November 16, 2022

Dear progressives: Bitcoin protects the vulnerable

Bitcoin brings hope to the very people that progressives seek to empower.

David Waugh
David Waugh

Content Editor

Dear progressives: Bitcoin protects the vulnerable

Table of contents

Dear progressives: Bitcoin protects the vulnerable

Bitcoin has few fans among progressive politicians. Many progressives think it should be regulated or banned to combat climate change and protect the dollar’s dominant global status.

The implication of calls for bitcoin bans or regulations is that bitcoin is of little value. After all, many other activities consume electricity and do not find themselves in the crosshairs of progressives. 

Energy consumption from industries such as healthcare, construction, and transportation is orders of magnitude higher than bitcoin. The output from these industries is vital to human flourishing – but so is a secure monetary network providing access to sound money for all.

In fact, on balance, bitcoin is a relatively green technology, in that the share of renewable energy sources it uses is generally much higher than other industries.

The idea that bitcoin is somehow frivolous or unnecessary is not only misguided, it also threatens to harm the world's poorest and most vulnerable people. 

Bitcoin provides access to financial security

For billions of people living in developing countries with high inflation, weak property rights, and poor governance, bitcoin is used to protect personal savings. Bitcoin brings hope to the very people to which the progressive worldview devotes itself.

Bitcoin offers universal access to a secure, decentralized payment network, uncontrollable by moneyed interests. And unlike fiat currencies, its fixed supply prevents issuers from printing units and diluting their value.

In addition to its monetary qualities, bitcoin allows individuals to send and receive money at high speed, with final settlement. It is a powerful tool for remittance payments, which serve as a lifeline for many in the developing world. As just one example of many, in Uganda, people have used the bitcoin network for remittance payments since 2014.

As Nic Carter and Ross Stevens state in their report Bitcoin Net Zero, "People in [developing countries] value bitcoin's institutional qualities, which compare favorably with their local settings."

We all have blind spots that we can work to eliminate by educating ourselves about how others live. In developing nations, countless individuals are vulnerable to imperial and corporate manipulation of their laws, money, and livelihoods. For progressives, learning about how bitcoin alleviates these harms is critical for advancing their cause in the modern age.

Check your financial privilege

Americans and others in developed countries currently live under a monetary and financial system characterized by financial repression. They face artificially low interest rates and a devaluing currency because these are the ways our governments cope with a high debt-to-GDP ratio. 

Still, people in the United States and other developed nations have not experienced widespread capital controls or hyperinflation, which can destroy entire societies in months.

Using the definition provided by Philip Cagan in Milton Friedman's Studies in the Quantity Theory of Money, hyperinflation is a price-level increase of 50% or greater per month. In their Hyperinflation Table, Steve Hanke and Charles Bushnell find that, since World War I and the rise of central banks, 57 hyperinflationary events have occurred worldwide.

What does hyperinflation look and feel like to those experiencing it? Saifedean Ammous provides an overview of its societal effects in his book, The Bitcoin Standard:

Hyperinflation is a far more pernicious phenomenon than just the loss of a lot of economic value by a lot of people; it constitutes a complete breakdown of the structure of economic production of a society built up over centuries and millennia. With the collapse of money, it becomes impossible to trade, produce, or engage in anything other than scraping for the bare essentials of life…First go the luxury goods, but soon follow the basic essentials of survival, until humans are brought back to a barbaric state wherein they need to fend for themselves and struggle to secure the most basic needs of survival.

The bottom line is this: Hyperinflation kills. And because most westerners have not experienced it, progressive politicians in developed countries do not grasp why those in the third world are afraid of government money and currency overissuance. As Alex Gladstein documents in his excellent book, Check Your Financial Privilege,

Only 13 percent of our planet’s population is born into the dollar, euro, Japanese yen, British pound, Australian dollar, Canadian dollar or Swiss Franc. The other 87 percent are born into autocracy or considerably less trustworthy currencies. 4.3 billion people live under authoritarianism, and 1.2 billion people live under double- or triple-digit inflation.

For those not born into financial privilege, where governments enact harmful monetary policies and limit financial transactions, bitcoin offers an escape hatch. And macroeconomic data display bitcoin adoption rates in these countries as some of the highest in the world. 

As Gladstein states in “Freedom Go Up”, bitcoin’s protocol “does not discriminate, remaining open 24/7 to anyone on earth, regardless of their nationality, gender, level of wealth, creed, or ethnicity.”

Bitcoin helps refugees and migrants

Notably, bitcoin also lessens the costs associated with migration. Take as an example the plight of a refugee leaving a war-torn country, or asylum-seekers fleeing persecution based on ethnicity, belief system, sexuality, or anything else. 

Before bitcoin, their savings would likely be tied up in physical commodities (livestock or other business inventory, real estate, gold, and so on) which are difficult to transport at best, and dangerous or impossible to move at worst. Additionally, money in any physical form would be subject to confiscation at many points along the way.

With bitcoin, refugees can store their wealth on a tiny device the size of a USB drive, or even memorize a seed phrase and keep access to their wealth in their heads. 

This is a powerful application of bitcoin. By lowering the cost of migration, bitcoin gives people the chance to access their savings as they build a new life.

Bitcoin supports a global village

Many western politicians, particularly progressives, express unease with bitcoin owing to the misguided idea that it has no use case that advances the human condition. However, this reaction by people in power stems at least partially from the threat it presents to much of the fiscal and monetary structures in the developed world that has so handsomely rewarded those in power, while leaving the world’s most vulnerable people behind. 

Any progressive argument against bitcoin based on its environmental impact, lack of regulation and oversight, or other concerns, must also account for the significant and undeniable humanitarian value that bitcoin offers today.

November 13, 2022

Dear progressives: Bitcoin protects the vulnerable

Bitcoin brings hope to the very people that progressives seek to empower.

David Waugh
David Waugh

Dear progressives: Bitcoin protects the vulnerable

Bitcoin has few fans among progressive politicians. Many progressives think it should be regulated or banned to combat climate change and protect the dollar’s dominant global status.

The implication of calls for bitcoin bans or regulations is that bitcoin is of little value. After all, many other activities consume electricity and do not find themselves in the crosshairs of progressives. 

Energy consumption from industries such as healthcare, construction, and transportation is orders of magnitude higher than bitcoin. The output from these industries is vital to human flourishing – but so is a secure monetary network providing access to sound money for all.

In fact, on balance, bitcoin is a relatively green technology, in that the share of renewable energy sources it uses is generally much higher than other industries.

The idea that bitcoin is somehow frivolous or unnecessary is not only misguided, it also threatens to harm the world's poorest and most vulnerable people. 

Bitcoin provides access to financial security

For billions of people living in developing countries with high inflation, weak property rights, and poor governance, bitcoin is used to protect personal savings. Bitcoin brings hope to the very people to which the progressive worldview devotes itself.

Bitcoin offers universal access to a secure, decentralized payment network, uncontrollable by moneyed interests. And unlike fiat currencies, its fixed supply prevents issuers from printing units and diluting their value.

In addition to its monetary qualities, bitcoin allows individuals to send and receive money at high speed, with final settlement. It is a powerful tool for remittance payments, which serve as a lifeline for many in the developing world. As just one example of many, in Uganda, people have used the bitcoin network for remittance payments since 2014.

As Nic Carter and Ross Stevens state in their report Bitcoin Net Zero, "People in [developing countries] value bitcoin's institutional qualities, which compare favorably with their local settings."

We all have blind spots that we can work to eliminate by educating ourselves about how others live. In developing nations, countless individuals are vulnerable to imperial and corporate manipulation of their laws, money, and livelihoods. For progressives, learning about how bitcoin alleviates these harms is critical for advancing their cause in the modern age.

Check your financial privilege

Americans and others in developed countries currently live under a monetary and financial system characterized by financial repression. They face artificially low interest rates and a devaluing currency because these are the ways our governments cope with a high debt-to-GDP ratio. 

Still, people in the United States and other developed nations have not experienced widespread capital controls or hyperinflation, which can destroy entire societies in months.

Using the definition provided by Philip Cagan in Milton Friedman's Studies in the Quantity Theory of Money, hyperinflation is a price-level increase of 50% or greater per month. In their Hyperinflation Table, Steve Hanke and Charles Bushnell find that, since World War I and the rise of central banks, 57 hyperinflationary events have occurred worldwide.

What does hyperinflation look and feel like to those experiencing it? Saifedean Ammous provides an overview of its societal effects in his book, The Bitcoin Standard:

Hyperinflation is a far more pernicious phenomenon than just the loss of a lot of economic value by a lot of people; it constitutes a complete breakdown of the structure of economic production of a society built up over centuries and millennia. With the collapse of money, it becomes impossible to trade, produce, or engage in anything other than scraping for the bare essentials of life…First go the luxury goods, but soon follow the basic essentials of survival, until humans are brought back to a barbaric state wherein they need to fend for themselves and struggle to secure the most basic needs of survival.

The bottom line is this: Hyperinflation kills. And because most westerners have not experienced it, progressive politicians in developed countries do not grasp why those in the third world are afraid of government money and currency overissuance. As Alex Gladstein documents in his excellent book, Check Your Financial Privilege,

Only 13 percent of our planet’s population is born into the dollar, euro, Japanese yen, British pound, Australian dollar, Canadian dollar or Swiss Franc. The other 87 percent are born into autocracy or considerably less trustworthy currencies. 4.3 billion people live under authoritarianism, and 1.2 billion people live under double- or triple-digit inflation.

For those not born into financial privilege, where governments enact harmful monetary policies and limit financial transactions, bitcoin offers an escape hatch. And macroeconomic data display bitcoin adoption rates in these countries as some of the highest in the world. 

As Gladstein states in “Freedom Go Up”, bitcoin’s protocol “does not discriminate, remaining open 24/7 to anyone on earth, regardless of their nationality, gender, level of wealth, creed, or ethnicity.”

Bitcoin helps refugees and migrants

Notably, bitcoin also lessens the costs associated with migration. Take as an example the plight of a refugee leaving a war-torn country, or asylum-seekers fleeing persecution based on ethnicity, belief system, sexuality, or anything else. 

Before bitcoin, their savings would likely be tied up in physical commodities (livestock or other business inventory, real estate, gold, and so on) which are difficult to transport at best, and dangerous or impossible to move at worst. Additionally, money in any physical form would be subject to confiscation at many points along the way.

With bitcoin, refugees can store their wealth on a tiny device the size of a USB drive, or even memorize a seed phrase and keep access to their wealth in their heads. 

This is a powerful application of bitcoin. By lowering the cost of migration, bitcoin gives people the chance to access their savings as they build a new life.

Bitcoin supports a global village

Many western politicians, particularly progressives, express unease with bitcoin owing to the misguided idea that it has no use case that advances the human condition. However, this reaction by people in power stems at least partially from the threat it presents to much of the fiscal and monetary structures in the developed world that has so handsomely rewarded those in power, while leaving the world’s most vulnerable people behind. 

Any progressive argument against bitcoin based on its environmental impact, lack of regulation and oversight, or other concerns, must also account for the significant and undeniable humanitarian value that bitcoin offers today.