Michael J. Saylor, Co-founder of Microstrategy has made claims that he believes the use of Bitcoin (BTC) is the solution to the financial crisis that is being experienced in Lebanon as the country’s currency has lost 96% of its value against the U.S. Dollar (USD).
Saylor gave the opinion on Twitter as he claimed that the commercial banks had failed the country. Lebanon, a country long famed for its stable and investment-friendly financial system, has slid into anarchy as hyperinflation grips the country and banks impose hefty cuts on dollar withdrawals.
The use of digital assets became a thing when Lebanon was experiencing a financial crisis in 2019, a decentralized and seamless digital currency came into play outside the control of bankers and the government according to news reports at the time.
Lebanon presently has 6 bitcoin ATMs. There is one in Aamchit and five in Beirut but those who were interviewed in the report claim the best way to access bitcoin is either by earning it through work/mining or alternatively by purchasing it with the Tether stablecoin.
The Use of Bitcoin as a Tool to Fight Inflation
Satoshi Nakamoto invented the first cryptocurrency, Bitcoin (BTC), in 2008. Bitcoin has since transformed in its usage and monetary forms, money issuance standard, and money mobility thanks to its underlying blockchain technology
Michael Saylor has previously stated that using bitcoin to fight inflation is a viable option. Saylor made a statement last year that corporate investors can use bitcoin to fight inflation.
He stated that “in order to maintain shareholder value, conventional treasury practices are no longer effective. To control the dilution that monetary inflation has on their balance sheet, corporations need new management strategies. Bitcoin is the ideal solution”.
According to a Paxful survey, Argentina views Bitcoin and other cryptocurrencies as the most effective hedge against inflation. The majority of respondents, according to the study, have used cryptocurrencies to shield themselves from rising inflation, and about 70% of respondents believe that investing in Bitcoin and other cryptocurrencies is extremely safe.
When Square’s boss Jack Dorsey talks about hyperinflation, the world listens. And Twitter reacts. Since so-called developed economies are now feeling the pain that inflation brings, the concept is in everyone’s mind. Every human has a front-row seat to witness the consequences of the United State’s relentless money printing. And, since the Dollar is still the reserve currency of the world, they’re all feeling it too.
Related Reading | Bullish For Bitcoin: US Inflation Expectation Breaks Out From Decade Long Downtrend
This is Jack Dorsey’s tweet:
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Hyperinflation is going to change everything. It’s happening.
— jack⚡️ (@jack) October 23, 2021
As you can see, he doesn’t merely talk about inflation. He goes for “hyperinflation,” which caused adverse reactions in the replies and the quoted tweets. They accused him of fear-mongering and quoted official numbers at him. And the nay-sayers probably have a point here, because the US is far removed from the reality that word implies. However, one thing’s for sure: money printer goes brrrrrrrr… and it hasn’t stopped working since Covid hit.
Negative And Moderate Reactions To Jack Dorsey‘s Tweet
This is an example of an unnecessarily insulting response from a traditional finance person.
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2/ step back and it’s disturbing that a lot of most powerful financial figures/oligarchs are invested, literally and figuratively, in various huckster schemes and libertarianish fantasies of state and civilizations collapse.
— Josh Marshall (@joshtpm) October 23, 2021
This man has obviously not done his homework regarding Bitcoin, so his argument is invalid. And doesn’t require a response. Plus, he’s being insulting to get attention, which he got. So, good for him and his dopamine levels. Let’s hope he has fun staying poor.
This is a Venezuelan economist with a moderate answer to Jack Dorsey.
I don’t think it will. But it doesn’t need to happen for things to get ugly. https://t.co/Cj85mJ8o7x
— Eduardo Gavotti (@EduardoGavotti) October 23, 2021
Since Venezuelans have first-hand experience with hyperinflation, let’s take what he says into account. The US is just feeling what inflation does. So-called developing economies live with that concept on their backs every second of every day.
BTC price chart for 10/23/2021 on Bitstamp | Source: BTC/USD on TradingView.com
Informative Reactions To Jack Dorsey’s Tweet
The Human Rights Foundation’s Alex Gladstein, a notorious Bitcoin maximalist, had this to say to Jack Dorsey.
Those shocked by this tweet live in a bubble of financial privilege.
*1.3 billion* live under double, triple, or quadruple-digit inflation: Turkey, Nigeria, Ethiopia, Iran, Lebanon, Venezuela, Cuba, Sudan, and beyond.
It’s already one of the world’s biggest humanitarian crises. https://t.co/P83opDagdu
— Alex Gladstein 🌋 ⚡ (@gladstein) October 23, 2021
He’s not lying. Hyperinflation is “already one of the world’s biggest humanitarian crises.” However, the US is far away from “Turkey, Nigeria, Ethiopia, Iran, Lebanon, Venezuela, Cuba”, and Sudan’s situation. And, since the Dollar is still the reserve currency of the world, they have a comfortable cushion to resist the constant money printing’s effects.
Serial entrepreneur and former Coinbase CTO, Balaji Srinivasan, answered Jack Dorsey with a fully-fledged idea. A “censorship-resistant inflation index.”
I wrote a spec for a censorship-resistant inflation index. It’s framed for a startup, but Square could easily do this. In a crisis, accurate inflation info would be something people checked Twitter for every day. @milessuter @moneyball @jack https://t.co/SYb2mfxjex
— Balaji Srinivasan (@balajis) October 23, 2021
In the project, he brings forth some hard truths:
“If inflation is a government-caused problem, we can’t necessarily rely on government statistics like theCPIto diagnose it or remediate it. Indeed, in places with high inflation, censorship and denial is the rule rather than the exception.”
If you are technically capable, there’s still time to send your proposal and earn “A $100k Prize for a Decentralized Inflation Dashboard.” Be aware that “if you use Chainlink’s oracle tech in your project, the best dashboard will be eligible to receive a $100k grant in LINK tokens.” Those tokens are in addition to the main prize.
Poor Understanding Of The Terminology
In a Twitter Spaces room specifically dedicated to Jack Dorsey’s tweet, notorious podcaster Preston Pysh concluded.
“I think people’s understanding of the terminology, deflation, inflation, is just grossly misunderstood. And so, when you say we’re going to have these deflationary events that are then going to lead to more QE, which is then going to result in more inflationary events. I completely agree with you, but we’re talking that there’s so much information loss in such a simple word as deflation and inflation. So the deflationary event is that this whole system is constructed as credit.”
When he says QE, Preston refers to Quantitative Easing, whichInvestopedia definesas:
“A form of unconventional monetary policy in which a central bank purchases longer-term securities from the open market in order to increase the money supply and encourage lending and investment. Buying these securities adds new money to the economy, and also serves to lower interest rates by bidding up fixed-income securities.”
Related Reading | Jack Dorsey Plans to Build A Decentralized Exchange For Bitcoin
That being said, Preston asks:
“How many people in the US, or in the world, have that context when that’s not their expertise, right? They didn’t get a major in macroeconomics, or finance, or whatever. So, it’s just all buzzwords that people throw around. And, in the meantime, no one really even understands what those definitions even represent.”
For more information aboutinflation, check out the Bitcoinist Book Clubanalysis of Saifedean Ammous’ “The Bitcoin Standard.”
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