The root problem with conventional currency is all the trust that’s required to make it work.
The central bank must be trusted not to debase the currency… but the history of fiat currencies is full of breaches of that trust.
Then banks must be trusted to hold our money and transfer it electronically… but they lend it out in waves of credit bubbles with barely a fraction in reserve.
That’s Satoshi Nakamoto writing in an old cryptography forum back in 2009. He was explaining – quite clearly I think – the true purpose of Bitcoin. It’s to restore honest money to society.
Satoshi is the person who created Bitcoin. The name is fictitious… but the person is quite real. I have it on good authority that he was in fact a cypherpunk.
The cypherpunk movement was strong back in the 1980s and 90s.
It consisted of computer programmers who were early internet pioneers. Their calling card was that they believed in the sovereignty of the individual over the State.
More specifically, the cypherpunks believed that all individuals should be able to interact and transact with each other freely and privately, so long as they did so without coercion or fraud.
That was the key. No coercion. No fraud.
Today there’s an entire social philosophy based on this premise. It’s called voluntarism. But that’s a story for another today.
Yesterday we talked about how the Signature Bank collapse wasn’t a collapse at all. The regulators forcibly shut it down as an attack on the crypto industry.
I certainly don’t condone such actions. I’m myself a voluntarist at heart.
At the same time, I’m not a fan of what the crypto industry has become. On the whole, the industry has strayed far from Satoshi’s vision.
Painting with a broad brush, Bitcoin’s purpose is to restore honest money to society. That’s spelled out clearly in the Satoshi quote above. And in the early days the entire crypto industry was aligned with that purpose.
As I mentioned yesterday, I’ve been plugged into the Bitcoin world since 2014.
Back then, there was Bitcoin and only a handful of other serious cryptocurrency projects.
Litecoin was one. It’s job was to be Bitcoin “light”. That is, to facilitate faster, cheaper peer-to-peer payments while Bitcoin worked to build a network effect.
Namecoin was another. It’s goal was to provide an alternative to the highly centralized DNS system. That’s because the system as it exists is largely contrary to the original vision of an open and unrestricted internet.
Ripple was around back then too. I never cared much for it. But it did have a specific purpose. That’s to modernize the way banks handle cross-border transactions.
Dogecoin was around in 2014 also. It came about entirely as a joke. It was never intended to be a real project. I guess we can say that its purpose was humor.
To my knowledge, these were the only five crypto projects running in 2014 that are still prominent today.
And notice that we didn’t mention Ethereum.
Ethereum was still in development at the time. It hadn’t launched yet.
Still, Ethereum had a specific purpose. Painting with a broad brush again, it was to be the world’s super computer.
My point is this… the digital asset industry was small and mission-driven. And with a few exceptions, the major cryptocurrencies were complimentary to one another.
This dynamic changed with Bitcoin’s incredible run in 2017. I remember it well.
In 2017, Bitcoin opened the year trading at $997 per BTC. Then it shot up to about $17,000 by December of that year.
For those of us who were around in the early days (and I wasn’t that early), this was incredible.
You see, we didn’t think about the dollar price too much back in 2014. We weren’t interested in Bitcoin because we hoped to make a return on our dollars.
Instead, we got on the Bitcoin train because we believed in honest money.
That is to say, money that can’t be created from thin air arbitrarily and unilaterally. Doing so always and everywhere debases the purchasing power of the money.
In other words, we got into Bitcoin because we saw it as a better monetary system. That was the Bitcoin vision. And it still is.
So when Bitcoin exploded in popularity in 2017, I naively thought that the world had realized what I did three years earlier. That Bitcoin was simply better money.
I was wrong.
What the world learned was that they could put their dollars into “crypto” and get an unbelievable return on their investment. Then they could sell their crypto and take even more dollars out.
Hence the term “cryptos” was born. And to this day I can’t stand it.
I can’t tell you how many people approached me in 2017 with “cryptos” schemes. I agreed to take their calls because I naively thought they saw the vision. It didn’t take thirty seconds for me to realize the folly in that.
The same thing happened again with the big crypto boom in 2021. People with schemes came out of the woodwork. But I knew better by then. I took zero calls.
So here’s what I want you to take away from this…
Bitcoin is not an investment.
If you’re looking for something where you put dollars in and then get more dollars out later, buy stocks and real estate. We have specific guidance around both in The Phoenician League.
But when it comes to Bitcoin, it’s all about accumulation. The same goes for gold.
We don’t buy Bitcoin or gold hoping to make a return on our investment. We buy them because the dollar has lost 96.7% of its purchasing power since 1913… and we know that trend’s only going to continue. Monetary debasement is baked into the current system.
Therefore, we buy Bitcoin and gold to turn our dollars into real money. Money that will protect our purchasing power for centuries.
-Joe Withrow
P.S. I gave a presentation titled Bitcoin’s True Purpose a few years ago. You can find it right here: