Obi Nwosu is the CEO and co-founder of Coinfloor, the UK's longest-running Bitcoin exchange. He has over 20 years’ experience building online marketplaces and bringing virtual currencies to tens of millions of people. Obi writes The Road to Bitcoin Hegemony, a weekly recap of some of the most impactful developments in Bitcoin.
There is only one thing worse than being talked about, and that is not being talked about. Well, that’s one problem Bitcoin has never had to contend with.
Over the last 13 years, Bitcoin has been roundly ridiculed by all the wise heads of classical economics; it’s been called every name under the sun, from joke to Tulip 2.0. But for all the mockery, it’s rarely been out of the newspapers or off the TV screens. The result? Everyone from the governor of the Bank of England to your grandmother is talking about the Orange Gold.
But last week saw a deeply significant shift in the way the old guard is talking about the Bitcoin. According to the Bank for International Settlements (BIS), the global body for central banks, Bitcoin is a threat to the world’s entire monetary system — and central banks need to “step up the fight” against it.
Bitcoin as an existential threat to old money? Some Tulip! Some joke!
It’s impossible to be simultaneously a figure of fun and a danger to the established order. It’s one or the other, I’m afraid. Although in this case, it’s neither. The only thing Bitcoin threatens is old assumptions about the nature of money and citizens’ financial sovereignty. And, perhaps, the careers and reputations of those who dogmatically refuse to accept that they are watching a once-in-a-century revolution in financial affairs.
The truth is, Bitcoin and fiat can live perfectly happily together, each doing what they do best. As can CBDCs which, funnily enough, were the one digital currency to escape BIS’s censure, with the bank saying they could be “a tool to achieve greater financial inclusion and lower the high costs of payments.”
But not Bitcoin, apparently. No matter. The beauty of the free market is that consumers can choose whichever product, service (or currency) that serves them best. And not just consumers — countries too. El Salvador didn’t embrace Bitcoin out of ideology or experimentation: it simply wants to help its citizens out of poverty, in part by enabling its diaspora to remit money home without the exorbitant fees traditionally involved in international transfers.
Whom does that threaten? The only conceivable downside is if you think financial inclusion is a zero-sum game, and that it’s a bad thing Bitcoin was the first digital currency to start delivering its promises to make life fairer for some of the world’s poorest people.
The best insight into the Bitcoin backlash comes from the president of El Salvador, Nayib Bukele. In last week’s What Bitcoin Did podcast, Peter McCormack asked Bukele why classical economists have such a negative view of Bitcoin. “The answer is in the question,” the president shot back. They are classical economists: all their work has been built upon the assumption that the world — and money — works a certain way. All their models and interpretations rest on old rules; anything that upsets decades of orthodoxy is naturally going to challenge their reputations and will be viewed as a threat.
Keynes famously said that when the facts changed, he changed his mind. Ironically, unlike the supporters of traditional Keynesian economics, that's what Bitcoin’s champions did. We didn’t all start off as believers: some were sceptical; many more were mystified by the very idea of a digital currency. What unites us is that we took the time to read and explore the issue; to learn about Bitcoin from a technical and philosophical perspective and understand its potential to bring financial services to the billions of unbanked around the world. And, of course, to test the waters by buying a few satoshis — or in some cases, a couple of billion dollars-worth of Bitcoin — ourselves.
And we didn’t fall for the FUD. We looked with objectivity at the arguments for and against Bitcoin; we examined claims that China would kill Bitcoin, or that Bitcoin would kill the planet, and found them to be spurious. From that, we deduced that the shrill screeching, the mockery, and now the apocalyptic warnings of ‘six months to save the world’s monetary system’ are just sound and fury, signifying nothing.
We can’t stop people from spreading doubletalk or making bad arguments. And, in a way, we shouldn’t wish them to. Bitcoin is hurtling down the road to hegemony regardless, and those who attempt to defend their reputations by denying its brilliance are only proving the impossibility of not talking about Bitcoin.
One of the joys of being involved in Bitcoin is watching people figure it out for themselves. And that’s exactly what El Salvador has been doing these last couple of weeks, led by their president.
On Friday, El Presidente took to the airwaves (and YouTube) to give citizens a crash course in Bitcoin. He also announced that his government is working on a unique wallet called Chivo which will enable citizens to send and receive bitcoin, and to convert it easily into El Salvador’s other legal tender, the US dollar. They’ll even get a bonus $30-worth of Bitcoin to get started with.
No doubt some wise heads will pop up in the coming days and weeks to explain the flaws in Chivo, to highlight the dangers of encouraging citizens to ‘speculate’ in Bitcoin, or to find some other reason to catastrophise. How many, though, will ask El Salvadoreans themselves what they make of it? Because as far as this story goes, there’s really only one voice that matters: the people’s.