Not wanting any useful innovation to go unhampered, federal politicians have directed their ire toward cryptocurrencies in recent months. From accusing Bitcoin of destroying the environment to labeling all of crypto-finance a shadow banking system, the tyrants are tirelessly attempting to find a casus belli (an occasion for war) that will stick in the public consciousness and excuse a scorched earth campaign against cryptos. Those who genuinely care about the lower and middle classes should reject this messaging. In reality, cryptocurrency offers financial freedom and long-term stability to billions of people around the globe.
First of all, using cryptos allows people living in less wealthy countries to avoid costly banking fees associated with converting their local currency to foreign currencies like US dollars or British pounds. This allows small business owners all over the world to sell their products anywhere, without having to worry about how they will get their money from a foreign bank. And, as in all cases when producers can reach a wider audience, consumers around the world benefit from broad availability of a wide diversity of goods.
Second, although cryptocurrencies suffer from extreme short-term volatility, they tend to appreciate in the long-term. This is the opposite of every fiat currency, such as the US dollar. For those with a native fiat currency that inflates over 5% every year (or even more in some cases), cryptos offer a way to store value for use in future exchanges.
Speaking of inflation, Americans might be interested in hedging against inflation as well. At the end of 2020, over 20% of all US dollars in existence had been created in the last year. Inflation being always and everywhere a monetary phenomenon, the fact that price inflation isn’t yet at 20% annually does not mean there’s no cause for concern. The best cryptocurrencies have hard caps on volume, or are at least created slowly and predictably. Here, we’ve encountered one of the main reasons that tyrants hate cryptocurrency: they can’t steal citizens’ stored value through the secret inflation tax. Barely any of the $9 trillion printed in 2020 went to you or me. That money went to big banks, airlines and other big businesses. All while silently destroying the value of the dollars in the average citizen’s bank account. Those who are concerned about wealth inequality should jump at the chance to destroy the government’s ability to steal from the poor and give to the rich, which is the primary effect of the Federal Reserve System and fiat dollar.
Still, there’s another reason that tyrants seek to destroy cryptocurrency: it gives citizens the ability to freely trade with one another across great distances, without a middle man. Currently, the standard way to complete transactions is with a credit, debit card or with an app like Venmo or Cash App. These are convenient and easy to use, but they rely on a middle man, a bank or a financial services company, to facilitate the transaction. This gives would-be tyrants an easy target for political pressure or regulation. If the government wanted to control someone, they could just pressure the bank into forcing compliance as a requirement for receiving service. Cryptocurrencies avoid this issue using decentralized blockchains, which are public lists of records that can be verified using cryptography. These blockchains are available to and auditable by everyone. Privacy-focused cryptos, like Monero, take this principle a step further by obfuscating identifying information, making all transactions completely anonymous by default. This allows people to exchange freely and with the added confidence that they cannot be pressured to comply with tyrants through financial coercion.
Ultimately, it should come as no surprise that those who love power hate cryptocurrency. Cryptos bring freedom to impoverished and vulnerable individuals worldwide, empowering them to freely exchange with one another in peace.
The views expressed are those of the writer and do not necessarily reflect those of The Torch.
