The Breakdown - The Political Class Bends the Knee to Bitcoin

Episode Date: July 30, 2024

NLW covers speeches from President Trump, Robert F. Kennedy Jr., Cynthia Lummis, Wiley Nickel and more from the Bitcoin Conference. Enjoying this content? SUBSCRIBE to the Podcast: https://pod.link/1438693620 Watch on YouTube: https://www.youtube.com/nathanielwhittemorecrypto Subscribe to the newsletter: https://breakdown.beehiiv.com/ Join the discussion: https://discord.gg/VrKRrfKCz8 Follow on Twitter: NLW: https://twitter.com/nlw Breakdown: https://twitter.com/BreakdownNLW

Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the Big Picture Power Shifts remaking our world. What's going on, guys? It is Monday, July 29th, and today we are catching up on the big speech from last weekend at the Bitcoin Conference. Before we get into that, however, if you are enjoying the breakdown, please go subscribe to it, give it a rating, give it a review, or if you want to dive deeper into the conversation, come join us on the Breakers Discord. You can find a link in the show notes or go to bit.ly slash breakdown pod. Well, friends, it was the big moment over the weekend. Donald Trump unveiled his plan to make the United States the, quote, crypto capital of the planet and the Bitcoin superpower of the world. Trump took center stage in Nashville on Saturday, becoming the first American president to address

the Bitcoin conference. Speaking to over 3,000 rabid bitcoiners jammed into the crowded convention hall, Trump declared, quote, Bitcoin is not just a marvel of technology, as you know. It's a miracle of cooperation and human achievement. Trump also accused the Biden administration of deliberately going after Bitcoin because it, quote, stands for freedom, sovereignty, and independence from government coercion and control. The speech laid out the Bitcoin policy to be adopted under a Trump White House. As anticipated, Trump announced the National Bitcoin Reserve, stating, quote, for too long, the government has violated the cardinal rule that every Bitcoiner knows by heart.

Never sell your Bitcoin. Trump announced, it will be the policy at my administration to keep 100% of all the Bitcoin the U.S. government currently holds, requires into the future. This will serve in effect as the core of the strategic national Bitcoin stockpile. He framed government seizures as part of a fascist regime, claiming, it's been taken away from you because that's where this country is going. Instead, Trump said that he would, quote, transform the vast wealth into a permanent national asset to benefit all Americans. One of the loudest cheers came when Trump announced he would fire Gary Gensler on day one. Surprised by the response,

he commented, I didn't know he was that unpopular. Trump named check to Operation Chokepoint 2.0 and said it would be immediately shut down. He added, They want to choke you. They want to choke you out of business. We're not going to let that happen. And no longer will your government sit by and watches Bitcoin jobs and businesses flee to other countries. Because America's laws are too unclear and too tough and too angry and too stiff. We will keep each and every Bitcoin job in the United States of America. Elizabeth Warren also rated a mention with Trump declaring that her and her acolytes are, quote, very nasty to you. She hates your people. She hates everything about you. We'll keep their

hands off Bitcoin. Trump linked Bitcoin mining to his electricity policy, reiterating plans to double electricity supply through a reduction in regulations. He admitted this plan would require additional fossil fuel use, but also hinged on expanded nuclear power. Trump claimed his administration would be creating so much electricity, quote, you'll be saying, please, please, President, we don't want any more electricity. We can't stand it. You'll be begging me, no more electricity, sir, we have enough. This ample electricity supply would make the U.S. the, quote, world's undisputed Bitcoin mining powerhouse. The rest of the platform ticked off the industry checklist. Trump repeated his pledge to free Silk Road founder Ross Ulbricht. He also committed to defending the right to self-custody. Finally, Trump said he would

halt all work on developing a CBDC, stating, it's over, forget it. CBDC, there will never be a CBDC while I'm president of the United States. The entire speech was framed around Bitcoin's role in the geopolitical competition with China. Right from the start, Trump said, if we don't embrace crypto and Bitcoin technology, China will. Other countries will, they'll dominate, and we cannot let China dominate. he wants China to be successful, quote, I want the United States to be first in technology, first in science, first in manufacturing, first in artificial intelligence, and first in space. A big part of the rationale on clearing up domestic regulation and enabling the U.S. mining industry was, quote, so you will not have to move your family to China.

The speech also picked up on the synergy between stable coins and international dollar dominance. Trump said that stable coins, quote, extend the dominance of the U.S. dollar to new frontiers all around the world. Cementing a departure from his previous thoughts on Bitcoin, Trump added, those who say that Bitcoin is a threat to the dollar have the story exactly backwards. I believe it is exactly backwards. Bitcoin is not threatening the dollar. The behavior of the current U.S. government is really threatening the dollar. In conclusion, Trump delivered his pitch to the Bitcoin voter, declaring, quote, I will be the pro-innovation and pro-Bitcoin president that American needs and our citizens deserve. He framed his view of the future of the United States as one where

frontier industries thrive without new ideas being censored. Trump said, those of you in this room inherit a legacy of generations of American pioneers and patriots, risk takers and renegades who settled this continent, built the modern world that lived on the bleeding edge. You are the modern-day Edisons and Wright brothers and Carnegie's and Henry Ford's, and what you do in your lifetime stands a chance to outlive us all and inspire humanity for generations to come. So what was the response in the commentary? Some commented on how often Trump got sidetracked or devolved into unrelated political attacks. TXMC trades noted, Trump throws the crowd a nugget every six or seven minutes and spends the rest of the time in a rambling stream of consciousness about the carnage

of American cultural decline and the low mental fortitude of his many opponents. filmmaker Max DeMarco commented, I don't think Trump's team realized how important this speech was. For many people, it was their first time listening to a full speech from Trump. This wasn't just another speech. Sadly, his team treated it like any other speech. Missed opportunity. RFK seems to be the real bitcoiner.

Karate Combat Champion Nick Carter, however, pointed out that this is all pretty much as expected, tweeting, Some pointed to a hint of uns seriousness underpinning the speech. Scott Melker, host of the Wolf of All Straits, tweeted, Trump's speech hit the main points, good, but it was uninspired and clear that it's just politics. And the end of the speech, not serious about Bitcoin. Have a good time with your Bitcoin and your crypto and everything else you're playing with. Still, a definitive positive for the industry. Stephen Lubka, the head of private clients at Swan said, ultimately my stance going in was that it literally doesn't matter if he actually does anything.

It's about forcing a narrative shift and soundbites into the political sphere. The speech wasn't good, it did force a lot of things like first pro-Bitcoin president, U.S. will hold Bitcoin, support this industry into the dialogue. This ultimately, I think, continues to shift both parties further toward neutral Bitcoin policy. Jacob Silverman wrote, Trump hitting every coiner note in the speech, Bayer-Gensler, commute Ross Ulbric's sentence, freedom to transact, national Bitcoin stockpiles, stable coins for dollar dominance, tons of fossil fuel production sounds like it was written by a crypto lobbyist. Alex Gladstein wrote, the fact that all kinds of U.S. government officials are now calling for a Bitcoin strategic reserve is completely wild. This was mean.

memed into existence, but memes changed the world. Now, one of the coolest sub-stories I thought was actually the idea of stablecoins furthering dollar dominance. This is something that if you've been listening to this show for a long time, have probably heard me talk about numerous times. I had Nick Carter on the show to talk about this something like three and a half or four years ago. At the time, Bitcoiners didn't even want to talk about that.

Nick was kind of alone out there, really trying to put the issue on the map. It's become more commonplace to think this in the crypto space, but the fact that it made it into this speech, I think, is extremely notable. Carter himself wrote, Trump supports stable coins to further dollar dominance. Once a niche talking point, it's now penetrated the absolute highest levels. Congrats to whoever got through to him on that. Hello, friends, before we get back to the rest of the show, I want to implore you to join me at Permissionless. Permissionless is the conference for Cryptonatives by CryptoNatives, and the reason it's so important this year is that despite regulators' best attempts to push industry founders,

devs and executives out of the U.S., the United States remains the beating heart of crypto. Today, the tide is turning. Policymakers have pivoted from fighting crypto to embracing it. Literally now, we are in a major political party's platform, which will lead ultimately to the creation of new financial products, new applications, and ultimately new adoption. Permissionless is the conference for those using and building on-chain products. It's home to the power users, the devs, and the builders. And perhaps more importantly, I will be there. The location is Salt Lake City, the dates are October 9th to the 11th, and tickets are just $499.99. If you want to get 10% off, use code breakdown 10. Go to the Blockworks

website, blockworks.com. There will be links to register for the conference, and again, you can use Code Breakdown 10 to get 10% off. Let's talk about some other speeches that went on in this event, because that was far from the only thing happening. After Trump unveiled the concept of a strategic Bitcoin Reserve, Senator Cynthia Lummis followed up with a proposal that could make it a reality. Speaking from the main stage, Lumas proposed a bill that would see the U.S. government purchase around 5% of the total Bitcoin supply and hold it for at least 20 years. According to Lemmas's bill, the reserve could only be used to reduce the national debt. Lovus believes this policy could cut the debt in half by 2045. She said, this is the solution. This is the answer. This is our

Louisiana purchase moment. Digging into the details, the plan would be to cede the reserve with current government holdings and purchase one million bitcoins over a period of five years. Lummis said, Bitcoin is a great store of value. Over the last four years or so, it has increased about 55% per year. During the same period, the U.S. dollar has declined in value and we've seen increasing inflation. So it would be a value, in my opinion, to have a hard asset that backs the U.S. dollar and that grows in value instead of declines in value. Lummus acknowledged that this is still draft legislation that won't move anytime soon, saying this is not something I see passing this year, but rather it was filed as a piece of legislation

that people can review this year, drafted in-house by my staff. There were some who focused on some details of the mechanism, but most focused on the big picture, weighing in on whether a U.S. government Bitcoin reserve is a good idea. To those outside the industry, it seems like a bizarre plan. Tom Garah, a former journalist now working at Meta, tweeted, I don't mind the idea of the government being less hostile to Bitcoin and maybe even pro-Bitcoin, but the fact that one of the big asks of the Bitcoin lobbyists appear to be that the government should buy $70 billion with a Bitcoin is so insane.

Pomp, however, responded that, quote, when compared to the current population asking the government to buy $35 trillion in debt, the Bitcoin communities ask of $70 billion into Bitcoin appears to be a good risk-reward proposition. Others looked at the policy as more symbolically important. Marty Bent of 1031 Ventures wrote, framing a strategic Bitcoin reserve as our Louisiana purchase moment is incredibly powerful. The digital land grab is upon us and the land is still cheap. Can't fumble this opportunity. Democrats were also represented at Bitcoin Nashville with pro-crypto-counterman Wiley Nichols sitting down for an onstage interview. He presented a letter co-signed by 28 Democrat lawmakers

urging a policy shift ahead of the convention next month. The letter asked for four changes. Pro-digital asset language in the party's platform, selecting a vice presidential candidate sophisticated in digital asset policy, selecting a pro-innovation SEC chair, and engaging with the industry in a meaningful way. Nichols said, we've been working hard behind the scenes,

having senior-level meetings with folks, with the office of the vice president, with the campaign to get a reset. Vice President Harris understands this issue, her husband is someone I know who gets it, and I think we're going to get to see a reset, which will be a big one in this space. The future has to be a bipartisan one. If we politicize this issue, we will just poison the well

for 10 years in Congress. Now, this interview was notably less well received than the Republican speeches, underscoring how much the Democrats have lost the crypto vote. During one section, Nicol took a swipe at the Trump platform stating, he's hit all the bad talking points. He said crypto facilitates unlawful behavior, including drugs and illegal activities, and in 2021, he called it a scam. As the crowd's booing got louder, he exclaimed, Folks, I can tell you one thing, and I want to say this as politely and respectfully as I can. Donald Trump was president for four years. He did nothing on this issue, and right now, I can tell you, he's totally full of . Responses on Twitter remain the same, that Bitcoiners want to see tangible action

from Democrats before giving them support. Bitmex co-founder Arthur Hayes, for example, tweeted, Don't be a fool. Make these bloodsuckers do something positive for crypto before you shower them with money. It does sound as though the outreach has begun. On Sunday, the Financial Times reported that the Harris campaign has reached out to multiple crypto companies in an attempt to quote-unquote reset relations. sources specifically named Coinbase Circle and Ripple Labs is the companies that have met with the campaign. One unnamed executive said, the fact that she's willing to listen is a big deal.

With Biden, you couldn't even get a meeting. It has left people with such a bad view of the Biden administration. Galaxy Digital CEO Mike Novagrats responded to some of the recent backlash, tweeting, the hypocrisy of politicians knows no bounds. Trump went from disliking Bitcoin during his presidency to now giving it an amazing endorsement trying to win over single-issue voters. If Harris, who has no control over policy from her seat, does the same, it's pandering? Come on. We want both parties on our side. Rounding out coverage of the

political events for the weekend, independent presidential candidate RFK Jr. made his case as the one true Bitcoin candidate. Speaking on Friday afternoon, Kennedy spoke to Bitcoin's role in preserving the American way of life. His policy hinged on a trio of executive orders he would sign on day one if elected. The first would transfer all of the government's Bitcoin to the Federal Reserve as a strategic reserve fund. Going beyond the Trump position, Kennedy would also order the Treasury to purchase 500 Bitcoin per day until the reserve had 4 million Bitcoin. Via this policy, Kennedy said the U.S. would attain, quote, a position of dominance no other country will be able to usurp. The final executive order would instruct the IRS to treat all transactions between Bitcoin and the U.S. dollar as non-reportable

and non-taxable. Kennedy said, transactional freedom is as important as freedom of expression in the First Amendment. The stated rationale for the policy was to slowly transition the world onto a Bitcoin standard, first by presenting the Bitcoin Reserve as backing for the U.S. dollar. Kennedy added, fiat currency was invented to fund war. If the world was on a Bitcoin standard, there would be no more war because you can't print Bitcoin. He suggested that the 4 million Bitcoin would ultimately yield around $50 trillion, enough to eliminate the budget deficit entirely. He also argued that a strategic reserve would ensure faith in the dollar and, quote, restore us for 250 years as the global economic leader. For some, RFK has better Bitcoin credentials and delivered a platform more in line

with their beliefs. Max Kaiser tweeted, I think the reason Trump kept confusing Bitcoin with crypto comes from chatting with the Winklevoss twins. RFK Jr. only talked to Bitcoin maximalists, so he was more on point. It also doesn't hurt that RFK has put his money where his mouth is. Ringside at the Thursday night fight, he said, I was at the Bitcoin conference last year. I went home and put most of my wealth in Bitcoin. I am fully committed.

Others, however, pointed out that RFK has fewer constraints. Nick Carter wrote, for example, RFK can promise heaven and earth, low stakes for him. Trump still has to win an election. He has to be at least somewhat pragmatic. The weekend really delivered on high-profile political news. We got not one but three different views on what a U.S. Strategic Bitcoin Reserve might look like, as well as multiple Democrat representatives talking about a crypto pivot.

It seems that the crypto industry is quickly sorting into red and blue after many years of being outsiders to the political process. Early in the weekend, however, before the frenzy got underway, Edward Snowden had some words of warning. During a video appearance on Friday, the political exile said that lawmakers are now lining up to win the love of Bitcoiners. He delivered a sobering message to the crowd, advising them, cast a vote, but don't join a cult.

They are not our tribe. They are not your personality. They have their own interests, their own values, their own things they're chasing. Try to get what you need from them, but don't give yourself to them, even if you have to vote for them. Now, as to the critique that Bitcoiners were just getting suckered in, I think Dan Held had the strongest point suggesting that this was inevitable, writing, everyone whining that Bitcoin has lost its way because of BlackRock or Trump are morons. Bitcoin hasn't changed. They're bending the knee. You thought that Bitcoin was going to radically change the world but wouldn't touch politics or financial institutions? Ultimately, it was a fairly remarkable weekend, one that will be remembered as a pivotal turning point in Bitcoin

history. Huge kudos to David Bailey and the Bitcoin Magazine team for putting this together. It was a historical event for sure. For now that is going to do it for today's breakdown. Until next time, be safe and take care of each other. Peace.