Friday, February 9, 2018

Weaponizing Money

He probably won't be mentioned in the same breath as the cypherpunks or other early bitcoin pioneers, but my guess is that his influence on the bitcoin movement will prove to have been a powerful one. He is Juan Zarate, former deputy national security advisor for combating terrorism.

His contribution was the weaponizing of the dollar via the use of draconian financial embargoes against entire countries. He now worries that bitcoin and other cryptocurrencies may allow countries that the U.S. labels as bad actors a way around these embargoes.

The reality is that such draconian actions will force not only bad actors to think about using alternatives to the dollar in international trade, but it will force many legitimate companies and individuals to explore alternatives as well. China and Russia have already built an alternative to SWIFT payment platform. No doubt that legitimate individuals and companies worldwide are exploring bitcoin in case the U.S. targets their country or their suppliers or customers. The U.S. is proving itself to be a less than reliable partner on the monetary front, and this extends well beyond the debasement argument.

As Nick Szabo, one of the early cypherpunks explains:

The historically recent growth of centralized digital money has resulted in the transformation of money from being a medium of exchange, to many officials viewing it as primarily a medium of law enforcement. This is increasingly making such money more local and less trustworthy.

The U.S. certainly seems intent on destroying the dollar.

Disclaimer: This does not represent investment advice.


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