President Trump Tweets About Crypto: Right on Libra, Wrong on Bitcoin

President Trump Tweets About Crypto: Right on Libra, Wrong on Bitcoin

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Say what you will about Donald Trump - love him or hate him, you have to agree that he is a prolific tweeter. Yesterday, he posted some real doozies:

If the Twitter link isn’t working for you, a transcript of the relevant tweets follows:

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…

….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…

…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!

This is the first time - as far as I know - that President Trump has ever mentioned Bitcoin publicly. That makes this worth examining - and while it might not seem like it, there is a lot to unpack here.

1) I’m unconvinced that the President actually wrote it.

President Trump probably does not write all of his own tweets. This one, most likely, came at the behest of the “boomers” in his administration who probably don’t understand much about Bitcoin. With that said, President Trump probably doesn’t understand much about Bitcoin either. These people are all digital immigrants, rather than digital natives.

The term digital native describes a person that grows up in the digital age, rather than acquiring familiarity with digital systems as an adult, as a digital immigrant. - Wikipedia

This means that they tend to have to put more effort into understanding and embracing new technology, and cryptocurrency is right out there on the bleeding edge. This sort of statement likely comes from his advisors - such as people in the Treasury Department - who, in turn, have their own advisors. I’d be surprised if anyone in his administration has an intimate understanding of Bitcoin or cryptocurrencies as a whole. This is important because it puts the statement into context, which is that the President himself probably does not have any real disdain for crypto. 

2) He calls Bitcoin’s value highly volatile and based on thin air.

Bitcoin’s value is indeed volatile - this is unsurprising. As a technology, it’s still in its infancy. Saying that the value is “based on thin air” is a stretch. I’ve written a lot about how Bitcoin’s value comes from what it can do. Most importantly, it is free speech money - no payment processor can stop you from receiving or sending Bitcoin if they don’t like your politics. In fact, many of President Trump’s own supporters have been financially deplatformed and have come to rely on cryptocurrencies to facilitate their business.

3) Bitcoin is conflated with facilitating “unlawful behavior.”

This is technically accurate, but it presents a false narrative. It would be more accurate to say that any money facilitates unlawful behavior. Statistically, the US Dollar is used to facilitate unlawful behavior more than any other medium of exchange. In fact, committing crimes on a public, immutable blockchain is generally a very bad idea for obvious reasons. I cover this in my video series about Dumb Things People Say About Bitcoin.

4) Libra is garbage, but it shouldn’t be conflated with Bitcoin.

These tweets were made around the time of President Trump’s “Social Media Summit.” In part, this event was meant to highlight censorship of certain political voices on social media. As a result, it should come as no surprise that President Trump has a low estimation of Facebook’s new stablecoin project, “Libra.” On this, he’s right - Libra is a centralized project which does not stay true to the principles of cryptocurrencies. In effect, it would be a fiat currency entirely controlled by Mark Zuckerberg and a handful of partner corporations in the “Libra Association.” It’s a very stupid idea, and it’s not likely to take off. In fact, Congress itself has asked them to knock it off:

We write to request that Facebook and its partners immediately agree to a moratorium on any movement forward on Libra - its proposed cryptocurrency and Calibra - its proposed digital wallet. It appears that these products may lend themselves to an entirely new global financial system that is based out of Switzerland and intended to rival U.S. monetary policy and the dollar. This raises serious privacy, trading, national security, and monetary policy concerns for not only Facebook’s over 2 billion users, but also for investors, consumers, and the broader global economy. — Five members of Congress, 07/02/2019

Executive Summary: Good for Bitcoin 

A sitting US President publicly mentioned Bitcoin for the first time in history. I don’t care if it was in a negative context - this is amazingly good news for cryptocurrency as a whole. Sixty-two million people follow President Trump’s Twitter - some percentage of those people either didn’t know about Bitcoin or didn’t know it was important enough that a President should be tweeting about it. Remember: First they ignore you, then they laugh at you, then they fight you, then you win. It seems like the cryptocurrency world has reached step three.