Bitcoin acts as better money for everyone — especially the unbanked — because it responds only to free market forces.
This is an opinion editorial by Kelly Slaughter, an associate professor of professional practice at the Neeley School of Business at Texas Christian University.
With elections coming up next month, it's almost impossible to find common ground between liberals and conservatives. But there's one subject that should unite red and blue voters: keeping bitcoin free from government regulation.
To make this case, compare bitcoin to a potential central bank digital currency (CBDC), currently being explored per a recommendation from a recent White House report. A CBDC fails to provide all the benefits of bitcoin while introducing new risks.
The attraction of bitcoin and other cryptocurrencies is that they are not subject to central decision-making. With a CBDC, the government could freeze digital accounts. As a replicated system, transactions between bitcoin holders cannot be restricted. Inspired by the same fear of having the accessibility of your assets at the whim of whichever party is in power, red and blue should agree to the benefits of a platform without a selective “off” button.
The White House report states a CBDC could promote financial inclusion and equity by enabling access for a broad set of consumers. Bitcoin is better positioned to do this. Roughly 5% of U.S. households are “unbanked,” which is to say they have no savings or checking accounts. The top two reasons for being unbanked are the inability to meet minimum requirements and a lack of trust in banks. Bitcoin requires no minimum balance and does not require trust in a governing institution.
Indeed, bitcoin’s most significant adoption is in poorer countries with high rates of unbanked households and high institutional distrust. The social good possibilities such as direct transfers are immense. Liberals and conservatives may come at this subject from different perspectives but both see the value in providing a financial infrastructure for those without.
Bitcoin is the most transparent financial system ever introduced and no central authority decides what is transparent and what is not made public. Anyone can access historical and current Bitcoin data. Even the code running Bitcoin is open for public review, including what changes were made and when.
The opportunities for leveraging this transparency are immense. What if you paid your taxes to a government bitcoin address? What if vendors were paid in bitcoin? What if the government and vendors had to share their addresses publicly? We would have the most financially transparent government ever conducted, answerable to both blue and red sides of the aisle.
There are a number of legitimate criticisms directed towards bitcoin. Regarding energy use, proponents and critics agree that a reduction in energy use is a worthwhile pursuit. We can then recognize the progress being made in transitioning to green mining.
What of the grift and illegal activities? Bitcoin proponents are keen to wrest this type of activity out of the system (though to be fair, what is the standard for an honest system? Are we asking more of Bitcoin than other systems?). While transparency alone can work against dishonest activity as seen in the legal seizure of cryptocurrency, many Bitcoin proponents want to work with the government to introduce reasonable regulations.
Bitcoin experiences significant volatility and speculation. This is not behavior we want in a currency and an issue recognized by all bitcoin advocates. But we analyze bitcoin from a 2022-based perspective as if the nature of money is static. In our country’s history, we have accepted foreign currency for official spending and allowed banks to print their own currency. The idea of what money does and how it behaves evolves. Bitcoin is a bit over a decade old and, if allowed, will also evolve based on our technical, economic and social preferences.
Bitcoin is not a replacement for the U.S. dollar, it is an alternative. We accept that USD is an alternative currency, officially and by custom, across the globe. Barter without a currency at all is still legal. We recognize a number of ways for people to transact. Both red and blue parties recognize the value of having financial options — bitcoin is another option with unique benefits.
Bitcoin opponents argue that bitcoin has no intrinsic value, unlike a fiat currency that is backed by the government. But what is our government but an agreement among citizens? Accordingly, citizens have the power of agreement in recognizing bitcoin as a means of transacting. With supporters on the right and the left, let’s agree to let bitcoin continue to evolve as a voluntary way for parties to choose to conduct business.
This is a guest post by Kelly Slaughter. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.