I’ll Read It For You, Vol. I.
In the article above, Haseeb Qureshi, a partner at Metastable and a generally well-regarded and successful entrepreneur, wonders why, if Bitcoin is to live up to its calling as a destroyer of (sovereign) worlds, those same sovereigns have allowed it to survive this long, only lobbing a few regulatory salvos. His conclusion: sovereign governments do not see bitcoin as a threat.
Before landing there, he posits two other potential reasons.
- “All innovation is good innovation”. Maybe governments are allowing global experimentation with a technology capable of massive disruption of the current global power structure because they’re pattern matching with the development of internet infrastructure in the 90s. (Side note, Patrick O’Shaughnessy has a great discussion with Albert Wenger on the safe harbor laws that allowed for this innovation in this podcast around the 22 minute mark). Qureshi ultimately dismisses this possibility by noting the paradox around cryptography, which has long been strictly regulated from a knowledge-transfer perspective as potential weapons-grade technology.
- “The government is too dumb to recognize the threat”. A self-explanatory theory, which Qureshi writes off as unlikely, given the ruthlessness with which governments have identified and eliminated threats to their power in the past (this statement goes uncited, but seems reasonable).
- “Bitcoin is not a threat”. Qureshi lands on this argument, and makes three arguments why it’s the case. First, pseudonymous != anonymous; capital controls around fiat onramps will allow for relatively easy identification of individual transactions. Second, Bitcoin will not be widely adopted as a medium of exchange; scaling issues, a deflationary monetary policy, and the stickiness of the legacy financial system will prevent its adoption as a technology that allows “its users … to conduct their financial lives on a parallel, uncensorable economy.” And third, Bitcoin is the only truely stateless cryptocurrency; were it possible to classify the technology as belonging to one particular state or entity, players on the global political scene might consider its adoption as a promotion of that entity.
Qureshi concludes with a defense of Bitcoin as a store of value. He makes an interesting point that those countries with the strictest controls to prevent capital flight (India and China) are those that have come down on crypto the hardest, as a liquid, portable store of value would be of great help to those who wished to undermine those regulations. He also projects forward, stating that he believes “we should expect the next phase (of crypto) to be messier…” as projects continue to work on the medium of exchange use case.