The idea of
The Bitcoin-Dollar is a parallel to the petro-dollar system, which was upheld from the gold window closing via the Nixon shock in 1971 until only somewhat recently. By creating a
de facto monopoly on the in’s and out’s of oil to U.S. dollars, the U.S. was essentially able to re-peg their inflating dollar to an ever-demanded energy commodity, and create a mass buyer of dollars. Every country that wanted to industrialize needed oil to do so, and thus every country that wanted to compete on the world stage first needed to buy some dollars.
Bitcoin, too, is an energy commodity, and the U.S. dollar system has once again established a de facto monopoly on the volume of bitcoin sales across the globe, not to mention that the country also holds more bitcoin on its balance sheet than any other nation in the world. The U.S. could easily print $35 trillion dollars in freshly issued Treasuries and pay off its debt, especially now that it has found a buyer with an insatiable demand in the aforementioned stablecoin issuers, but the inflationary effects would be catastrophic on the purchasing power of the dollar and, thus, the net purchasing power of the U.S. economy.
This is where Bitcoin comes in. Bitcoin is the only commodity to break the pressures of increasing demand on inflating supply. For example, if gold doubles in price, gold miners can send double the miners down the shaft and inflate the supply twice as fast, thus decreasing demand and thus eventually decreasing the price.
Yet, no matter how many people are mining bitcoin, no matter how high the hash rate increases this month, the supply issuance remains at, as of April 2024, 3.125 bitcoin per block. This capped eventual supply of 21 million –– set via a disinflationary rate of token issuance hardcoded in the protocol within Bitcoin’s monetary policy at network launch –– allows the U.S. to massively inflate the dollar into this demand inelastic energy commodity without, for example, making nationstate-holders of gold wealthy or oil-rich nations even richer.
As the price of bitcoin goes up worldwide, the large reserves held within the borders of the U.S. will increase the relative wealth of the country.
"How can we continue to keep up demand for the dollar while still pumping the money supply to pay off our compounding debts?…By creating an infrastructural on-ramp to Satoshi’s protocol that is denominated in dollars, in effect, we have recreated the same, ever-present demand for an inflating supply of dollars demonstrated in the petrodollar system. By expanding the Tether market cap to [$115 billion] during the first dozen-or-so years of Bitcoin’s life, when [94%] of total supply was issued, the U.S. market made sure the value being imbued into the now-disinflationary protocol would forever be symbiotically related to the dollar system…
Tether isn’t simply “tethering” the dollar to bitcoin, but permanently linking the new global, permissionless energy market to the United States’ monetary policy.
We have recreated the petrodollar mechanisms that allow a retention of net purchasing power for the U.S. economy despite monetary base expansion."
