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What Trump’s Bitcoin Tweet Changes

Let's be clear: it was not the substance of Donald Trump's tweet that made his bitcoin and Libra criticism so important last week.

It should not be surprising that this president of the United States declared himself "is not a fan of the "highly volatile" air-based cryptocurrencies that "facilitate" illegal behavior"Or that he prefers a lot "Reliable and reliable" currency called the United States dollar!"

(Anyone who assumed that Trump would be a libertarian defender "drain the swamp" for censorship-resistant money had a misinformed opinion of a man whose government is crammed with former Wall Street executives, who opposes free trade and immigration, and a draconian approach to a variety of civil rights and social freedoms).

What matters is the very fact that an incumbent president mentioned cryptocurrencies at all. In fact, from a price perspective, Trump's disparaging comments are, in general, positive for bitcoin. For Friday night, the post-tweet price action reflected that.

More importantly, the tweet marks a symbolic milestone in the gradual but constantly expanding presence that the cryptocurrency occupies in public conversation about money and politics.

It also marks the starting point in a titanic battle over the shape of our global monetary system.

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Why is Trump's tweet shame positive for the bitcoin price? Well, bitcoin must remain relevant to succeed, and this was, at least, an acknowledgment of the hallways of its relevance power.

By simply giving him the time of day, Trump revealed that people within the high levels of the US power structure. UU They are noticing the challenge posed by cryptocurrency technology.

Also important: the tweet came shortly after Federal Reserve Chairman Jerome Powell, one of the favorite boxing bags of the president of the United States, described bitcoin, in the testimony of the Senate, not as a payment vehicle. but as "an alternative to gold … a store of value … a speculative Store of value".

Powell was not saying that the saw bitcoin as gold in itself; It was a reference to the way that most bitcoin users are currently dealing with it and, in that sense, it was simply stating a fact. Still, it gave some legitimacy to bitcoin's claim to be the replacement of the digital age of that old store of value.

And if we think about how gold was used during the era of the fiduciary currency, as protection against the political risks inherent in national currencies, then this double blow could hardly be better for those who argue that Bitcoin should play that role in the XXI century. .

Think about it: they got the world's most powerful central banker to describe Bitcoin in such terms. Shortly thereafter, a self-interested politician in the most powerful government position in the world demonstrated why he may want such protection.

Amplifying the narrative

All this comes within the context of the announcement last month of the blockchain and cryptocurrency project sponsored by Facebook, Libra.

As was inevitable when a powerful and controversial company launches a new radical idea, the arrival of Libra has greatly amplified what I like to call the "narrative economy" in which cryptocurrencies grow.

With its potential global influence on the 2,700 million Facebook user base, Libra is forcing people (corporate leaders, bankers and, most importantly, government leaders) to think and talk about cryptocurrencies. It was what motivated the question to Powell of Mike Chapo, Chairman of the Senate Committee on Banks, Housing and Urban Affairs, and was the main focus of the Fed President's response. And it is clearly what inspired Trump to use Twitter, since its publication of three tweets included a line that said that Libra "will have little reputation or reliability" and that it would need a banking letter for its operation.

Let's not forget that this happens just before next week's hearings on Libra called by the House Financial Services Committee, convened by its president, Maxine Waters, who warned that the Facebook project can not be allowed to compete. with the dollar.

That there is an alignment between Trump and Waters in a subject is in itself historical. But it also alludes to the battle of power at stake. The growing conversation is about the structure of our financial system and about the predominance of the intermediaries that administer that system: the banks, deeply integrated as they are in our system of government, money and power.

As guardians of the dominant fiduciary system, banks (and, by extension, the political leaders who determine how to regulate them) can make it harder for people to use both decentralized cryptocurrencies such as Bitcoin and private currencies backed by companies like Libra. . Trump's tweet, with a high degree of specificity, looked suspiciously as if it had been written by someone with interests in the banking sector.

But putting a lid on all this will not be easy for governments. Most cryptocurrencies, whether bitcoin or Libra, are based on open source software. Can those governments ban the software? Technically, yes, but how will they be coordinated globally around that effort, how will they stop it?

As it is, many central banks suddenly seem to be adopting the strategy "if you can not beat them, join them". China's state-owned daily Daily reported this week that China was accelerating its plans to produce a digital currency. That happened a week after Agustín Carstens, head of the Bank for International Settlements, said central banks would introduce digital currencies "sooner than we think." It was a remarkable change from someone who months earlier had told cryptocurrency programmers to "stop trying to create money," and discarded any value in the central bank's digital currencies.

Probably more important, just at the time of Libra's announcement last month, Bank of England Governor Mark Carney dropped a bomb, saying the BOE would provide funds to technology companies, an apparent move to head the development of financial technology in London at a time when the Brexit has threatened the banking industry. The opening represents a great opportunity for Libra and other service companies to provide new "narrow banking" payment services.

Things are set to become very confusing, in other words, with private corporate currencies, decentralized cryptocurrencies and government-run digital currencies competing for primacy in the world of money. Thanks to Libra, but in reality, thanks to Bitcoin before that, the narrative economy around monetary innovation is expanding seriously.

Communities of stories

As the noise level increases, more and more people will consult and explore alternatives to conventional currencies, such as bitcoin. They will also deal with the opportunities, risks and disruptive challenges posed by that choice.

Essentially, a giant collective narrative exercise has been pushed into overdrive. Stories have always driven the adoption of new ideas, building the connective emotional fabric on which social networks and the communities around them are formed. And that, in turn, the development of a community around a shared idea, is ultimately what sustains a currency.

Trump, who with his 62 million followers on Twitter could be said to have a transmission power greater than any news network, is contributing to this exercise of collective narration. Maybe it's the character in the film, who opposes the cryptographers' "A la Luna" enthusiasts, but even in that role he is promoting the narrative, essentially by feeding the resistance, encouraging his opponents to counteract with different arguments and , of course, of course, the memes.

Which brings us to the other factor that guarantees that Trump's tweet, more than any other statement by a government official, will be fundamental to drive the uproar and propaganda around this issue: Twitter itself.

Twitter is not only the President's favorite vehicle to communicate with the public, but also represents the most important segment of crypto's narrative economy. If there was ever a community prepared to respond to those three short messages, it was Crypto Twitter, which responded immediately with its special blend of snark, humor and passion.

God knows where all this is going. But one thing is certain: the cryptocurrency carnival has become wilder.

Image credit: a katz / Shutterstock.com

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