lukasz on Nostr: https://m.primal.net/NeXy.png MONETARY PRISONER'S DILEMMA: BITCOIN AND NATION-STATES ...

MONETARY PRISONER'S DILEMMA: BITCOIN AND NATION-STATES

A monetary prisoner’s dilemma explores four distinct scenarios:

1) Every nation-state buys Bitcoin.

First come, first served. Demand from nation-states pushes the price higher, accelerating transition to the Bitcoin Standard. Early adopters accumulate more at lower prices, while laggards are left to accumulate less at higher prices. International trade increasingly settles in neutral reserve assets like Bitcoin or gold. Countries will either accumulate significant amounts of Bitcoin cheaply or need to generate it through a trade surplus.

2 and 3) Some nation-states buy Bitcoin, while others do not.

Countries that purchased Bitcoin use it for trade settlement with one another, while non-adopting countries continue moving away from USD settlement towards gold. Countries using Bitcoin for trade settlement become more competitive and prosperous due to:

1. The devaluation of gold caused by new supplies of both physical and paper gold entering the market.
2. The high costs associated with transporting and verifying physical gold (e.g., melting and recasting).

4) No nation-state buys Bitcoin.

(purely theoretical: Bhutan is already mining Bitcoin, and El Salvador is both buying and mining it.)

Individuals, businesses, and funds continue accumulating new supply, driving adoption forward without government involvement. As an increasing amount of wealth secured in Bitcoin (which cannot be debased), money printing becomes ever more difficult and eventually impossible. Without money printing, twin deficits (trade and budget deficits) can no longer be financed, leading to a significant reduction in government size worldwide. This shrinkage of government is a welcome change for a large portion of citizens.

Genuine question: Which scenario do you prefer, and why?