The Breakdown - What Us Election Outcome Is Best for Bitcoin? 

Episode Date: March 4, 2020

Today is Super Tuesday - the biggest day of the US primary election season. Increasingly, prediction markets and pollsters suggest it’s a two person race between Joe Biden and Bernie Sanders (although Mike Bloomberg has insisted he’s staying in).  In this episode, NLW breaks down each candidate in the context of their positions vis a vis cryptocurrency, as well as looking at the possible role of three other fallen contenders in the rest of the campaign.  As Bernie leads the Twitter poll, the question arises: do people think Bernie will be good for bitcoin because he shares the same values of prioritizing the little guy over big banks, or because they think his programs will demand so much QE it will send bitcoin to the moon?  Listen and find out.

Welcome back to The Breakdown, an everyday analysis breaking down the most important stories in Bitcoin, crypto, and beyond, with your host, NLW. The Breakdown is distributed by CoinDesk. Welcome back to the Breakdown. It is Tuesday, March 3rd, and that means it is Super Tuesday. For those of you who are not in the U.S. or just not following U.S. politics, Super Tuesday is one of the most important days on the election primary schedule. the primaries being, of course, the way that the parties nominate their candidate for the presidency. In America, we've had a major shake-up over the last 72 hours or so. It had looked like a runaway train for Bernie Sanders,

with maybe a little bit of a road bump in Mike Bloomberg, but on Saturday night, Joe Biden scored a huge victory in South Carolina. It was so big, in fact, that two of his opponents, Amy Klobuchar and Pete Buttigieg, both other contenders for the moderate opposition to the very progressive, the very left, Bernie Sanders, dropped out of the race and threw their weight behind Biden. So where we stand now in terms of the Democratic race is that there are two progressive and two moderate candidates left. There's Biden and Bloomberg who are the moderates, and there are Sanders and Warren, Elizabeth Warren, who are the progressives. Right now, to look at polls and to look at prediction markets, it is a two-horse race between Biden. Biden as the moderate standard bearer and Sanders as the progressive stalwart.

And really, in some ways, the question is whether anyone will be able to stop Sanders. That seems to be the whole thrust of this momentum shift and everyone throwing their weight behind Biden. It's not that all of a sudden everyone is excited about Biden. It's that there is a feeling of imperative to consolidate around a single contender, a single moderate contender to combat Sanders. So in the context of Super Tuesday of this big election moment, I thought it would be interesting to do a bit of a review of where the candidates stand on cryptocurrencies and ask specifically who would be best for Bitcoin. This morning, I put that question to Twitter and 600 plus responses later.

I'm going to share those results, but I'm going to talk through each candidate a little bit in advance. One last quick note before I dive in, a lot of my review was aided by CoinDesk's new special section called the Post-Truth election. They just pushed this live today, and I actually had no idea this was coming. I think it's super cool that they put this together. They had SAS from both within the ranks of Coin Desk journalists, but also people who are outside and just contributors, like me, to the Coin Desk network of content, came in and actually wrote up different takes on individual candidates as well. So highly recommend you go check out all of that coverage if you want to dive deeper into any of these individual candidates. This should be a fun one, even if it's not a

particularly enlightening one. But either way, let's dive in. All right, so first let's talk about who's gone from the race. Three major candidates that we're going to talk about, I'm going to ignore some of the folks who have had less of an impact on the national conversation and focus on Klobuchar Yang and Pete Buttigieg. Amy Klobuchar had a late surge in New Hampshire, but ultimately fizzled out a little bit, and like Pete Buttigieg, who we'll talk about in just a minute, ended up throwing her weight behind Biden. Klobuchar has very little in her record on cryptocurrencies or any statements even to indicate how she feels about them, other than in a hearing in 2017 where she seemed to be interested in

the law enforcement context, which makes sense in the context of her background as a prosecutor. Now, where Klobuchar kind of does intersect with some folks in the crypto community, at least, is her interest in privacy. In a campaign speech, she said, for too long, the big tech companies have been telling you, don't worry, we've got your back. While your identities, in fact, are being stolen and your data is being mined. Our laws need to be as sophisticated as the people who are breaking them. So there's clearly some interest there. And what's more, this is backed up by the fact that she introduced or supported two bills around privacy in 2019. So clearly interests there.

What this might mean is that if she does play a role in a future cabinet position or something like that, she may be an advocate for some of the types of privacy conversations that people in this crypto community are interested in having. Let's now shift over to Pete, Pete Buttigieg Mayor Pete. Pete got into the national conversation in a big way when he started to show serious traction in Iowa. In the weeks leading up to the Democratic caucus in Iowa, there were many polls that actually had Pete in the lead in that state. And there's some thought that if he had been able to win Iowa cleanly, in other words, if the Democratic Party there had been able to get the caucus to work correctly, that momentum might have been able to carry him into New Hampshire, where if he had gotten just

a little bit more of the vote, he might have actually even beaten out Bernie Sanders. And at that point, there's a whole new narrative and who knows what would have happened. It seemed like when that didn't work, when the caucuses were such a catastrophic failure, when Pete announced, victory days before we actually had results, he really lost the narrative and lost his chance, but either way, he was a contender, and it's worth looking at how he felt, how he thought about cryptocurrencies. Now, one thing that's for sure about Pete is that he was the darling of Silicon Valley. His fundraisers were largely from Silicon Valley. One of his major donors was David Marcus from Facebook, who's obviously the head of their Libra project. But he wasn't necessarily

just in bed with tech. He had significantly. He had significant. that he wasn't sure that Facebook should be doing Libra when they had so many issues around privacy to deal with, and in general, privacy and data was Pete's big focus as it related to tech companies. As opposed to Elizabeth Warren, who made it an explicit point to go after Facebook and other tech giants and say they needed to be broken up, Pete said that there could be some argument to, but more or less positioned it as a last resort. Still, it was clear that he had knowledge of this, right? He talked about how Amazon preferences its own products through its algorithms over the brands that are on its platform that aren't owned by Amazon. So really, in a lot of ways, we never

got to know Pete's full feelings on cryptocurrencies. My guess is that because he was a very intelligent politician who probably didn't think that they particularly mattered to most of the people that he needed to win votes with early. So who knows exactly what type of force Pete might be in a potential future cabinet or even just in the context of endorsing and pushing a candidate. Last up among fallen candidates that we're going to talk about is our boy, Andrew Yang, Yang Gang for Life. Andrew Yang was by far in a way the candidate who talked the most about cryptocurrencies. In fact, he was the only candidate to really have a real position on cryptocurrencies,

to have strong articulated feelings, to speak eloquently at national events about cryptocurrencies and about Bitcoin. He spoke recently, even during the Iowa campaigns to Joe Wisenthal on Bloomberg, about Bitcoin and about how it would be very hard for the government to shut down Bitcoin to stop Bitcoin, even if it wanted to. So for crypto circles, this was the de facto candidate in many ways. Now, that wasn't always true. There are many who found his $1,000 for every citizen UBI proposal to be just another form of crazy socialism, and they weren't interested in that.

But I think by in a way, the most supported candidate, at least on an intellectual, philosophical level within the crypto community was Andrew Yang. And in many ways, he doesn't really have a follow-up. There are many people who thought that perhaps his support would just flow right into Bloomberg being the other kind of pro-business, business experience, entrepreneurally experienced candidate in the race. But that just hasn't seemed to happen. In fact, when news reports came out that Bloomberg had courted Andrew Yang about a potential

potential VP role, it seems like part of his reason for not really following up on that was that the Yang gang just wasn't really excited about Bloomberg as a candidate. I do think that Yang strangely could have some impact on this election still. I think in one way, that could be because someone might actually try to recruit him for one of these roles. I don't think that's crazy. But I think second, he has a big platform now. He's joined CNN as a commentator, which means that CNN has a commentator who can actually speak about these set of issues as it relates to these campaigns, but also he has his Yang Gang still. And what we've seen is that the Yang Gang is not contingent upon just his success in the polls

or anything like that. It is a group of people who are invested in him and his ideas and who he commands as a force, if not just as a poll force, perhaps, as certainly a media presence. So I don't think we've heard the last from Andrew Yang or the Yang gang in this election cycle. But with that, let's shift over to candidates who are still in the race. First, let's talk about Elizabeth Warren. Now, in terms of electability and election odds, right now things don't look particularly good for Elizabeth Warren.

She's more or less being counted out by the pundits and by the prediction markets, and it seems in some ways that her path to the nomination only lies in a contested convention where no candidate is able to actually get enough delegates to win the nomination cleanly, and it has to be sorted out at the Democratic National Convention this summer, which is, in some ways, a nightmare scenario for the party. However, there's no denying that she has been an intellectual force throughout this election cycle, and it will likely continue to be in the context of either a P-roll or who she endorses or how she gets involved in the campaign, so her ideas around cryptocurrencies and

tech and big banks in general are worth noting. Elizabeth Warren has not said much about cryptocurrencies. It has to be made clear. So anything that we're doing here is just guessing and speculating a little bit. Now, that said, she has been a huge antagonist of big tech. She's called publicly for the breakup of Facebook and is clearly not interested in the way that tech power is organized right now. What this might mean is that if she looks at cryptocurrencies as an extension of technology, she might not be a fan. Then again, as anyone versed in the Bitcoin community will tell you, these are not actually technologies at core. They are new financial forces, in particular Bitcoin. It's much harder to tell how she'd feel about

that. The only thing we've really ever heard from her around cryptocurrencies is skepticism and worry around consumer protection, which is very on brand for her. her in hearings in Senate Banking Committee hearings in 2018, she made it clear that she was very concerned about consumer protections in the context of token sales. So it's not impossible that Elizabeth Warren shows up as a Bitcoin maximalist to the extent that she's interested in cryptocurrencies. However, she is very antithetical in some ways to the average Bitcoiners perspective on the size of government and the role of government in society. So it's really hard to tell. From where I'm sitting and from the polls that I'm seeing, it seems unlikely that Warren actually

wins the nomination from here. However, I would be shocked if she didn't have a major role in any potential Democrat administration. So I think that it's really important to understand where she sits or might sit on some of these issues. Okay, now from here, we'll get into the candidates that I actually polled about. And yes, I left out Elizabeth Warren, one, because of all the poll numbers that I was seeing, but two, because Twitter limits you to four options. And I think that these were the most viable candidates and obviously the incumbent. So Biden first. So again, the question the poll that I asked on Twitter said, what U.S. election outcome would be best for Bitcoin? Biden is currently sitting at 5.6 of the votes, which is the lowest of the four options. Biden is the most

center of the road down the middle candidate in the race. And like I said earlier, the only reason I think we're seeing consolidation around him is a feeling that the Sanders juggernaut is moving so fast that we have to just pick one and stick with it. And he's the one that just stomped South Carolina. That's why we're there. If you look back across campaign statements and policy statements, there's really nothing to indicate that Biden has ever even thought about cryptocurrencies, much less formulated a strong position on it. So it's very hard to sit here and say what his position might be, I think probably the better way to understand what a Biden administration might be like for Bitcoin is just to say, what would the generic Democrat administration be like for Bitcoin?

What would the generic Democratic administration be like for cryptocurrencies in general? My guess is that the 5.6% of people saying that he would be best for Bitcoin are basically just saying that it's best for Bitcoin if government more or less just doesn't pay any attention to it, because Biden seems clearly not to be. I could be wrong about that. there could be multitudes lurking that I just haven't seen, but maybe let's shift off Biden because there's just not that much to say right now based on what we've seen. So next up, let's talk about Bloomberg. Bloomberg is really in some ways the only other candidate who

as a candidate has said anything about crypto. When he published his recent financial plan, he mentioned cryptocurrency and specifically standardizing regulation, making it clear from a regulatory standpoint as part of that platform. Now, there were people who were excited about that, right? just having some clarity around how these assets are going to be treated and what they mean and what the U.S. government thinks they mean would be really valuable, right? It would give entrepreneurs more license to actually figure out how they're going to respond and react, right? It would give us something to critique and fight against if we didn't like those designations, but at least it would be clarity versus the sort of clarity we have now, which is almost more just a presumed clarity, or a look

back and take the average of all the statements clarity, or a pay a ton of money for expensive hourly lawyers to tell you what the clarity is clarity. The reality is, though, is that Bloomberg hasn't really captured the crypto community's attention like Yang did. We talked about this a minute ago when we were talking about Yang. It's not like a bunch of Yang people have then shifted over into the Bloomberg camp. Now, there are plenty of independence and independently minded people who are pro Bloomberg because they think he is going to be a technocrat administrator who keeps the economy going in a strong way. However, that's different than having a strong pro-crypto candidate. I do think that what's more right now is that Bloomberg, from an electability standpoint,

has completely lost the narrative. His debate performances have been not just underwhelming, but extraordinarily damning, right? There is a huge psychic fracture between the Bloomberg in the campaign ads that have been just absolutely everywhere, thanks to his unlimited budget, and the Bloomberg that was seen on those debate stages. And really, especially with Biden's huge win in South Carolina, even though Bloomberg wasn't on that ticket, it seems right now very hard for him to muster the momentum, especially with the other moderate candidates throwing their weights

so heavily behind Biden. It'll be really interesting to see how Bloomberg performs today. But it wouldn't surprise me if in all but name, the Bloomberg campaign is done after today, after Super Tuesday. Still, in this poll, Bloomberg has done well. Bloomberg got 20.9% of the vote for what U.S. election outcome is best for Bitcoin. Remember, I didn't ask, what do you think is the most likely U.S. election outcome? I said, what is best for Bitcoin. In some ways, I actually think that this 20.9% is the cleanest and most consistent of any of the poll results. My feeling, and again, I could be really,

wrong, but my feeling is that those 20.9% of people who say that Bloomberg would be best for Bitcoin in the context of U.S. elections is that they think that Bloomberg would just provide a generally pro-business, generally pro-innovation, generally regulatory light type of administration in which Bitcoin and other cryptocurrencies could continue to grow and flourish sort of on their own terms, right? We might see some more pro-business, pro-innovation officers in place. like the SEC, we might see support for things like Hester Pierce's sandbox for securities and tokenized securities and tokens. So I think that while it's looking unlikely, like I said, those 21% of people who think that Bloomberg would be good for crypto are seeing it in a pretty

similar light of more or less just keeping hands off and making it maybe just a little bit better for crypto companies in general in the United States. But let's close now with the two options who have gotten the most votes for this poll, what U.S. election outcome is best for Bitcoin? Candidate, Bernie Sanders, and President Donald Trump. In a weird way, I think that the reason that both of these folks are coming out ahead in this highly scientific poll is that there are two different factions voting for them, right? Who maybe actually diametrically posed in how they view the world. So first, let's talk about Trump.

Trump is really confusing to me on one hand because he has made his stance on Bitcoin and cryptocurrencies very clear. In a tweet from July 11th of last year, he says, I am not a fan of Bitcoin and other cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air. Unregulated crypto assets can facilitate unlawful behavior, including drug trade and other illegal activity. Similarly, Facebook's Libra virtual currency will have little standing or dependability. If Facebook and other companies want to become a bank, they must seek a new banking charter and become subject to all banking regulations, just like other banks, both national and international. We have only one real currency in the USA, and it is stronger than ever,

both dependable and reliable. It is by far the most dominant currency anywhere in the world, and it will always say that way. It is called the United States dollar. So couldn't be clearer in terms of how this person feels about Bitcoin and crypto assets in general. Now, you can make an argument that a lot of the pump of that tweet had to do with really wanting to go after Libra, right? It was right around the time of the Libra hearings that that tweet came out. It also kind of reads like the Department of the Treasury might have written most of it for him. But still, this idea of Bitcoin and cryptocurrencies as just tools for criminals has come up over and over and over again. The U.S. official who talks the most about cryptocurrencies right now is Treasury Secretary Steve Mnuchin,

who is really seemingly not a fan of these assets and keeps kind of trying to put them in the box of regulation. Like even yesterday, Mnuchin had a group of crypto industry people to talk about potential new regulations and just how the crypto industry was going to shape up in terms of how it fights crime. You also see with the rise of Iran talking about how they're going to use cryptocurrencies as a way to evade sanctions, a collision course coming with this administration. So it's kind of strange on the one hand that Trump is getting so many votes. On the other hand, there are a few reasons why people might be voting for him that have come up in the comments. First, there's just the idea of Trump as an agent of chaos. This has been surrounding Trump from the beginning, right? There are many of his prominent supporters

from particularly libertarian circles like Peter Thiel, who seem to be interested in his disruptive effect on the calcified system of U.S. governance. For people who are interested in Bitcoin, it could be that they just sort of think that Bitcoin is particularly well positioned in a time of chaos. A second reason, though, is that it's been very clear

from Trump's position that he wants this stock market with its overinflated asset values based on aggressive central bank intervention to not only continue but to grow, grow, grow. He has taken to Twitter when he can't convince Fed Chair Jerome Powell to do what he wants behind the scenes to just basically bully the Fed into trying to juice the economy even further. In that light, there are many who believe that Trump is just going to continue to push QE, push QE, push QE, and that that effectively reinforces the raise on debt for Bitcoin, right? in a world where QE is being lobbied for on Twitter in public by the president to the Fed chair,

you got to think that a sound money like Bitcoin is going to appeal to a whole lot of people. So that's Trump. Trump had the second highest votes in this poll with 34.4% of people saying that his election would be the best outcome for Bitcoin. But then at the very tippy top of this poll was Bernie Sanders. Bernie Sanders sitting at 39.2% of the vote. 39.2% of people I pulled, over 600 people at the time of this recording, said that Bernie Sanders' election would be the best outcome for Bitcoin. Now, this one was super surprising to me on some levels, but as I've watched people comment, I really have come to believe that it's because

there are exactly two different groups who have fundamentally different worldviews who are both arguing for this. On the one hand, are the folks who believe that Bernie Sanders embodies the values of Bitcoin, that Bitcoin is an... anti-elite technology that is a bank disruptor, that is an intermediary disruptor, that is a disintermediating force, and Bernie is that force embodied, obviously not focused on the same type of issues, but there is a kinship there. There are a lot of people who just really believe that there is an alignment there that is going to be good for Bitcoin. Now, the weird thing about this is that there's plenty of reasons to think that Bernie isn't going to be super interested in

cryptocurrencies, a campaign surrogate who talked to CoinDesk effectively brought up that they were a little freaked out by the connection that Bitcoin has to libertarian circles. What's more, Bernie seems super interventionist. And interventionism and self-sovereignty are sort of diametrically opposed views of what government is supposed to be. So there's a little bit of weirdness there. However, from a narrative standpoint, you can make the argument that Satoshi was trying to disrupt banks and so is Bernie. So that's, I think, one part of this 39.2%. The other part, I think, is similar to those who are voting for Donald Trump that has to do with QE and the deleterious effect of that administration on the economy being good for Bitcoin. So these are the folks who are looking at these policies that Bernie is

proposing in terms of health care for everyone and college loan forgiveness and all of this sort of stuff and saying, where is the money for that going to come from? Well, the only answer is going to be some sort of MMT-style unlimited money printing. And again, that is the scenario that justifies and makes the argument for Bitcoin in some serious way. So I think at the end of the day, the reason that you're seeing Bernie win is that there is this strong narrative argument for some people, but on the other hand, this very strong, just rational argument looking at likely policies on the other. So to recap the results of this poll, what U.S. election outcome is best for Bitcoin. Biden came in last with 5.6%, Bloomberg came in third with 20.9%. Trump came in second with 34.2%. And Bernie won

with 39.2%. Now that could change throughout the day, but it's been now four hours, 625 plus votes. So I think it's pretty locked in. And like I said, it's interesting to me that the winners, right, the people who got the most votes, seems to be because they're consolidating two different groups who have very different takes on this. With that, though, I will turn it over to you guys. What do you, the listeners, think? Will the Bernie administration be the best for Bitcoin or is Trump much better?

Is Bloomberg a dark horse to actually be the most valuable for cryptocurrencies? Because they'll get an actual common sense approach to how they can grow and develop. I think this is going to be an ongoing question throughout this election cycle and probably into the next administration, whoever it is. So thanks for indulging me on a fun super-tusage.

special for The Breakdown. We'll be back tomorrow with a normal episode unless something crazy happens, which it almost certainly will. All right, everyone, wash your hands. I'll see you tomorrow.