To accurately characterise Bitcoin and predict its trajectory in the decade ahead, it helps to revisit the message embedded in its genesis block: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks”.
Bitcoin kicked off the blockchain revolution and became a poster child of fintech. Over time, it is regarded as a monetary technology for its value as sound money. Eventually, people will realise that it is the most promising Dissident Tech of our time. This occurs in the context of the enormous social problems and inequalities created by the Cantillon Effects of unprecedented global liquidity – a redistribution from the poor to the rich.
In other words, Bitcoin is a technological breakthrough, but it is first and foremost a political and ideological movement.
The Spirit of 1776, by Archibald Willard, represents the zeitgeist of the American Revolution. It refers to the attitude of self-determination and individual liberty. The Spirit of 2016, by David Parkins for The Economist, typifies the global sentiment following the election of Donald Trump as US president. It is an unsettling zest for tribalism and authoritarianism.
In Tolstoy’s War and Peace, Prince Andrey enumerated the factions within the Russian high command during Napoleon’s invasion. You usually see the full range or a subset of these dynamics as a group responds to situations.
- Rigid military theorists
- Non-planners favoring spontaneous actions
- Courtiers reconciling the first two groups
- Advocates of surrendering to Napoleon
- Adherents to Barclay de Tolly
- Adherents to Bennigsen, calling for Barclay to be replaced
- Devoted worshippers of the Tsar
- Place seekers chasing crosses and promotions (the largest group)
- Older politicians who can withdraw from conflicting opinions and take an objective view
I’m a political analyst, not an economist. But in many situations, it’s more than enough for me to understand the logic behind the Chinese economy.
As an important example: in the March 2016 National People’s Congress session, why did Xi Jinping set 6.5% as the GDP growth target for the next 5 years?
This number has nothing to do with economics. It’s all about politics and the logic is as follows:
- In October 2015, the Fifth Plenum of the 18th Central Committee set itself the ambition of doubling the 2010 GDP by 2021.
- Why 2021? Because it is the 100th anniversary of the founding of the Chinese Communist Party (CCP). Doubling the GDP so that China becomes a “moderately well-off society” will fulfill one of the “two centenary goals” of the CCP, very key to sustaining its legitimacy.
- Take a look at the realized GDP growth rates for the past 5 years: 2011-9.5%; 2012-7.8%; 2013-7.7%; 2014-7.3%; 2015-6.9%.
- If the average growth rate for the next 5 years from 2016 to 2020 is 6.5%, the 2021 GDP will be exactly double that of 2010. Mathematically: (1+9.5%)*(1+7.8%)*(1+7.7%)*(1+7.3%)*(1+6.9%)*(1+6.5%)^5=2.
In politics, posture is very important. This includes physical posture. The picture shows Japan’s surrender to China at the end of WWII. Standing on the left and right are the Commander-in-Chief of the Chinese (Ho Ying-chin) and the Japanese (Yasuji Okaruma) Army respectively. It looks as if China was bowing to Japan. The relative heights of the two generals, the length of the table, coupled with the fact that Japan first handed over the surrender document, led to this awkward situation. To achieve a favourable posture, you first need to get the details and the order of actions right.