Bitcoin City

Published November 23, 2021, 12:12 AM

by James Deakin

ONE FOR THE ROAD

James Deakin

Last September, El Salvador became the first country in the world to adopt Bitcoin as legal tender; two months later, just last Friday, their president, Nayib Bukele, shocked the world once again with the announcement of Bitcoin City –– a digital investor’s paradise that promises zero percent income taxes, zero capital gains tax, zero property tax, and zero municipal and payroll taxes.

Are you paying attention yet?

If you are wondering how El Salvador will source its revenue from these digital nomads, they will achieve that through a 10 percent VAT on all purchases , as well as selling bonds against the energy they produce to mine Bitcoin. It is the ultimate middle finger at the system and it has started off a revolution of sorts that Hillary Clinton recently warned will destabilize America. Needless to say, the fear mongers and institutional bullies, like the IMF, the World Bank and the Feds are threatening El Salvador with all the dangers of leaving their usurious and oppressive systems. But Bukele and his team are enjoying the support of the world’s biggest investors and are more than happy to take their chances doing this on their own terms.

Many see this as the ultimate acid test for smaller or marginalized nations to achieve true sovereignty. If this plays out even half as well as Bukele and his supporters believe it will, then we will witness the rise of a new world order where money is backed by energy and proof of work, rather than weapons and war. A level playing field, so to speak.

There’s a saying: fix the money, fix the world. And in just 12 years, Bitcoin has grown from being an underground currency used by drug dealers, to a laughable fringe currency within the hipster or Silicon Valley set, to a speculative digital asset, to a publicly traded ETF, to a national currency –– which recently flipped Facebook in terms of market cap –– placing it  firmly in the top 10 most valuable assets in the world. All without a single employee, business card, website or office address. Think about that. 

How did an algorithm or piece of written code surpass the Swiss franc to become the 13th largest currency in the world and even more valuable than silver? It’s simple. Bitcoin is a lifeboat of truth in a storm of lies and manipulation. Its success can be credited almost entirely to the failure of global monetary policy, the insatiable greed of central bankers and the rise of authoritarian rule and weakening of property rights around the world –– and more recently, has become the most popular choice among retail investors seeking refuge from hyperinflation.

But again, how does a piece of code with no employees, much less a sales and marketing team, dematerialize traditional assets and become the preferred choice of even the most traditional and conservative companies like JP Morgan––who repeatedly called it a Ponzi scheme –– but are now shamelessly peddling this to their own clients as a solution to a problem they helped create. It’s called Gresham’s law.

In economics, Gresham’s law is a monetary principle stating that “bad money drives good money into hiding.” For example, if there are two forms of commodity money in circulation, which are accepted by law as having similar face value, the more valuable commodity will gradually disappear from circulation. Right now, with around 40 percent of all US dollars in circulation being printed in the last 12 months, the USD is about as bad as money can get. So once people saw a decentralized asset with a fixed supply that can never be adjusted, Bitcoin became that hedge. And they are buying it faster than it can be produced and there’s no stopping it now.

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