's tenure that Fort Knox became the US strategic gold reserve base, and Trump also declared that Bitcoin would be used as the US federal reserve.

In this US election, Trump defeated Harris in the popular vote. As long as the electors are loyal to the will of the voters, Trump has already won more than half of the 538 electoral votes. If nothing unexpected happens, Trump can return to his loyal White House on January 6, 2025.

Not only that, the Republicans in the Senate have already occupied 51 seats, and the two parties in the House of Representatives are expected to form a balance of power. Even if the Republicans cannot control it, the gap between the two parties is within the single digits. And thanks to Trump's multiple nominations of justices during his first term, the current ratio of conservative VS liberal justices in the Supreme Court is stable at 6:3, which even surpasses President Roosevelt because he did not fully control the Supreme Court.

The last miracle of two non-consecutive elections happened 132 years ago in the Cleveland period. After November 5, the Wikipedia page needs to be modified. Trump's achievement of being the second person in history has been achieved.

Looking back at the history of Rome, the Republican Party is already Trump’s party, and the first integration of the three powers also gave him a power base that previous US presidents did not have. The last time Roosevelt laid the foundation for the dollar-gold alliance until the collapse of the Bretton Woods system, and this time, will Bitcoin also start this historical process?

The process of Web3 institutionalization begins

Institutions mean stability in the Eastern powers, while in the eyes of Trump and Musk in the Western powers, System, like Deep State, represents a corrupt interest group that needs to be eliminated. Therefore, Musk will personally join the game, hoping to become the helmsman of the Department of Government Efficiency (D.O.G.E), adding new catfish and vitality to the existing political correction mechanism.

This is not a new idea. The birth of the FBI, the emergence of the IRS, and even the establishment of the CIA are all new variables that cannot be maintained by the existing route. It is unnecessary to believe that cryptocurrency and Bitcoin will truly change the United States. The only thing we need to care about is how the US dollar and gold are "Americanized", which is also the so-called institutionalization, that is, the new resistance forces are absorbed as part of the existing ruling order.

The End of Free Dollar

The issuance of the US dollar has roughly gone through three stages, from the Continental Currency in the War of Independence to the establishment of the Federal Reserve in 1913, the gold standard from 1879 to 1944, and the credit currency era after the 1970s.

As early as the American War of Independence, the Continental Army began to issue US dollars, but at this time the US dollar was more of a war bond. If you bet that the Continental Army will win, just hoard US dollars. Later, during the Civil War, the federal government issued a large number of "greenback dollars", which was also the same reason. It had a strong war bond color, while the Southern government issued cotton bonds. In the end, the industrialized US dollar defeated the cotton of the plantation owner.

After that, there was the Bretton Woods system that supported World War II. The US dollar was linked to gold, and the currencies of other countries were linked to the US dollar. The double-peg mechanism was also a de facto gold standard mechanism, but after Nixon announced that gold would no longer be exchanged for US dollars, the system officially disintegrated.

The above is the history of the US dollar that we are familiar with. Today's US dollar is actually a redemption certificate for US Treasury bonds. The US Treasury issues bonds, and the Federal Reserve purchases them and issues reserves as US dollars. Luna-UST and other dual-currency mechanisms are just poor imitations.

The free banking era of the greenback dollar from the 1820s to the Civil War is no different from the current prosperity of cryptocurrency. A large number of banks can issue banknotes on their own, which is essentially a promissory note that can be redeemed on presentation. Even if the banknotes issued by banks themselves have the same face value, they cannot be interoperable. In the craziest era, there were more than 70,000 types of "US dollars" on the market.

To a considerable extent, the chaos of the US dollar system was also one of the causes of the Civil War.

This kind of chaos of issuing entities naturally cannot continue to exist, just like the regulatory thinking of cryptocurrencies today. If it is not managed, even gold will be sold at prices ranging from the moon to the underworld, and the economic system will be under the Brown system for a long time.

According to this, the United States introduced the National Bank Act in 1863, established a number of national banks and the Office of the Comptroller of the Currency (OCC), but it should be noted here that the US government did not deny the qualifications of other banks to issue banknotes, but conducted targeted "reviews" and supervision, just as the SEC targeted the "securities issuance" qualifications of various cryptocurrencies, but did not deny your cryptocurrency issuance qualifications. The characteristics of US management are hidden in history.

So far, the US government began to intervene in the US dollar on a large scale, until the economic crisis of 1907, when J.P Morgan played the role of the savior, so he had the hard power to play with the US government. In 1913, the Federal Reserve Act was introduced, and the Federal Reserve (Fed) was born, and the free dollar was completely ended.

After Bitcoin Landed

Zhang Hua was admitted to Peking University, Li Ping entered a secondary technical school, and I worked as a salesperson in a department store. We all have a bright future.

There are only two types of cryptocurrencies in the world, Bitcoin and others. In Trump's view, the US dollar needs to change its anchor, and Bitcoin will be a better anchor than US debt, at least as one of the supports as gold. The only problem is that the price of Bitcoin cannot accommodate tens of trillions of liquidity. If each Bitcoin is worth one million US dollars, it is more likely that the US dollar will depreciate.

Let's do a simple math problem. The current scale of US debt is 35 trillion US dollars, and the current circulation of Bitcoin is about 19.1 million. Do a simple division to solve the US debt crisis. The price of a single Bitcoin needs to reach 1,832,460. The current 75,000 US dollars is just an appetizer, and there is still a 24-fold increase.

A more rational choice is that Bitcoin does not need to become a reserve fund for the US dollar like gold, but only needs to solve the interest on US debt. According to calculations, the annual interest on US debt is about 1 trillion, which is almost half of the market value of cryptocurrencies, or approximately equal to the market value of Bitcoin, but this still requires the US government to control all or most of Bitcoin. Regardless of whether the US government can do this, assets without liquidity are worthless.

Picture description: Bitcoin distribution map

Picture source: River Capital

Currently, the US government holds about 1% of Bitcoin, but like J.P Morgan to the Federal Reserve, most of the various BTC ETFs are US-funded. If their 5.2% share is counted, plus Satoshi Nakamoto's passive lock-up of 4.6%, then the US government is theoretically capable of controlling or influencing about 10% of the Bitcoin price, which is already a super whale.

Before 2034, there will be about 10 trillion U.S. debt interest. Considering that Trump's term is only 4 years, if Bitcoin can really be used as a reserve of U.S. dollars, then only about 5 trillion interest will be needed. Then the price of a single Bitcoin will only need to reach 261,780 U.S. dollars, which is about 3 times the current price. This is possible. Just take the attitude of "I don't care about the flood after I die".

And the entire Web3 will also enter the American era. The last Internet dividend produced the fruits of Silicon Valley. I don't know how it will go this time.

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