The "Crime of '73" and the Risk of a Bitcoin Reset: Why the Privacy Concerns of Monero Bros Miss the Bigger Picture

In 1873, the U.S. made a fateful decision that would come to be known as the "Crime of '73." The government effectively demonetized silver by switching to a gold standard, which radically shifted the economic landscape. Prior to this, the U.S. operated under a bimetallic system, with both gold and silver circulating as money. The inflationary effect of silver (which was easier to mine) allowed people to take on debt more easily, assuming that the debt would be paid back with money that would lose value over time as the silver supply increased.

But when the U.S. abandoned silver and moved to a gold-only system, things changed dramatically. Gold was much harder to find, creating a deflationary environment. This meant that the value of money—and by extension, the value of debts—was rising, not falling. As a result, those who had taken on debt during the inflationary period were suddenly crushed. The real value of their debts grew, and many found themselves unable to repay what they owed.

Fast forward to today, and we're faced with a similar situation, albeit with a new asset: Bitcoin.

The Bitcoin Reset: A Modern-Day “Crime of ’73”?

In a world transitioning to a Bitcoin standard, we may very well face a scenario where debts are "repriced" in Bitcoin terms. If the government (or market) shifts from a traditional fiat system to a Bitcoin-backed one, the deflationary nature of Bitcoin could have a devastating impact on those who hold large amounts of debt in fiat currencies. Just like in 1873, the real value of those debts would increase as the purchasing power of money increases.

Bitcoin’s deflationary structure, where the supply is capped at 21 million coins, creates a unique set of incentives. While this is great for savers and those who hold Bitcoin, it poses a serious risk for people or institutions that hold debt. If you owe in dollars (or other fiat currencies) and the world shifts to a Bitcoin standard, your debt could grow in real terms, even though the nominal value remains the same. The deflationary pressure from Bitcoin could recreate the same debt spiral that crushed many during the Gold Standard era.

But What About Privacy? The Monero Dilemma

Here’s where the Monero community often diverges from Bitcoiners: privacy. While Monero offers superior privacy features, it’s crucial to recognize that a Bitcoin standard has broader economic implications. The Monero bros often dismiss Bitcoin due to its privacy limitations, especially with the growing surveillance concerns around the Bitcoin blockchain. However, this focus on privacy misses a much larger issue: the deflationary nature of Bitcoin could create an environment where those who hold Bitcoin—especially early adopters or savers—could see huge financial rewards. On the flip side, those who hold debt in any other form could be left in a precarious position.

Monero’s privacy features may protect individual transactions, but the real threat to economic stability comes from the value of money itself. If you’re holding Bitcoin and your debts are priced in fiat, you may be positioned for long-term growth as the value of your holdings appreciates. However, if your debt is in fiat and the world shifts to Bitcoin, your debt could balloon beyond your ability to repay it, just as it did for borrowers during the 1873 switch to the gold standard.

The Bigger Picture

The historical lesson from 1873 isn’t just about inflation versus deflation; it’s about understanding the economic ramifications of a hard-money standard. If Bitcoin (or any deflationary currency) becomes the new global standard, the key issue will be the repricing of debts. Those who have real assets like Bitcoin (or gold, historically) will be insulated from this shift, but those who hold debt will face a massive risk. Privacy, while an important consideration, is secondary when the fundamental nature of money itself is shifting.

So, to the Monero bros: while privacy is a valid concern, it’s essential to keep an eye on the broader economic shifts that could have a much bigger impact. In a world where Bitcoin becomes the standard, your debts, your assets, and your future will be shaped by its deflationary force. Make sure you’re prepared for the long-term financial implications, because just like in 1873, switching to a harder money standard can have consequences that extend far beyond privacy.

#Monero #Bitcoin