Yesterday President Trump said in a tweet that he’s “Not a fan” of Bitcoin and other cryptocurrencies, and went on to say that they are “not money”, have value that is “highly volatile and based on thin air”, and “Can facilitate unlawful behavior”.
I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air. Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity….
— Donald J. Trump (@realDonaldTrump) July 12, 2019
Opinions aside, Trump’s tweet by itself was very significant. This was the first time a sitting US president took to Twitter to weigh in on matters concerning Bitcoin or Cryptocurrency. Trump’s assertions, however, are highly flawed- and many have been proven false. It could also be said that some are very ironic, coming from Trump- and he may not be the best person to be making them.
By claiming that Bitcoin is “highly volatile and based on thin air”, Trump seems to imply that it could collapse completely at any moment. but as anyone who has been following this space will tell you, many skeptics have been making the same claim about Bitcoin for as long as it’s been around- and Bitcoin has proved to be resilient. There is even a website that chronicles the many times it was supposed to die for sure and didn’t.
Now of course, not every crypto project has had the same resiliency as Bitcoin – There have been a lot of other coins and blockchain projects over the years, and many have crashed and burned. Some were outright scams, and many others just didn’t succeed like their creators hoped, or were coins that were heavily bought then manipulated in a “pump and dump” scenario- leaving people who invested in them with little to show for it, only to become known as “bag holders” in the end.
Having said that, though, it’s still questionable whether a guy with six bankruptcies and a failed mortgage company (due to exaggeration of Trump’s credentials) is the best person to be giving advice on financial assets. There have been many examples of Trump ventures that resulted in bag holders in the end – including Trump Steaks, Trump Vodka, the Trump airline, and of course, Trump University.
After his first tweet, Trump took aim at Facebook’s Libra, and said that if Facebook wants to be a bank they need to get a banking charter. What Trump (and Facebook) fail to understand though, is the great innovation of Bitcoin is being able to hold your money digitally without going through a custodian who needs a charter. This works with Bitcoin because it’s decentralized- and that’s why it’s able to help the “unbanked” population that Facebook claims to want to help. And again, Trump doesn’t really have room to complain about Facebook’s “unchartered” bank after the fiasco with his “unaccredited” university that was shown to scam people.
Trump’s claim that Bitcoin and other cryptocurrencies are used for illegal activities like drug dealing is also flawed. It’s been shown that cash is more desirable for activities like this, because it’s harder to trace. With Bitcoin, every transaction is recorded permanently on the blockchain, and the origin of a coin can be traced with a little detective work. There are coins like Monero that focus on privacy and are harder to track, but there’s also the volatility factor that Trump likes to criticize.
Trump’s ignorance on cryptocurrencies showed here, and he’s the last person who should be criticizing their negative qualities- so he really should sit this one out.
