On 11th July, President Donald Trump of the United States made negative comments related to Bitcoin and cryptocurrencies. He stated that he’s not a fan of cryptocurrencies in general as they are “not money” and are volatile, “based out of thin air”. Additionally, he even trashed Facebook’s Libra coin and spoke about the supremacy of the US Dollars.
OpEd: This article is basically going to explain Trump’s tweetstorm, sentiments that crashed Bitcoin prices, additionally, it will provide insights of illiteracy amongst decision-makers [irony].
Trump’s thread on Twitter was divided into three tweets, let’s analyze all the three tweets step-by-step.
Tweet No. 1
I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air. Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity….— Donald J. Trump (@realDonaldTrump) July 12, 2019
Not being a fan of Bitcoin and Cryptocurrencies is totally cool, but not getting your facts right as the President of the United States is not cool.
Starting with, Bitcoin being a cryptographic form of money with or without the consent of Trump. Money is a medium of exchange, it is a resource and an asset – so is Bitcoin. When it comes to volatility, every currency is. Some are more, some are less. But I don’t remember the last time I bought 3200 USD and it became $13000 in 7 months.
Whereas, backing up Bitcoins is concerned. It is not made out of thin air, it needs computational power, solving complex algorithms and a trustless community to mine 1 bitcoin. And guess what? Before 1971, the dollar was backed by gold. Post that, US dollars are made out of thin air, they are backed by the “full faith and credit” of the U.S. Government. [I’m not even kidding]
Bitcoin has a mathematical framework and a technology that cuts out the third party, does cross-border payments under seconds, has an open ledger book and is still decentralized.
Coming to the part of unregulated assets that can “facilitate unlawful behavior, including drug trade and other illegal activity”. Funnily enough, in 2009 National Geographic did a research and found out that:
Here’s how most of the time the US Dollar bill has not only been used to buy drugs but also to do it [literally]. Now, can you really blame cryptocurrencies?
Tweet No. 2
….Similarly, Facebook Libra’s “virtual currency” will have little standing or dependability. If Facebook and other companies want to become a bank, they must seek a new Banking Charter and become subject to all Banking Regulations, just like other Banks, both National…— Donald J. Trump (@realDonaldTrump) July 12, 2019
That said, calling out on Facebook is great [only if it’s regarding breach of data and user privacy], but talking about it becoming a bank? If you have ever checked out Libra’s Whitepaper it never spoke about its vision of becoming a bank, but stated how the cryptocurrency would help the UN-Banked. The population of over a billion that needs to run through centralized institutions or government channels just to have one private bank account.
Right from Money Transfer Scams, to Payment Card fraud, unauthorized loan approvals, false letters of credit – centralized financial institutions AKA banks; have done it all. Do cryptocurrency-related companies need to convert themselves into banks while that’s the very first thing these assets were made to disrupt?
Tweet No. 3
…and International. We have only one real currency in the USA, and it is stronger than ever, both dependable and reliable. It is by far the most dominant currency anywhere in the World, and it will always stay that way. It is called the United States Dollar!— Donald J. Trump (@realDonaldTrump) July 12, 2019
This one was the best, I almost cracked up.
” We have only one real currency in the USA, and it is stronger than ever”
The Nixon Shock of 1971 changed many things related to the US dollar. It enabled Federal Reserve to mint dollars [without backups] and lend to banks which stimulated apparent growth and capitalism. Also, it is extremely important to understand that FED is a private, for-profit bank and is NOT a part of the US Government.
The U.S. continuously keeps on adding billions [USD] to its trade deficit [the amount by which the cost of a country’s imports exceeds the value of its exports] and the government produces billions in Treasury debt [ The aggregate, gross amount that Treasury can borrow]. Keeping in mind that the United States is one of the biggest debtor nations it doesn’t take an Einstein to figure how and why the US dollars have been declining.
Not just this, has the world forgotten about the 2008 global meltdown? That accelerated because of the Lehman Brothers blunder in the US? This is when the American market fell in trillions overnight while the FED made 9 trillion dollars overnight on emergency loans. Researchers at the Federal Reserve Bank of San Francisco [FRBSF] estimated that without the abnormal severity of the 2008 crisis, America’s GDP would be 7% higher than it is. [Means it would be 1.43 trillion richer, that’s the whole GDP of countries like Norway, Brazil, Argentina, etc.]
So yeah, maybe it’s not the right time to say that it is stronger than ever. US economy might possibly collapse in the coming years and that’s when the citizens of the US might need a more sovereign, decentralized and immutable currency – Bitcoin.
Coming to the end of the article, Trump had almost zero influence on the crypto community with his negative statements. The only thing the existing community noted was how Bitcoin is not big enough for the President of the US to tweet about be it negative or positive.
Here are a few comments from the influencers of the crypto-space that were picked up from Trump’s tweet:
If your argument is that Bitcoin is based on thin air, while Bitcoin’s argument is that it is based on math, who should we believe?
Asking for a friend :)— Pomp 🌪 (@APompliano) July 12, 2019
Untraceable, physical cash is the best tool for facilitating drug trades and unlawful activities, not a public ledger that records the history of every transaction ever made.— Bitcoin Magazine (@BitcoinMagazine) July 12, 2019
Bitcoin doesn’t care if you’re not a fan of bitcoin.— Gab.com (@getongab) July 12, 2019
Additionally, the sentiment of Bitcoin crashing due to Trump’s tweet was all over Twitter. This got clarified when TIE – An analyzing platform for crypto traders put out a tweet saying:
After his [Trump] tweet, BTC tweet volume temporarily spiked from 35K to over 50K as price and sentiment moved slightly upwards. However, within 24 hours tweet volumes, sentiment, and price all began to fall. pic.twitter.com/Vk7NqI5K2F— The TIE (@TheTIEIO) July 14, 2019
The BTC price crash was a correction to the previous spike of BTC and not a reaction to Trump’s tweet.