The creation of non-sovereign, digital money decreases the power of inflation and taxation, according to cryptocurrency researcher Phil Bonnello.
In his new blog post, the Ikigai Fund advisor tracks greed, fear, belonging, curiosity and escape – the behavioral drivers behind Bitcoin and crypto adoption. Digital money, he argues, gives people the power to defend themselves.
“The fact is, Bitcoin reduces government revenue potential by providing a way to opt out of hyper inflationary forces and by altering taxation enforceability. With digital money, personal wealth becomes more difficult to seize and easier to transport.
It further reduces geopolitical borders and allows the cybereconomy to flourish without gatekeepers. Bitcoin allows individuals to better defend. Defend against inflation. Defend against seizure. Defend against censorship. As these needs grow, so too will the value proposition of Bitcoin and ancillary applications.”
Bitcoin and other decentralized cryptocurrencies can be stored, owned and completely controlled by the individual.
As people seek out solutions to protect their property, Bonnello expects powerful incentives for “dissident technology” to grow.
“The reasoning is simple. As individuals have more control over their property, they will increasingly need to defend that property. This is a behavior change. We are accustomed to outsourcing out protection services to third parties.”
“Right now, the dominant use case for digital money is speculation (drive to acquire). Secondary demand comes from users defending against inflation, asset seizure, taxation or regulatory hurdles (drive to defend).”
It’s the secondary demand that will fuel new crypto-based financial services, which are an extension of the internet and its ability to reach billions of people, regardless of location. Without jurisdictional barriers, global cooperation and entrepreneurship rise, driving competition across borders.
Bonnello points to a tweet by Jill Carlson, co-founder of the Open Money Initiative, who says that financial services are poised to go global.
With the Internet the addressable market for so many companies went from local (millions) to global (billions).
What got left out? Financial services. Locked in by jurisdictional regulations & currencies.
Crypto for the first time unlocks a global market for financial services.
— Jill Carlson (@jillruthcarlson) November 8, 2019
“This increase in individual power will cause a shift in human behavior from ‘Acquire’ to ‘Defend’.”
You can read Bonnello’s ‘The Sovereign Individual’ Investment Thesis here.