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Jerry Brito @ the Coin Center
Howdy Bitcoiners!
One of the benefits of teaching my Bitcoin class at Texas A&M is that there is no shortage of speakers willing and able to address the students. My new Bitcoin class focuses on the business and policy surrounding Bitcoin. We heard this week from Jerry Brito, the founder and executive director of the Coin Center, a non-profit in Washington, DC, that is playing the ground game of advancing Bitcoin-friendly policies in our nation's capital.
Jerry is a lawyer who worked at the Mercatus Center at George Mason University before realizing that Bitcoin is the transformational technology of our time. He founded the Coin Center a decade ago and spent the early years primarily educating policymakers on Bitcoin.
Below are the chief highlights from his talk that I found most insightful:
The past was a time of Bitcoin ignorance, the future less so. In the last decade, policymakers knew nothing about Bitcoin or how it works. (They barely know how the internet works, just watch any hearings with Mark Zuckerberg). But now the congressional staff are recruited as subject matter experts, and they are penetrating all arms of government. These young staffers believe they understand Bitcoin, and as such, some are emboldened to legislate it away. Case study: Elizabeth Warren last spring tried to shame the Bitcoin mining community in Texas for high energy use.
Therefore, Bitcoin enjoyed freedom from regulation largely because of policymaker ignorance, which may change in the future.
The payments problem. Bitcoin is still missing a clear and popular domestic use case for payments. Congress gets that immutable and censorship-resistant money matters in a dictatorship that is hyper-inflating. But here in the US, even inflation approaching double digits is insufficient to demonstrate the wide use of Bitcoin as a medium of exchange. This matters for the Coin Center because their audience, Congress, asks what the impact on the US will be if the most common use for Bitcoin payments lies abroad. Bitcoin adoption as a medium of exchange rather than a store of value may likely happen abroad first. It's also hard to persuade a US Senator that Bitcoin can displace the US dollar. Their brains cannot accept that that’s a feature, not a bug. It is possible to frame Bitcoin as uniquely American, but I will leave that for a future post.
The Bitcoin Carve-out. For the last decade, policymakers put Bitcoin and crypto into one big box. Now that Bitcoin will be regulated as a commodity rather than a security, the policy world is finally beginning to distinguish the two. That means the CFTC for Bitcoin and the SEC for the altcoins. And the CFTC is a mouse compared to the SEC, so, this is good news for keeping regulation at bay. The bad news is that Bitcoin regulation will likely filter through energy regulation. That regulation may not mention Bitcoin per se, but it will address the changing energy economics emerging from the growing Bitcoin mining industry.
Political Ossification. In the past decade, the political landscape was dotted with both opponents and proponents of Bitcoin from both sides of the aisle. Their positions were diverse, irrespective of party lines. Fast forward to the present, a shift has occurred. Republicans now predominantly favor Bitcoin, seeing it as an embodiment of economic freedom and innovation. Democrats express skepticism, citing concerns about regulation and the environment. Despite this apparent polarization, a significant portion of Congress remains neutral or undecided.
The good news with Coin Center is that it has two Bitcoiners at its top: Jerry, and the head of research, Peter, both who testify often about Bitcoin to Congress. The downside of being forced to work with Congress is that you must constantly address their needs, which naturally only reflect the short-term political sentiment from the media. I remember my days working in the Bush White House, where we joked that today's presidential briefing was yesterday's New York Times. I wish Jerry had focused all his energy exclusively on Bitcoin at the Coin Center. But I understand that he needs to fund his nonprofit and answer questions from Congress on altcoins that have nothing to do with Bitcoin.
The focus on payments is a double-edged sword. It is the motivation for the white paper itself. But let's remember that the white paper doesn't even mention what is probably Bitcoin’s most important assumption, its limited supply. And so the real villain in this drama is not Vitalik Buterin and the Ethereum Foundation, nor Visa and MasterCard, but the Federal Open Market Committee. That's the conversation that Washington needs to have. But it takes the long view to do so.
Moving forward, I will preserve my more polished public opinions and news in this free version of the newsletter. The paid version will contain my more tentative conclusions and views that are not ready to go public, as well as some inside baseball that I hear in the Bitcoin ecosystem from my vantage point in Texas and Texas A&M. The next paid post will be on DriveChains.