Rationalizing Bitcoin’s rise as an economic movement is correct, but not entirely correct. Bitcoin’s revolutionization of economics is intertwined with its objective of serving as a political movement. Nic Carter wrote an extensive article on why Bitcoin is, first and foremost, a means of political revolution, rather than an economic one.
In the 1940s, the world indefinitely moved from gold-backed money to trust-backed money. This was an economic innovation or change, depending on how you perceive this event. There was no real political change; the government still issued money, but now they were free to issue as much as they pleased without worrying about gold’s limited supply.
By contrast, Bitcoin is a political revolution simply because it challenges the way things work today. With a non-custodial, peer-to-peer financial system, the powers of the government and regulators will be reduced to oversight rather than authoritative execution. This means that regulators keep an eye on the system and get involved if something malicious or suspicious comes to their attention, rather than single-handedly controlling the entire system and the direction it takes.
Yes, a capped supply and immutable financial record are indeed economic changes that change the status quo too. But the biggest implication of a potential Bitcoin economy is the change from custodial to non-custodial methods of transacting. No more does a person have to worry that a bank might make risky investment decisions and blow their deposits. Yield bearing markets on Ethereum, like Compound and Maker’s DAI Savings Rate (DSR), offer non-custodial ways to earn interest on stable currencies like DAI and USDC.
The entire notion of DeFi on Ethereum is to achieve the same feat as Bitcoin, though many Bitcoiners will disagree. We see a lot of harmony between Bitcoin and Ethereum, and the two can thrive together if crypto-tribalism kicks down a bit. DeFi encourages non-custodial financial services, which is basically Wall Street except that shady multi-millionaires don’t ever get to touch your money – they simply facilitate its movement.
In essence, this is a political revolution that is positioning itself as economic innovation. Because what better way to infiltrate the system than act like what you’re bettering the system?
Bureaucrats across the globe are vehemently opposed to crypto. Their beloved kickbacks and authoritative control will fade away with transparent ledgers and automated processes. There is a fair share of well-intentioned bureaucrats, and they have openly voiced their support for something that can truly empower the people.
Bitcoin is political first and economic second. But it will only be truly effective when a person can opt-out of the traditional banking system and rely on Bitcoin and non-custodial financial services alone.
It should be noted that regulation and governments are still necessary. There are always bad actors looking to seize the system and manipulate people, so oversight and a degree of executive powers are an absolute must in any system – economic or political.