Original title: Bitcoin for the Sovereign
Author: Matt Huang, founder of Paradigm; Translated by: 0xjs@黄金财经
When Paradigm was founded in 2018, we were convinced that the value of BTC (about $4,000 per coin at the time) would increase several times in the next few years, partly due to increased legitimacy and institutional adoption (for more reasons to be optimistic about BTC, please see the previous article "Preaching Bitcoin for those enlightened skeptics").
But at that time, the possibility of sovereign countries adopting BTC was still small. Now it seems that its possibility has been underestimated.
Currently, multiple sovereign countries hold BTC, the most well-known of which is El Salvador.
Abu Dhabi Sovereign Wealth Fund participates in Bitcoin mining.
US President-elect Donald Trump spoke about the Strategic Bitcoin Reserve on stage at Bitcoin Nashville.
US Senator Cynthia Lummis introduced draft legislation for a Strategic Bitcoin Reserve.
Prediction market platform Polymarket estimates that Trump has about a 30% chance of establishing a Strategic Bitcoin Reserve.
So what? Solve for the equilibrium, as Tyler Cowen likes to say. The game-theoretic equilibrium that BTC employs has shifted.
Sovereign states can no longer ignore BTC. From a game-theoretic perspective, BTC is like gunpowder, not an iPhone. Christopher Nolan can avoid the iPhone, and his deliberate Luddism may even lead to increased creativity. But once gunpowder was discovered, every sovereign was forced to adopt it…or else the consequences were dire. The same is true today for AI, drones, and other critical technologies.
Now that the Overton window for US BTC adoption has opened, other sovereigns won’t wait. Sovereigns that build up BTC reserves early will benefit from significantly better entry prices.
The race for sovereigns to build up BTC reserves has begun.