Bitcoin. It’s not just a Hedge. It’s a Wedge.

ABOVE: Janet Yellen appearing before the House Financial Services Committee in 2017. At the time she was head of the Federal Reserve, the US central bank. While she spoke the now infamous ‘Bitcoin Sign Guy’ made his first appearance.

Veteran investors, institutions and large corporations are increasingly waking up to the reality that their fiat cash reserves are melting ice cubes. As a result hard assets like Bitcoin are gaining traction as a hedge against inflation, in a world where the very foundations of fiat money is being tested by unprecedented levels of debt and monetary expansion.

However, as Bitcoiners know very well, that realization is the entry into a rabbit hole that goes much deeper. Because Bitcoin isn’t just a hedge against inflation, it’s a wedge that’s forcing open and widening the cracks in a world where true power and control is hidden behind a facade.

All the world’s a stage. And all the men and women merely players. They have their exits and their entrances. And one man in his time plays many parts.
From William Shakespeare’s ‘As You Like It’, 1623

And those that write the play aren’t interested in revealing their game plan. And why would they? Revealing your strategy has never helped anyone to win. So if we really want to know what’s going on we have to find ways to look behind the facade. Bitcoin, being the immutable and unalterable version of reality that it is, stands in stark contrast to those players who seek to manipulate reality in pursuit of hidden agendas.

Bitcoin is the world’s first truly disruptive technology. It doesn’t just disrupt a part of the establishment, which the system can reabsorb into the fold. It shakes the very foundations and threatens to wrench control out of the hands of those who call the shots. Whether they like it or not.

And the cracks are there for all to see, if they care to look. On Tuesday 19 January two things happened on the same day, both of which seem ordinary enough when viewed in isolation. But for those paying attention, when viewed side by side, it cannot be made more obvious that the world is not what we’re being told to believe it is.

First, Blockchain analysis company Chainalysis released a report showing that in 2020 cryptocurrency criminal activity fell to only 0.34% of total transactions. Which, in dollar terms was equal to $10 billion in transaction volume. This is compared with 2019, when criminal activity represented 2.1% of all transaction volume or roughly $21 billion worth of transfers.

The reason for the sharp decline in percentage compared to overall transaction volume is the fact that, not only is illicit use of cryptocurrencies falling, but legitimate use cases are also increasing, nearly tripling between 2019 and 2020.

I must point out that, like many other Bitcoiners, I do not necessarily like what Chainalysis is doing. Their business model is based on analyzing blockchain data in order to track the behavior of people, selling that data for a profit.

It’s not that they’re making money off of open source networks like Bitcoin that bothers me. There are many companies doing that and many of them are critical to the success of Bitcoin.

What Chainalysis is doing goes against the privacy ethos of Bitcoin. And while Bitcoin isn’t private or anonymous, since all transaction data on the blockchain is transparent to make the supply easily verifiable, privacy will always be a top priority in Bitcoin, second only to supply verification. Chainalysis aims to break that privacy.

Be that as it may, with this report which they release annually, Chainalysis is really doing the Bitcoin community a favor by helping to dispel one of the most oft repeated myths used to argue against Bitcoin. Which is that it’s only used for illegal activity.

Reading the report, it becomes clear just how ridiculous this line of reasoning is. With illegal activity sitting at a rate of just 0.34% of all cryptocurrency transactions there really is no argument there. Especially considering that, every year, up to 5% of global GDP is laundered using good old government issued fiat money, including bank deposits and cash.

And yet, on the very same day that Chainalysis released their report, Janet Yellen, who will likely become the next Treasury Secretary of the United States under Joe Biden, said cryptocurrencies are “a particular concern” when it comes to terrorist financing. This was while speaking at a Senate Finance Committee hearing on her anticipated nomination.

“I think many [cryptocurrencies] are used, at least in transactions sense, mainly for illicit financing and I think we really need to examine ways in which we can curtail their use …”

Wait. Hang on a minute.

One of the world’s leading blockchain analysis companies just released a publicly available report showing that not only is illicit activity in the cryptocurrency space decreasing in absolute terms, but relative to the overall market, illegal uses of cryptocurrencies represent a tiny fraction of total volume, at only 0.34%. A percentage that’s multiple times lower than what’s laundered through other more conventional means.

And while terrorist financing specifically seems to be one of the incumbent secretary’s main concerns with cryptocurrency, as a percentage of overall use it does not even feature in the Chainalysis report.

Of the meager 0.34% of cryptocurrency transactions used for illegal purposes, the vast majority of illegal transactions were made while perpetrating scams, purchasing drugs on dark market places, and demanding ransom, none of which quite pose an existential terrorist-level threat to society.

What’s more, one would expect the soon-to-be treasury secretary to be aware of the data provided by Chainalysis, seeing as her government is one of their biggest clients. US Government agencies like the FBI and IRS spent more than a million dollars each on some of the blockchain tools developed by Chainalysis in 2019.

Off course, that’s less than a molecular fraction of one drop in the bucket for Uncle Sam, but as far as blockchain analysis goes, Chainalysis is the US government’s leading cryptocurrency analysis contractor in terms of spending. The US Government pays more in contract fees to Chainalysis than to any other blockchain analysis firm.

Did I hear somebody say “WTF!?”

If this is your first step down the rabbit hole, relax, it’s going to be OK. Many people have been down here and we’re all still fine. None of us wear tin foil hats or believe that the earth is flat. We’re simply willing to see the world for what it is.

The first most obvious question we should ask ourselves is this:

“Instead of fabricated statements, based on who knows what, why does Janet Yellen not make statements based on the research of the company to whom her own government paid millions in contract fees?

Second, and less savory to consider:

“If Janet Yellen’s comments about curtailing the use of cryptocurrencies isn’t based on actual real world data, which it clearly isn’t, what exactly is it based on? What’s the agenda?

She’s clearly not being honest, twisting reality for an ulterior motive. But she’s a politician. So there’s no surprises there. The question is, what is that motive? And because she’s lying through her perfectly bleached teeth, we’re left to speculate. You know, create conspiracy theories that remain just that, theories. Precisely because the factual agendas are being actively hidden.

The answer I believe, is nothing new. It’s the same old story that Bitcoiners have been repeating over and over again, for years on end, in an attempt to get people to listen.

The US Government is riddled with debt. Their economy is struggling and one thing that’s keeping them alive is faith in their currency. The reserve status of the US Dollar allows the US Government to print and borrow all the money they want, essentially exporting what would otherwise be rampant inflation to other nation states and corporations all across the planet.

But only for as long as these entities are willing to hold US Dollars as their cash reserves. The one thing the US Government cannot afford right now is a serious competitor to the US Dollar and, I suspect, that’s what’s really going on here.

Janet Yellen is trying to help her government make Bitcoin and other cryptocurrencies into the enemy. Not because they are the enemy but because it threatens their control of the world’s monetary and financial system. If people, corporations, institutions and governments realize that Bitcoin is a better store of value than the US Dollar, the US Government will lose its ability to print all the money they need to support the highest debt levels in all of recorded human history, with which they’ve created the largest military and the most expansive empire the world has ever seen.

What they’re desperately trying to do here, turning 0.34% into a practically non-existent boogeyman, is to hold off the Bitcoin wedge from cracking the facade wide open. Until they’ve put another plan in place. Perhaps their own Bitcoin competitor in the form of a CBDC.

But Bitcoin definitely isn’t the enemy here.

History suggests that the US dollar will eventually lose its global reserve status anyway, like every other dominant sovereign reserve currency throughout all of recorded human history, and likely for the same reason: unsustainable debt. By borrowing almost $30 Trillion USD and pushing its debt to GDP ratio above the crucial level of 130%, the US Government created this crisis.

Bitcoin only came around in 2009, by which time the US and other governments had already printed vast sums of money to bail out the world’s biggest banks. And US national debt was already well over $10 Trillion, at more than 70% of GDP.

This problem had been a long time coming and Bitcoin offers a solution. Ignoring the noise, what Bitcoin is, is a way to store wealth (regardless of how much or how little it may be) in a way that cannot be destroyed by irresponsible governments who pursue agendas that often aren’t in the best interest of their citizens.

Contrary to popular belief, you shouldn’t buy Bitcoin because you want to get rich. You should buy Bitcoin because the value of the money in your bank account is risked by people with hidden agendas.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s