Coinbase CEO: Why Bitcoin is a return to sound money

Author: Coinbase CEO Brian Armstrong; Compiler: Deng Tong, Golden Finance

Experts often point out that cryptocurrencies have no practical use other than speculation and illegal activities. However, more than 50 million Americans and 400 million people globally have purchased cryptocurrencies, and the best data we have from third parties shows that illegal Activity accounts for less than 0.5% of transaction volume. So what are these people doing with it?

It is true that many people were initially attracted to cryptocurrencies as an investment, and speculation has led to an influx of many. But what are the underlying reasons driving this interest?

In the early 1970s, the United States (like many countries before it) eliminated any link between the dollar and hard commodities such as gold. For more than 50 years, a familiar pattern we've seen historically play out in the United States: the government spends more than it takes in because it can print money for "free," and years or decades later, people pay the price through: High inflation and stagnation.

Ordinary people may not understand the nuances of quantitative easing and the federal budget deficit, but they do notice rising prices for gas, food, and education, and they have a growing sense that something is wrong with our economy. In fact, 87% of Americans believe the current financial system needs an update. More than half of young Americans use the system only sometimes or not at all.

This brings us to the first and arguably most important use case of cryptocurrency, which isCryptocurrencies like Bitcoin are a return to sound money. Like gold, Bitcoin is not a national currency backed by a single government. Inflation is a regressive tax in the United States and abroad that hurts the poorest in society the most. Bitcoin, a hard currency with a fixed supply, is the solution to this problem. If inventing digitally native sound money was the only use of cryptocurrency, it would still be a world-changing technology, but it would be just the beginning.

For more than 5 years, the crypto industry has been working hard to build infrastructure to update our financial system and expand the utility of crypto. Use cases are no longer a promise of the future; They are here today. Here are some of the most popular examples:

• U.S. Dollar Digitization. Despite high demand for U.S. dollars in many parts of the world, many people were unable to open U.S. dollar bank accounts until the adoption of U.S. dollar-backed “stablecoins” (which currently exceed $100 billion). A digital dollar like USDC is critical to our global competition with China, which began investing in a digital yuan in 2019.

• Fast and cheap global payments. Merchants still lose about 2% on each credit card transaction, wire transfer fees are $30, and many transactions in the U.S. still take days to clear. As blockchain scales with “Layer 2” solutions, you can now send USDC to anywhere in the world in a second for about 1 cent. USD-backed stablecoin transaction volume approaches $9 trillion annually (more than Mastercard, American Express, and Discover combined).

• Business models for creatives. Total sales of NFTs have exceeded $62 billion and allow artists to build direct relationships with fans, cutting out expensive middlemen. Whether it’s music, gaming, visual art, or video, cryptocurrencies help establish digital provenance to ensure artists get paid.

• Decentralized social media. Although it’s still early days, decentralized social (or DeSo) ensures that you own your data, not controlled by big tech companies, and that you’ll never be censored. Each post is digitally signed, proving who the original author is to help combat false content brought about by artificial intelligence. Anyone can build a front-end interface using the same shared dataset of all social media posts.

Cryptocurrency is not just a new asset class – it It is the future of money. Today’s system is riddled with middlemen, high fees, delays, and other inefficiencies that make it inaccessible and unfair.

The future of money will be more open, free, efficient, and powered by cryptocurrencies. Cryptocurrency is the most important technology we need to update the global financial system and move America forward. In fact, it is critical to ensuring the dollar’s ​​future status as a reserve currency and the United States’ position as a technology and financial center.

Embracing cryptocurrencies and establishing clear regulatory rules for cryptocurrencies is the U.S. The most patriotic thing a person can do. If you are a cryptocurrency holder in the United States, please consider joining StandWithCrypto.org to help ensure that pro-crypto candidates are elected in the upcoming election. If you are a policymaker, help drive regulatory clarity in the United States to protect consumers and promote innovation. You can support bipartisan legislation like the Payments Stablecoin Clarity Act, the 21st Century Financial Innovation and Technology Act, and the Responsible Financial Innovation Act. Cryptocurrencies need fit-for-purpose rules, and the time to act is now.