China being silver maxis pushed 1800s Britain to get creative:
selling opium to a decaying Qing society to balance the trade deficit
In the 19th century, the Opium Wars were about British demand for Chinese goods.
China only accepted silver, but Britain didn't want to lose its strategic silver reserves.
The modern Opium War will be fought over Bitcoin
BRICS is Going to Adopt Bitcoin for Trade
The BRICS nations are evaluating ways to reduce their dependence on Western financial systems.
The main proposal discussed is the creation of a BRICS currency, either a basket of member countries' currencies or a gold-backed currency.
The intention is to challenge the dominance of the dollar and establish greater financial independence in a multipolar world.
What BRICS is not realising yet is that sooner or later they will—due to its decentralised and global nature—adopt Bitcoin as their currency for trade.
Problems with the BRICS Currency – Basket Version
Currency Devaluation:
In a basket with multiple currencies, one country's currency can devalue faster than the others. This would cause the entire BRICS currency to lose value, reducing the purchasing power for all members.
If one country prints more money than the others, the devaluation would impact the collective currency, decreasing its purchasing power and making it less reliable as a store of value.
Dependency on Larger Nations:
China's economy towers over the other BRICS economies, and if the BRICS currency is based on a basket of member currencies, the Yuan’s share of the basket will always give China outsized influence over the currency.
Smaller BRICS countries would shift their dependency on the US (via the dollar) to dependency on China, and maybe, other large BRICS nations.
Costly Political Coordination:
Maintaining a basket currency requires continuous political coordination between member nations, involving currency adjustments and policy agreements.
Like all bureaucratic processes, this would be time-consuming, expensive, and fraught with “one-size-fits-none” political agreements.
Problems with the BRICS Currency – Gold-Backed Version
Gold Reserve Imbalances:
Countries within BRICS hold different levels of gold reserves. A gold-backed currency would disproportionately benefit nations with larger reserves, while leaving smaller economies at a disadvantage.
This will create an internal imbalance of power within BRICS, where smaller countries may struggle to keep pace with their larger counterparts.
Trust Issues:
Historically, gold-backed systems have failed due to the over-issuance of currency relative to gold reserves.
This was the problem during the era of the gold standard and later during the Bretton Woods system, where the US printed more dollars than it had gold reserves.
The question of how to trust each other’s gold holdings would present a significant challenge, as transparency around reserves will be difficult to guarantee.
High Costs:
Gold is expensive to store, secure, and transport.
For a currency system that is expected to support international trade, the logistics of maintaining and transferring gold reserves is crazy inefficient and impractical.
In a modern, fast-paced global economy, such a gold-backed system feels like a relic from days long gone.
Why Bitcoin is the Superior Alternative
Decentralisation:
Bitcoin is decentralised, meaning it isn’t controlled by any one nation.
This is crucial for BRICS, as it allows member countries to trade on equal footing without one nation holding an unfair advantage.
Unlike a BRICS currency, no member country has dominant influence over Bitcoin’s value or operation.
Global Reach:
Bitcoin can be used for trade not just within BRICS, but with non-BRICS countries as well. This global acceptance makes it a flexible option, extending its utility beyond the borders of BRICS nations.
It ensures that BRICS nations are not limited to their own trading bloc but can freely participate in international trade.
No Exchange Rate Fluctuations:
As a single, universal currency, Bitcoin eliminates the need for managing exchange rates between different national currencies.
This reduces the complexities and costs associated with currency fluctuations, making Bitcoin a stable medium for international trade.
No Political Coordination:
Bitcoin operates on a decentralised protocol, meaning it doesn’t require inter-governmental agreements or political coordination to function.
This allows for smooth and cost-efficient operations without the bureaucracy associated with managing a BRICS currency.
Existing Infrastructure:
Bitcoin’s global infrastructure is already in place, with a growing number of participants, nodes, and miners around the world.
Its network is secure, scalable, and continually being improved upon, making it a ready-to-use solution for international trade.
Cost-Effective:
Bitcoin is significantly cheaper to store, secure, and transfer than gold. There are no physical reserves to guard, no transportation costs, and no need for costly security infrastructure.
This makes Bitcoin an efficient, low-cost option for settling international trade transactions.
Conclusion
Bitcoin’s neutrality, cost-efficiency, flexibility, and established global infrastructure make it the superior option for BRICS trade.
It bypasses the complexities and challenges posed by both the basket-based and gold-backed BRICS currency models.
While the idea of a BRICS currency might seem appealing in theory, in practice it is very unlikely to succeed.
It is only a matter of time before BRICS nations realise that Bitcoin offers the only viable solution for their goal of achieving financial independence and international trade efficiency.
Bitcoin Nation Strategies: Cooperation
Bitcoin will emerge as the resource over which nations engage in fierce competition to increase their share of the pie. Similar to gold and oil in the past but a lot more cutthroat due to Bitcoin’s absolute finite supply.
National power will be equated to Bitcoin holdings and because no country is able to control Bitcoin, nations will compete with each other to increase their holdings. It will be a zero-sum game in which one nation will increase its Bitcoin at the cost of another nation.
One way nations will do this is via cooperation. These are the cooperation strategies I see nations engage in in the future:
1. Strategic Alliances for Joint Bitcoin Investments
Nations increase their Bitcoin reserves by forming coalitions to pool resources and jointly invest in Bitcoin mining or other Bitcoin infrastructure. Smaller nations, for example, could band together to share the risks and rewards of investing in Bitcoin infrastructure. By combining their strengths, these countries can compete with large nations in increasing their share of the Bitcoin pie.
2. Trade Agreements for Bitcoin Transactions
Nations can also accumulate Bitcoin by incorporating it into bilateral or multilateral trade agreements. By allowing Bitcoin to be used as a medium of exchange in international trade, nations not only bypass the nation-state control of fiat currencies but also increase their Bitcoin by providing the world goods and services.
3. Technology Sharing for Bitcoin Mining
Bitcoin mining relies on energy consumption and technological efficiency. By collaborating on more energy-efficient Bitcoin mining technologies, countries can reduce costs and increase their Bitcoin production. Sharing technical expertise and cheap energy resources and technologies can give cooperating nations a significant advantage in the Bitcoin mining space.
4. Bitcoin-Based Citizenship or Residency Programs
Another strategy is for nations to offer Bitcoin-based citizenship or residency programs. Countries could grant citizenship or residency to individuals who invest a certain amount in Bitcoin and Bitcoin-related industries. This approach will attract wealthy individuals and investors seeking tax-friendly jurisdictions or nations with favourable Bitcoin regulations, boosting Bitcoin inflows
This strategy ties Bitcoin accumulation to immigration policies, creating a mutually beneficial mechanism where nations attract global talent and capital and individuals gain legal residency in a Bitcoin-friendly nation.
5. Bitcoin-Based Global Resource Cartels
Nations could also form global monopolies that control the raw materials needed for Bitcoin mining, such as rare earth minerals used in mining hardware production. By monopolising these resources, cooperating nations will make it more difficult for others to scale their Bitcoin mining operations, giving the cartel members a competitive edge.
6. Smart Contracts for Sovereign Bitcoin Reserves
Another strategy would be for nations to use smart contracts to manage their diplomatic agreements. These contracts could be programmed to automatically execute Bitcoin transactions from their reserves if specific conditions are met (or not met), such as the fulfilment of trade agreements, defence pacts or non-aggression agreements. This will create trust between nations by making their actions more predictable.
It will also make international cooperation a lot more efficient and make obsolete the money-wasting bureaucracies attached to global institutions.
Cooperation is the Peaceful way for Nations to Increase their Bitcoin
As Bitcoin becomes the primary resource nations compete over, cooperation strategies will start to enter the scene. These are peaceful strategies that nations will use to increase their Bitcoin holding compared to competing nations.
Since it is impossible to conquer a nation’ Bitcoin reserves (like was the case with gold), cooperation might be the most rational way to increase a nation’s Bitcoin.
This would shift the paradigm from competition through war towards competition through cooperation, trade and producing value to the world.
3 ways the US can avoid China's rise:
1- Pre-emptive war
2- Economic war
3- Isolation
Europe's future will be decided by its 10 million Bitcoin owners and how governments will treat them
Freedom is a competitive advantage because it attracts the brightest minds.
It's absolute MADNESS if El Salvador and Bhutan are the only countries in the world buying Bitcoin.
The best way to get a microchip industry going is by getting a Bitcoin mining industry going
Strategies Countries will use to get more Bitcoin
Bitcoin is about to become the global resource for which the nations of the world will fiercely compete.
Offensive Realism predicts the strategies countries will pursue to gain as much of the Bitcoin pie as possible. Countries will not only try to get as much Bitcoin as possible, but will also try to control as much of the Bitcoin mining industry as they can.
What is Offensive Realism?
The theory that predicts the behaviour of countries in the anarchic system of world geopolitics. With no central authority this system consists of competition and conflict between countries.
Countries all try to survive by focusing on their own interests, maximising their own power and they fear each other because they can’t be sure of each other’s intentions. Offensive realism provides strategies countries will follow to maximise their chances of survival.
Strategies to get as much Bitcoin as Possible
If countries prioritise their survival and security it automatically follows that in a world where Bitcoin is the most important strategic resource, they will prioritise getting as much Bitcoin as possible.
1. Cooperation
Countries can decide to pool their resources and work together.
Example: Two countries deciding to jointly develop their Bitcoin mining industries.
2. Economic statecraft
This involves countries using economic policy tools to influence the behaviour of other states.
Example: One country selling important technical know-how or essential resources (like foodstuffs) in return for the receiving nation’s Bitcoin.
3. Military Power
Military power leveraged to secure a country’s Bitcoin interests.
Example: A country can invade the Bitcoin mining region of another country and take control of its Bitcoin mining infrastructure
4. Coercion
Under the threat of war one country can blackmail another country into getting what it wants.
Example: A stronger country can blackmail a weaker country into handing over Bitcoin or run the risk of getting invaded.
5. Bribery and Corruption
Bribes and corruption can be used to influence another country’s behaviour.
Example: A country can bribe government officials of another country in order to let them pass regulation that will damage its Bitcoin mining industry. Giving the bribing country the opportunity to increase its share of global hash rate.
6. Information Warfare
Propaganda, disinformation and psychological operations are used to shape public opinion in another country.
Example: Propagandising the population of another country into believing Bitcoin mining is bad for the environment, putting pressure on that country’s hash rate.
7. Economic/Technological Development
The final (most constructive) strategy is investing in your own Bitcoin industries.
Example: A country investing in its energy sector to make sure domestic Bitcoin miners have access to the cheapest energy.
The Goal of a State is to Increase its Share of the World’s Bitcoin
And as soon as they realise this, there will be no more cheap sats for you…
The overriding goal of a state is to increase its share of world power. They need this to keep themselves safe from coercion and invasion.
States always try to become more powerful militarily compared to other states. Military power, however, grows out of economic power. Building a powerful military is costly.
So what states are really competing for is economic power. And in particular, the purchasing power that allows them to build a stronger military than their rivals.
Technological innovations, commodities and human capital are the potential sources of a state’s purchasing power. But whatever the source, states need to transfer economic power into money in order to have purchasing power.
So what states really aim for is to increase their share of the world’s money. Do you see where I am going?
Bitcoin’s hard limit of 21 million!
After the gold-standard failed as the world’s money, the USD is now in the process of failing as the world’s money. The speculation is about what the world’s next money will be.
I think there is only one serious contender and that is Bitcoin.
This means that states will soon wake up to the fact that in order to be safe they will need to own as much Bitcoin as possible compared to their rivals.
This will kickstart a buying frenzy the world has never witnessed before. And when the dust is settled, there will be a Bitcoin balance of power that states will try to maintain through bilateral agreements and military stand-offs.
Bitcoin & the Security Dilemma
The “security dilemma” in geopolitics refers to the paradox where a state’s attempt to increase its own security leads to a decrease in security of other states.
The same applies to Bitcoin, but with opposite consequences…
States that adopt policies or build weapons to increase their defensive capabilities think they are acting defensively. Potential rivals however often perceive this as offensive actions and will take countermeasures themselves.
This starts a spiral in which multiple states engage in a security competition that makes the entire environment less stable. It can even lead to war!
This “security dilemma” also applies to Bitcoin, but with Bitcoin the consequence is not destabilisation. It actually leads to competition for the benefit of humanity.
The “security dilemma” applies to Bitcoin because of its limited supply of 21 million coins. Every Bitcoin bought by one state therefore is one Bitcoin less for other states to buy.
States benefit by holding Bitcoin because of its ever increasing purchasing power. This allows states to attract talents and get resources more easily than rival states.
One state increasing its purchasing power is a strategic threat to other states if they don’t increase their purchasing. This is where Bitcoin’s “security dilemma” kicks in.
As soon as the world understands Bitcoin, one state buying more of it will cause stress among other states. And they will want to increase their own Bitcoin holdings.
Why this doesn’t cause destabilisation is because it is hard to impossible to “conquer” another state’s Bitcoin. It is after all an asset in cyberspace.
The best way for a state to acquire more Bitcoin is by developing its energy and technology industries. This allows the state to increase its share of the pie that is block subsidies and transaction fees.
If every nation develops its energy and technology industries the entire world benefits. It provides cheaper and cheaper energy and more advanced technologies.
This will increase productivity and make all our lives better!
Depending on Other Countries for your Defence is Fiat
Lots of countries depend on larger, more powerful nations for their defence. Just like fiat, this seems a good idea at first but is dangerous in the long-term.
It saves money and energy to outsource defence. But both have to be paid back multifold by any country pursuing this strategy.
The money that is saved can be used by the government for programs that are popular with citizens. Programs that get politicians reelected, like healthcare and welfare programs.
This is good for the reelected politicians, bad for the country. It is exactly the same as fiat money…
Fiat money allows governments to “help” its citizens by alleviating (perceived) economic pains. Artificially low interest rates and budget deficits is how this is done.
The long term consequences of this “money printing” are a weaker economy (due to misallocation of capital) and a weaker population (due to savings being inflated away).
In a similar way, the consequences of depending on others for defence weakens a country. It puts its sovereignty at risk. It also puts its economy at risk.
It is fiat in that the defence of that country depends on the whims of others. The king decides and the king can tomorrow decide to withdraw his military commitments.
Where does this leave the country being “protected”? Exactly…f*cked!
Not only can a country lose its sovereignty when it is left defenceless at the mercy of its (potential) enemies. It also leaves it at a severe disadvantage vis a vis the nation doing the defending.
The nation doing the defending has all the leverage…
Ask yourself what Germany’s reaction would have been to the blowing up of Nordstream if it didn’t have 30,000 US troops on its soil.
Or how Japan would have behaved in its trade spat with the US in the 80s if it didn’t have 54 US military bases on its territory.
For nations to be healthy, they need hard money and build an independent military.
Bitcoin alters the economic dynamic in geopolitics
Great powers often pursue their interests with strategies that involve economic coercion or competition.
Bitcoin will force them to completely alter these strategies. And this will be good for the world.
Economic sanctions are the classic way in which great powers try to submit other nations to their interests. Especially if they have control over the financial system, like the US currently has.
This explains why the US is the leader in sanctions with 9,000 imposed as of 2023. Its control over the global financial system through the USD allows it to create serious headaches to any entity using dollars for trade.
Bitcoin will force great powers to adopt a totally different strategy because no great power (or small power) can control it or decide who can or cannot use it.
It will be impossible for great powers to cut their adversaries out of world trade with the push of a button. Instead they will have to revert back to competition to gain an advantage over competitors and adversaries.
The most viable strategy to gain an advantage is by attracting as much hash rate as possible to its or friendly jurisdictions.
By doing so they will earn Bitcoin fees on as many Bitcoin transactions worldwide as possible. In theory they could then push their adversaries’ Bitcoin transactions to hash rate in other jurisdictions. This should put upwards pressure on the transaction fees of those adversaries.
In order to attract as much hash rate as possible great countries will need to develop their technology and energies sectors.
This competition in tech and energy will be good for the world, which will benefit greatly from the second and third order effects of these (peaceful!) developments.
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Dumb people are okay with censorship
Smart people realise its long term consequences
Bitcoin: the answer to Russia’s payment and China’s sanctions problem
Russian companies have encountered payment issues in their transactions with Chinese partners. Chinese banks are stricter towards transactions with Russia after threats of secondary sanctions from the US.
Bitcoin would allow China to continue trade with Russia unabated while making threats of sanctions look silly and pathetic. And causing an economic boom while they are at it!
The US has always been the defender of free flow of information, trade and transactions. China declaring that it is a universal right to trade and transact freely, will make US threats of sanctions look silly and pathetic.
By allowing Bitcoin (and stablecoins on Bitcoin infrastructure) tens of thousands of entities in China would be transacting with tens of thousands of entities in Russia. Nobody will be able to stop it.
The US won’t be able to interfere and neither will the Chinese government. It provides the perfect excuse to continue trade with Russia. While at the same time providing the world with an alternative to the ever tightening grip of western governments on trade and their economies.
Sanctioning China for the free flow of goods, services and money will make the US look like a hypocrite in the eyes of the world. Besides, China will experience an economic boom that will catapult it to be the #1 economy on the globe. In a very short time frame…
It will require the Chinese government to relinquish its perception of control, which probably won’t come easy to it. Luckily El Salvador provides an example.
El Salvador and Bukele show that economic freedom alters the contract between government and citizens without the government losing legitimacy.
On the contrary, El Salvador’s government and Bukele in particular have only become more popular by providing their citizens with better lives through economic freedom.
Hard choice for Asian countries
Asian countries are about to make the most difficult choice in their existence. They have to choose between the superpowers China and the US. Neutrality is probably not an option…
China is the behemoth next door, while the US is the superpower on the other side of the world. How to make this choice?
One thing that speaks in favour of siding with the US is that it is the superpower on the other side of the world. This means it will never be able to conquer territory in Asia because it is simply too far away to maintain these conquests.
With China, Asian countries can never be 100% sure, because countries can’t be sure what other countries are really thinking.
China on the other hand is by far the largest economy of Asia and many Asian countries already depend on it for their economic well-being. This is likely to increase in the decades to come…
Expect economic heft to be China’s preferred tool to influence and draw in its neighbours into its sphere of influence. With countries that depend most on China for their exports to be the first to side with China against the US.
Indonesia, The Philippines, Vietnam, Singapore, Thailand and Malaysia export more to China than they export to the US. These countries can therefore be expected to deviate more towards China over time.
Japan, South Korea, Taiwan and India all export more to the US than to China.
India will likely be one of the few Asian countries that remains neutral and will follow its own independent course. Japan, South Korea and Taiwan are tightly knit into the US sphere of influence (and security architecture) which most likely plays a role in their higher exports to the US.
It will be curious to see how this develops over time as China develops further and actively tries to increase Asian countries' dependence on its economy.
