Financial privilege and Bitcoin

Bitcoin May 24, 2021

I recently read this interesting piece by Alex Gladstein for Bitcoin Magazine.  It speaks to financial privilege and Bitcoin:

Check Your Financial Privilege
While those comfortable in the dollar bubble deride Bitcoin, the stories of three emerging market users demonstrate why it is so important.

The article

The article begins with various quotes describing bitcoin the currency and Bitcoin the network negatively such as that Bitcoin is "disgusting and contrary to the interests of civilisation".

The article then goes on to point out that much of the criticism of Bitcoin is coming from people based in stable economies, with working democracies and property rights.  I'd add they generally have working judicial systems too.

The article then tells the stories of three Africans and shows how Bitcoin as a store of value and a payment systems is fundamentally enabling people to workaround problems introduced from poorly functioning monetary and government systems in there countries.  

The examples speak to:

  • Bypassing high fees for inefficient and impractical remittances and payments.
  • Protecting value in  a context where inflation is high.
  • Ensuring monetary assets are not devalued by government malpractice.
  • Sustaining innovation and entrepreneurship under difficult circumstances.

The point is then that those with financial privilege may not understand much of the practical benefits of Bitcoin.

My views

As someone of an advantaged background living in South Africa I feel I can relate to some parts of both sides of the coin (forced mixed metaphor for a bad pun!).

I can see how that some of the comments from the traditional financial world make some sense given their context.  Bitcoin can seem like a get rich quick scheme and thus that it does not really have a fundamental value to society.  Many are just playing lottery with trading "crypto" and the the unique value proposition of the technology is lost.  And to a large degree I feel much of the more general "crypto" space is like this.

However when I look at it from a perspective of not having any other options this view falls away. Even Warren Buffett, a critic of Bitcoin, speaks about winning the lottery by being born in America:

..when we were born the odds were over 30-to-1 against being born in the United States, you know? Just winning that portion of the lottery, enormous plus...

Thus he recognises the privilege that he gained by being born in the United States but, perhaps, doesn't recognise how sound money is part of that privilege?

For me, someone living in South Africa who has experienced higher inflation, exchange controls and an ever devaluing currency I can see the other points too.  I've also travelled in other African countries searching for a bank ATM (and also one that works) while also having the risks associated with carrying cash (often local currency as well as USD as a backup).  I've personally experienced corruption on these travels too.  Of course with my privilege I could easily work past these issues and hence do not face the same difficulties as those in the article, but I get a hints of it.

I think the above helps me to recognise the key value proposition of bitcoin:

Decentralised money that cannot be co-opted by anyone.  Not a government, a billionaire, media nor you, nor me.

I find once you have this kind of thinking you can easily sidestep lots of the "get rich quick" and "crypto casino" narratives out there to see the fundamental value of bitcoin the currency and Bitcoin the network and identify that it may well be one of the most important inventions ever and of key value to civilisation.  

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Louis Rossouw

Site-owner here. Read more about me in the about section.

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