Bitcoin stands apart from other crypto, and what that means for US public policy

United States President Joe Biden’s executive order on digital assets has kickstarted an interagency mission to support financial innovation while protecting American consumers and interests. While many industry leaders welcome the constructive tone, some critics hope for a crackdown. We don’t blame them.

Many cryptocurrency projects operate behind thin veils of decentralization. In public, they’re sold on the premise that they distribute power. Behind the curtains, leaders pull the strings. In the recent case of Wonderland, a serial scammer and felon directed a $1 billion treasury.

Many projects secretly pay influencers to shill their tokens. The price pumps. Insiders dump. Naive investors lose money. Sometimes, the shillers are celebrities. And, sometimes, those celebrities leak the surprisingly low cost of their integrity.

Finally, Bitcoin is no scam. It can certainly be used for scams — much like the U.S. dollar, or other digital assets. But the Bitcoin network offers final settlement of its native asset, much like the Federal Reserve System offers final settlement of the U.S. dollar. People do speculate wildly on the Bitcoin price. Such is the way for early stages of innovation. And people worldwide need it even as privileged Westerners speculate.

Bitcoin’s design involves tradeoffs, to be sure. Its public ledger makes privacy difficult, though not impossible. It requires energy for its security. And its fixed supply engenders price volatility. But for all that, Bitcoin has become something remarkable: a neutral monetary system beyond the control of autocrats. Ideologues will balk as they seek that perfect — but perfectly elusive — monetary system. Wise and pragmatic policymakers, by contrast, will instead seek to use Bitcoin to improve the world.

Here’s what that means for public policy

First, we must not assume that cryptocurrencies share more in common than they, in fact, do. Bitcoin leads them all precisely because no one leads it. The policy must begin here from a place of understanding — not of cryptocurrency, in general, but of Bitcoin, in particular. As President Biden’s executive order conveys, digital assets are here to stay. The general category isn’t going anywhere precisely because Bitcoin, itself, isn’t going anywhere. We owe it special attention. Not Bitcoin only, but Bitcoin first.

Second, Bitcoin is credibly neutral since the network remains leaderless. Consequently, the U.S. can use and support Bitcoin without “picking winners and losers.” Bitcoin has, in fact, already won as a globally neutral monetary network. Nurturing the Bitcoin network, using Bitcoin as a reserve asset, or making payments over Bitcoin would be analogous to deploying gold within the monetary system — only digital, more portable, more divisible, and easier to audit and verify.

We commend President Biden for recognizing that digital assets deserve attention. We’ll need all hands on deck — from computer scientists, economists, philosophers, lawyers, political scientists, and more — to spur innovation and nurture what’s already here.

This article was co-authored by Andrew M. Bailey, Bradley Rettler and Craig Warmke.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Andrew M. Bailey, Bradley Rettler and Craig Warmke are fellows with the Bitcoin Policy Institute and the Resistance Money Bitcoin research collective and teach, respectively, at Yale-NUS College, the University of Wyoming and Northern Illinois University. Warmke is also a writer for Atomic.Finance.