Kay Capital: Talk about your belief in Bitcoin and stablecoins

Author: Kay Capital; Source: Twitter @keyahayek

Most people who come to this circle are motivated by making quick money. It’s not very interesting to talk about “belief”, but I actually have faith. This article will just talk about my faith in Bitcoin/Stablecoin.

There are a hundred different interpretations of Bitcoin faith. Because it’s about life experience, the emphasis is different.

I went to Cambodia before the 818 gambling ban. At that time, the real estate and land markets there were booming due to the abnormal online gambling/electronic fraud industry. I went to Phnom Penh, Poipet, Mubai, and of course the later infamous Sihanoukville. There were Chinese investors and construction contractors everywhere. Now when I think back, it’s like the 1920s in the United States in The Great Gatsby.

Everyone is imagining that this is the next Macau, the next Shenzhen. People still want to participate in that abnormal, rough and vibrant environment. Fortunately, they didn’t participate.

All this collapsed after Cambodia banned gambling, but that's another story.

Do you think I'm going to talk about all the urban legends of the big brothers in the park? No, and I, a visitor, can't get in at all.

What surprised me was the currency and banking system of this country.

The US dollar, the US dollar, and the local currency, the Cambodian riel, are common here. If you use it to pay for tutu cars, the driver will glare at you.

There is no compliance or risk control in opening a bank account here. Anyone can open an account, and it is said that tens of millions of US dollars are transferred every day. In addition to transfers and even cash deposits and withdrawals, no compliance documents are required.

Friends living in mainland China may not understand it, but overseas Chinese should know how difficult it is to do this in any other bank within the SWIFT system.

Similarly, Argentina, Ecuador, etc. have completely abandoned their local currencies.

How huge is the underground dollar system here? I don't know the data for Cambodia, but according to the Tax Justice Network, there are about 8-10 trillion dollars of assets hidden in offshore financial centers around the world, including Hong Kong, the Cayman Islands, etc.

In fact, this is the real upper limit of Bitcoin, and what will be taken over in the end is a portion of the SOV (Store of Value) share of the offshore/underground dollar system.

Offshore banks may still freeze assets, or they may be out of the SWIFT system/blacklisted due to compliance. If you have remitted money to Cayman/Gibraltar, you know what I'm talking about.

In addition to its volatility, Bitcoin is an excellent choice for hidden wealthy people, such as gray industry bosses/warlords, and there is no problem of capital circulation at all.

Because of the existence of PoW, in theory, the big brothers can still exchange their wealth for computing power to mine new coins, and the new coins cannot find any source (so the United States has compliance mining guidance, and mining pools also have stricter KYC).

Like MEME coins, MEME coins have no valuation system. Rising is the reason for rising. The more it rises, the better the liquidity. The more Bitcoin rises, the better the liquidity, the lower the volatility, and the larger the capacity of SOV.

But this demand is actually diverted by stablecoins, because USDT/USDC is a wilder existence than Cambodian banks, although both of them can freeze the stablecoin assets on user addresses.

Does this change the fundamentals of Bitcoin? This is like a company competition. The market share of two companies called Bitcoin and Stablecoin is different. Because competition is differentiated, Stablecoin still has compliance constraints, so no one can kill anyone, just a change in share per cent.

But will Bitcoin + Stablecoin replace the US dollar business of traditional offshore financial centers? This is somewhat possible, because the competition in the underground US dollar system is homogeneous in this regard. When young rich people replace the old rich people, the market share of traditional offshore financial centers will flow to the Bitcoin + Stablecoin system little by little every year.

Note that what is being discussed here is the dollar business of traditional offshore financial centers. There are many other businesses that are temporarily irreplaceable, such as entity establishment, capital gains tax benefits, trusts, etc.

Eventually, there may be an offshore free port that fully embraces digital. For example, the Hong Kong government obviously knows what kind of money it earns in the final analysis, and its embrace is also considered hard work, but...

Once, I thought that the most sophisticated use case of blockchain was DAI/LUSD, which created unregulated underground dollar credit in a decentralized way. Although the upper limit was constrained by the market value/liquidity of ETH, this value was too great. In Mile's words, how valuable is freedom?

Now Maker has been upgraded to what the hell Sky, with an address blacklist and VPN access banned. This is a betrayal of the encryption spirit after the team has successfully retired.

At the time of the DeFi boom, ETH, which was still PoW, actually had the opportunity to shift to SoV positioning, but now it is historical nihilism to say that these are all historical nihilism.

ETH is still a public chain, just like SOL is a public chain. Public chains have income. With income, there is a valuation system. A clear account is no longer a dream. Without dreams, there is no market-to-dream ratio.

As for the "belief" in Shitcoin, I will write about it later. That is a completely different system. In fact, I have also written about it - "Better gray securitization".

Let's end with a passage from Wu Jihan in 2012. The world will judge a person's character. At that time, he wrote such a wonderful text. There is no doubt that he is a very smart and visionary person. Vision is a state of mind, not a function of eye:

Bitcoin has seamlessly embedded a virtual offshore free financial environment into the world.

The Bitcoin network is the Hong Kong, BVI and Macau in cyberspace. Buying Bitcoin now is equivalent to owning a building in Mid-Levels, Hong Kong.

Don’t just look at the mountains now with nothing but trees, but look at the skyscrapers at the foot of the mountains in the future.

Open savings accounts at will, depositor identities are easy to keep confidential, transaction fees are low, no taxation, free trade, free gambling, strict monetary discipline.

Welcome to the Bitcoin network, a financial free port, duty-free trade zone and anarchist paradise on the Internet.