One driver for this growing interest into digital assets is undoubtedly the U.S. national debt, as the nation currently runs a $31 trillion deficit with no sign of slowing down. Senator Rand Paul recently acknowledged that “the greatest national security risk is our debt ” after the release of a single, $1.7 trillion (or roughly 95 million bitcoin, in today’s value) spending package. The mountain of national debt is certainly a cause of concern.
There are only two ways a deficit of that magnitude can ever be paid: either by default through a monetary reset or inflation. Because of the unsurmountable level of debt, there is a growing need for innovation to help solve this dilemma. The path to a digital dollar is nearly inevitable, as the era of 0% money quickly approaches its expiration date and forces the transition into a new monetary system that will be birthed into existence — a monumental shift of which the world has not experienced since the likes of the Nixon Shock in 1971 . In 1971, instead of defaulting on its financial obligations, the U.S. changed the economic policy entirely, ended the Bretton Woods era and removed gold from being tied to the U.S. dollar.
If history is any future indicator of what will occur at the end of the next financial cycle, the U.S. will likely explore an alternative economic policy as alluded to in the NSS, but this time will introduce a central bank digital currency (CBDC), or a digital dollar, to avoid defaulting on its current debt which, ironically, is a form of default.
The U.S. Can Adopt Bitcoin However, there may not be a need for the U.S. to invent a domestic digital dollar as Bitcoin fits the criteria that the NSS details. Bitcoin is the hardest form of money and provides the highest standards of protection to individuals. It is the most stable digital asset as it continues to release a new block every 10 minutes, and is the most inclusive monetary protocol as it allows not just individuals with social security numbers and two forms of government-issued IDs to access its benefits, but its open-source protocol grants protection and services to everyone including the 1.4 billion unbanked people across the worl d while the Lightning Network promotes efficient transactions, arguably the most important dimension of a globalized economy.
As more individuals, companies, banks and countries are forced by the market to pay out loans in bitcoin instead of notes, holders of the largest bitcoin stacks will naturally gain more influence. Its built-in deflationary nature and absolute scarcity features ensures that 100% of the work and value created by people is enjoyed and never diminished through monetary debasement. Lastly, Bitcoin’s enormous defense system discourages bad actors as the cost of attack has become too great and thus forces peaceful and mutually beneficial agreements.
In every sense, the Bitcoin protocol perfectly aligns with the core values of the United States and its national security strategy. Contrary to what some senior officials claim, Bitcoin does not generate a national security risk. Instead, ignoring the Bitcoin network would significantly impede the U.S.’s ability to pay its national debt, “outmaneuver [its] geopolitical competitors ” and weaken the country’s economic instrument of power, which aims to leverage the country’s wealth to influence the behaviors of others. Thus, further delaying Bitcoin adoption is the national security risk.
This is a guest post by Matt Smith. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine, the University of Nebraska-Lincoln, the Department of Defense or the United States Air Force.
