Forbes: America must embrace Bitcoin

America Must Embrace Encryption

It’s no secret that the topic of Bitcoin and the broader crypto-asset space has been a topic of controversy and debate in the United States.

From being laughed at by nearly every traditional financial institution in the U.S. to having 11 spot Bitcoin ETFs that have rapidly attracted billions of dollars since their inception, it is clear that the U.S. private sector has embraced Bitcoin and tokenized payments.

These institutions include Blackrock, the world's largest asset manager, and JP Morgan, the largest and most influential bank in the United States.At the same time, investment in Bitcoin continues to hit record highs, and other indicators continue to point to greater interest in the space, such as stablecoin capitalization and the resurgence of the NFT industry.

Despite these positive private sector trends, news, and indicators, resistance from U.S. policymakers remains significant. The SEC continues its push to classify nearly all crypto assets as securities, filing a lawsuit against Coinbase (an SEC-registered exchange) and launching a new investigation into organizations doing business with the Ethereum Foundation.

Furthermore, despite the apparent success of Bitcoin and other tokenized assets, politicians continue to debate. Elizabeth Warren has been one of the most hardline anti-crypto politicians in the U.S., and her stance has solidified with the White House’s recent reintroduction of a potential 30% tax on Bitcoin miners.

This divide cannot continue and is completely counterproductive, detrimental to a calm conversation around which technologies are best positioned to reshape money and commerce.

The dollar has gone digital

According to a study by the Federal Reserve Bank of San Francisco, only 19% of U.S. dollar transactions are conducted using cash, and only 6% by value are done in cash.

Whatever metric is used to measure the pivot to dollar-based transactions, the reality is clear: the dollar has gone digital. This is not to dismiss the arguments for and against central bank digital currencies (CBDCs), both sides have legitimate concerns that need to be addressed in a productive manner.

However, the debate surrounding CBDCs may obscure the reality that transactions by businesses and individuals are already increasingly digital/virtual in nature.

Against this backdrop, it seems a logical conclusion that as tokenized payments and blockchain-based transactions increase in frequency and value, these technologies will become part of dollar transactions.

So far, household names including JP Morgan and PayPal have launched tokenized payment products and stablecoins for internal use, respectively. Fighting these trends seems short-sighted.

Money is technology

Building on the first point, it is becoming increasingly clear that money is less a currency (not to mention obsolescence of physical units) and more a technology.

As digitization accelerates across all aspects of the global economy, whether driven by blockchain or other technologies, money is transitioning to another technological application.

As digital and virtual transactions become an increasingly larger portion of total volume and value, and as the tokenization of TradFi assets is well underway (and led by TradFi institutions), the boundaries between money and technology are becoming almost invisible.

These trends don’t even touch on the important role digital and tokenized transactions will play as video games, streaming content, and augmented reality continue to go mainstream. Virtual worlds may have been overhyped at first, but augmented and virtual reality are constantly improving and represent an almost ideal use case for tokenized/tech currencies.

The United States has long been a hotbed of technological innovation, and ignoring the evolution of currency will hurt consumers and companies.

The Fed is not a privilege

As the world's reserve currency, the United States enjoys one of the most expensive privileges ever enjoyed by any country.

The U.S. dollar has been the backbone of financial transactions and global markets for nearly 70 years, and it’s almost hard to imagine a world where this reality isn’t true. It’s hard, but it’s a mindset that ignores historical precedent. In the past, multiple countries and empires held the global reserve currency, and the United States was just one of many countries whose currencies held this status.

As challenges to the U.S. economic and geopolitical strategy continue to emerge and rise, coupled with the digitization of dollar transactions and the growth of the tech nation, the dollar’s ​​reserve currency status should not be taken for granted.

Instead, policymakers should build on private market efforts to incorporate tokenization, embrace the digitization of the dollar, and actively invest in the technological future of money.

Rather than fighting the trend, U.S. policymakers should follow the private sector’s lead and embrace Bitcoin and other crypto assets.

Final Thoughts

Bitcoin and crypto assets have been controversial in the United States, but the private sector has embraced them.

However, there is still resistance from policymakers, such as lawsuits from the U.S. Securities and Exchange Commission and debates among politicians.

But as digital and virtual transactions increase, money is transitioning to another technological application, and the United States should keep up with this trend and embrace the technological future of money instead of fighting against Bitcoin and other crypto assets.