PayPal and Facebook Founding Father Peter Thiel recently held court at the annual “Dinner for Western Civilization” dinner. This gathering was hosted by the Intercollegiate Studies Institute at the University Club in New York City. As per usual, Peter Thiel was asked about the prospectus of Bitcoin as a global currency, and how it relates to the dollar in the future.
The context of this discussion being that inflation and “Quantitative Easing” are hurting the dollar’s standing globally. So how would you best protect yourself, and diversify your exposure in the future, outside of the US Dollar. These are Peter Thiel’s thoughts on the current economic landscape.
“There are lots of problems with fiat money, and the challenge with creating alternatives to the US Dollar is that most of the other currencies are probably even worse. The Euro seems worse, the Yen seems worse, the Ruble seems worse……” Peter Thiel said.
The last part about the Ruble drew laughter from some of the informed in the crowd, as the Ruble has exposed as being in danger of a potential future collapse earlier this week. The Russian Government has over $400 Billion in capital reserves to string it along, so nothing is imminent. The point is, saying the Ruble seems worse to be in worse shape than the US Dollar at this moment would be quite an understatement. It’s also indicative that Peter Thiel probably had not heard the latest on the state of the Ruble.
“The question becomes can you create new currencies where the (United States or any nation state) government cannot simply inflate them away. This was the idea behind PayPal, where we had T-shirts made in 2000 where Paypal was going to be the new World’s Currency. We did not succeed at making a new currency but a new payment system, a much lesser goal.” continued Peter Thiel. “The Bitcoin phenomenon is very interesting and has at least succeeded in creating a currency on the level of speculation. The critical challenge is how to integrate that with the actual payment system, and until that happens, it is very hard for things to change (become a digital currency capable of replacing major fiat currencies).”
What Peter Thiel said next is not politically correct to say, yet it is the truth and far more accurate and noteworthy.
“One thought on why the dollar is hard to replace is it says on each that this Federal Note is legal tender for all debts, both public and private. This means you’ll need to pay your taxes in dollars, not in Bitcoins. If you don’t pay your taxes in dollars, there will be people with guns who will come and make sure you pay your taxes in dollars. So the dollar, on some level, as imperfect as it is…..is driven by the supremacy of the US Military’s power.”
If you could still ask Saddam Hussein or Moammar Khadafy, or their estate, they would agree with that very much. Those who threaten to turn their back on the US Dollar have paid the ultimate price. The US Government has created a Petrodollar, a Federal Reserve system, and now FATCA and GATCA systems to coerce the world to play their corrupt currency game on the United States’ terms. The larger sovereign nations like China and Russia will not be bullied by this regime as they are much harder to bully in the traditional Western-style. It’s easy to pick on Libya and Iraq. China and Russia, not so much. There has been plenty of rhetoric from Vladimir Putin about how they have nuclear weapons, so they aren’t the ones to try and strong-arm by the West.
How this all affects Bitcoin is complicated, but important. The more fiat currencies implode, the more demand for better money. If Russia’s Ruble does head towards a full collapse in 2015, that will have major implications for Bitcoin. The fall of Cyprus drove Bitcoin prices from well under $100 to close to $250 within hours while Gold prices barely moved at all.
Bitcoin does not have the world’s largest military to “protect American interests”, but it does have the potential for a much better way forward, economically. More and more, people are starting to realize this in our increasingly digital world. Those that do not are starting to be exposed as ones with a vested interest in maintaining a corrupt, deeply flawed economic status quo. The day of fiat currency is coming to an end, and the barrel of a gun may not stave off the implosion of many top fiat currencies in the near future. And that includes the Japanese Yen, the Russian Ruble, and even “The Almighty Dollar”.
Is Peter Thiel correct? Should Peter Thiel be seen as a Bitcoin authority, since all he has done in this space is failed at making it work himself? Share above and comment below.
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