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- 👾 Bitcoin, the only game in town
👾 Bitcoin, the only game in town
Governments and financial interests are starting to realize that bitcoin is a game they must play, and play well – or else.
Dave Birnbaum & Joe Lupo
March 29, 2022
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Welcome to Bitcoin Roundup #5.
As a real life Game of Thrones plays out, bitcoin has been recognized as a key part of the story. Countries are showing serious doubt about the continued supremacy of the U.S. dollar, and they see bitcoin as a way to protect their interests.
Saudi Arabia may accept yuan instead of dollars for their oil, which would be the biggest change to the world oil markets since the mid-1970s.
Russia and Iran announced a new financial network in response to the limitation of their access to SWIFT, the network that powers most of the global economy.
Russia also announced this week that they will consider accepting bitcoin for exports.
The traditional financial landscape is changing rapidly. As the only form of neutral digital money, bitcoin has been waiting for this moment.
NEWS
Yellen changes her tune 🪗
Janet Yellen, Treasury Secretary and former Chair of the Federal Reserve, came out as pro-bitcoin. In contrast to previous statements, Yellen said that the United States should set up a regulatory environment that is friendly to innovation in cryptocurrency.
Exxon chooses to mine bitcoin to reduce emissions 🌱
The top oil and gas producer in America is mining bitcoin in order to – checks notes – reduce their carbon emissions? Yes. Exxon is now mining bitcoin with gas that would have otherwise been uselessly burned away. This reduces emissions up to 63%, demonstrating again that bitcoin is a green technology.
Bitcoin surges into positive territory for 2022 🚀
Bitcoin cleared $48,000 for the first time in nearly four months. There are many possible reasons, including institutional adoption by the likes of Goldman Sachs and Bridgewater Associates, a new $10 billion bitcoin reserve by Terra, and rising demand for bitcoin as a defense against inflation and a slowing economy.
Bitcoin adoption continues worldwide 🌍
Moscow announced it is considering accepting bitcoin for natural gas and oil. BlackRock, the largest asset manager in the world, is studying digital currencies. Leumi, Israel's second largest bank announced it will offer bitcoin to clients.
HOW BITCOIN WORKS
Learn one key idea about bitcoin each week. This week:
The game theory of bitcoin.
Game theory is a framework that analyzes and predicts the behaviors of players with conflicting interests in a game. It seeks to understand how they will operate in a given situation in order to optimize their outcomes.
Bitcoin adoption can be analyzed through the lens of game theory. Market participants of all shapes and sizes, including individuals, businesses, and governments, must consider the behavior of all other players.
As adoption rises, those without bitcoin face the very real possibility of being left behind. This causes players to adopt bitcoin whether or not they believe that bitcoin is a good thing, and whether or not they want it to succeed. They adopt it simply because they must in order to retain wealth and power in the new system.
You may recall that the United States recently took the top spot for hashrate after China banned bitcoin mining. A few months later, Janet Yellen announced we should ensure it stays in America. Now, Russia may accept bitcoin for natural gas exports.
A report from Fidelity sums up this phenomenon:
Even if other countries do not believe in the investment thesis or adoption of bitcoin, they will be forced to acquire some as a form of insurance.
You can see game theory at work in the behavior of major banks including JP Morgan Chase, Deutsche Bank, Wells Fargo, and Goldman Sachs.
Governments and banks are embracing bitcoin even though they would probably prefer to wave a magic wand and make it disappear. The reason resides in game theory: Not embracing bitcoin is simply too risky.
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COIN CHECK
What causes bitcoin’s volatility?
Bitcoin is monetizing, meaning that it's becoming money, and it's common for new forms of money to be volatile during this process.
Its supply is inelastic and does not respond to demand.
It's not volatile. On the Bitcoin Standard, 1 BTC = 1 BTC.
All of the above.
Check your answer at the end of the page.
ANSWER
4. All of the above
That’s all for this week, folks! When you signed up for this newsletter, we promised to act as your personal guide and help you understand what’s happening in the world of bitcoin. What did you think of today’s newsletter? Reply to this email and let us know what you’d like to see more of.
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