Believe in Bitcoin Bitcoin's potential as a store of value in the offshore financial system

Author: Kay Capital Source: X, @keyahayek

Most people who come to this circle are motivated by making quick money. It’s not very interesting to talk about “belief”, but I actually have faith. This article talks about my faith in Bitcoin and stablecoins.

Interpretation of Bitcoin Faith

There are a hundred different interpretations of Bitcoin faith. Because it’s about life experience, the emphasis is different.

I went to Cambodia before the 818 gambling ban. At that time, the real estate and land markets there were hot because of the abnormal prosperity of online gambling/electronic fraud. I went to Phnom Penh, Poipet, Mokpai, and of course the later infamous Sihanoukville. There were Chinese investors and construction contractors everywhere. Looking back now, it was like the 1920s America in The Great Gatsby.

Everyone imagined that this was the next Macau, the next Shenzhen. People still wanted to participate in that deformed, rough and vibrant environment, but fortunately they didn't. All this collapsed after Cambodia banned gambling, but that's another story.

Do you think I would tell you about the urban legends of the big brothers in the park? No. Besides, I, a visitor, couldn't get in at all.

What surprised me was the country's currency and banking system. The US dollar, the taylor, and the US taylor are commonly used here. The local currency, the Cambodian riel, is like waste paper. If you use it to pay for tuk-tuk fares, the driver will glare at you.

There is no compliance or risk control for opening a bank account here. Anyone can open an account. I heard that tens of millions of dollars are transferred every day, and no compliance documents are required, except for transfers and even cash deposits and withdrawals. Friends living in mainland China may not understand it, but overseas Chinese should know how difficult it is to do this in any other bank within the SWIFT system.

Similarly, Argentina, Ecuador, etc. have completely abandoned their local currencies.

Bitcoin and the offshore dollar system

How large is the underground dollar system here? I am not sure about the data in Cambodia. According to the data of the Tax Justice Network, there are about 8-10 trillion US dollars of assets hidden in offshore financial centers around the world, including Hong Kong, the Cayman Islands, etc.

In fact, this is the real upper limit of Bitcoin, and what will eventually take over is the value storage (Store of Value) of a part of the offshore/underground dollar system. Offshore banks may still freeze assets, or they may be blacklisted due to compliance. If you have sent money to Cayman or Gibraltar, you know what I am talking about.

In addition to its volatility, Bitcoin is an excellent choice for hidden wealthy people, such as gray market bosses/warlords, and there is no problem with capital circulation. Because of the existence of PoW, in theory, the big brothers can exchange their wealth for computing power to mine new coins, and the new coins cannot find any source (so the United States has compliance mining guidance, and mining pools also have stricter KYC).

Competition of stablecoins

The demand for Bitcoin has actually been diverted by stablecoins, because USDT and USDC are even wilder than Cambodian banks, even though both of them can freeze stablecoin assets on user addresses. Does this change the fundamentals of Bitcoin?

It's like a company competition. The market share of Bitcoin and Stablecoin is different because competition is differentiated. Stablecoin is still constrained by compliance, so no one can kill the other, it's just a change in share per cent.

But will Bitcoin + Stablecoin replace the dollar business of traditional offshore financial centers? This is possible, because the competition in the underground dollar system is homogeneous in this regard. When young rich people replace the old rich people, the market share of traditional offshore financial centers will flow to the Bitcoin + Stablecoin system little by little every year.

The future of digital offshore free ports

Eventually, there may be an offshore free port that fully embraces digital. For example, the Hong Kong government obviously knows what kind of money it earns, and it is also hard to embrace it, but...

I used to think that the most sophisticated use case of blockchain was DAI/LUSD, which created unregulated underground dollar credit in a decentralized way. Although the upper limit was constrained by the market value/liquidity of ETH, the value was too great. In Mile's words, how much is the value of freedom?

Now Maker has upgraded to what the hell Sky, added an address blacklist, and banned VPN access. This is a betrayal of the encryption spirit after the team has successfully retired.

ETH is still a public chain, just as SOL is a public chain. Public chains have income, and with income, there is a valuation system. A clear account is no longer a dream, and without a dream there is no market-to-dream ratio.

As for the "belief" in Shitcoin, I will write about it later. That is a completely different system. In fact, I have also written about it - "Better Gray Securitization".

Conclusion

Let’s end with a passage from Wu Jihan in 2012. People judge a person’s character. He was undoubtedly a very smart and visionary person when he wrote such a wonderful text at that time:

“Bitcoin has seamlessly embedded a virtual offshore free financial environment into the whole world. The Bitcoin network is the Hong Kong, BVI and Macau of cyberspace. Buying Bitcoin now is equivalent to owning a building in Mid-Levels, Hong Kong. Don’t just see that there is nothing on the mountain except trees now, but see the skyscrapers at the foot of the mountain in the future.”

Welcome to the Bitcoin network, which is a financial free port, duty-free trade zone and anarchist paradise on the Internet.