At a recent "Heal the Divide" political rally, US presidential candidate Robert Kennedy announced that, if elected president, he would gradually back the USD with Bitcoin and precious metals.
He stated “my plan would be to start very, very small, perhaps 1% of issued T-bills would be backed by hard currency, by gold, silver platinum or Bitcoin.” It was a rather sensational statement, generating excitement among both degen Bitcoin maxis and crypto bros alike.
His proposal to the people begs the question, could the USD actually be saved by Bitcoin?
https://x.com/BitcoinMagazine/status/1681480017245601794
Since the gold standard was dropped by Nixon in 1971, the US dollar has been backed by nothing, except the promise of the US government to service its debts, and this commitment is looking less and less likely to be honored as national debt tops almost $35 trillion and interest rates surpass 5%.
Kennedy has been a crypto advocate since the start of his campaign, actually suggesting that he would put the entire US budget on blockchain at a previous rally. He is ahead on that front compared to his political rival Donald Trump, who recently pulled a 180 on his anti-crypto stance.
Too Much Debt
The problem with Kennedy's plan is that the value of precious metals and Bitcoin combined does not even add up to America's outstanding debt. The total value of the gold and Bitcoin markets is about $17 trillion which is not even half of the $35 trillion that the government owes.
Perhaps all new dollars issued by the treasury could be backed by something like gold or Bitcoin, but what about the other trillions of dollars that are already in circulation? The fact is that there isn't enough gold or Bitcoin available to back them. Ultimately, some unlucky souls will end up "holding the bag" when the unsustainable ponzi scheme implodes.
The USD, Euro, Yen, etc. cannot be saved by crypto. I believe the more likely outcome is that cryptocurrencies will end up completely replacing traditional fiat currencies (as well as CBDCs), and new economies will form atop the foundation of decentralized trustless blockchains.
That said, we could see new digital currencies being issued by centralized entities that are backed by cryptocurrencies, allowing people who don't want to manage their own seed phrases to participate in the new economy.
New Economies, New Money
Small nations like El Salvador have already seen the writing on the wall, making the bold move to adopt Bitcoin as legal tender, and attracting fresh capital and talent to the country. However, this is just the beginning of a much greater movement.
Eventually all of our public budgets will be on trustless blockchains, likely within smaller communities, where stakeholders transparently vote on spending proposals. Getting to this point will require much turmoil, geopolitical shifts, and the end of traditional fiat currency.
We already have several DePIN projects that use advanced tokenomics to grow out decentralized wireless networks, compute networks, and mapping data services. Along with Bitcoin, the tokens that power these networks could end up being the money of the future.
If you learned something new from this article, be sure to check out my other posts on crypto and finance here on the HIVE blockchain. You can also follow me on InLeo for more frequent updates.
Until next time...
Resources
MSN Article About Kennedy's Rally [1]
Bitcoin in front of Dollar Image [2]