Daily Balajisms – Orange coin is the new blue jeans
Bitcoin is a Schelling point, and a new symbol of freedom and prosperity.
Balaji Srinivasan says that he is not a bitcoin maximalist, “but we are all bitcoin maximalists now” – amid this TradFi Winter and Fiat Crisis. Balaji sounded an alarm on the internet with his BitSignal tweet, and wants to get as many people on the bitcoin lifeboat when they still can.
Bitcoin price is one of the most honest market signals we have. When the Fed lies, and banks are dying, people are fleeing into the safety of the digital gold and seek the bitcoin parachute, because their are starting to sense that the plane of legacy financial system is about to crash.
Balaji describes himself as a polynumist, who believes that many coins can co-exist and serve various purposes. But in the moment of Crypto Wars 2.0 and The Operation Choke Point 2.0 – where the US regulators and representatives like Senator Warren openly attack crypto and aim to burn the fiat-to-crypto-bridges, we need to align around bitcoin as a Schelling point for the whole freedom loving left- or right-libertarian and crypto movement.
A Schelling point is a focal point in the game theory context, that actors will choose to cooperate absent communication. If you want to meet someone in Vienna and can’t communicate with them, you would probably choose Stephansdom as a meetup point and noon as a time of the meeting.
Balaji thinks that we are in the middle of a TradFi winter, where many, if not most, US banks became insolvent due to rapid rate hikes by the Fed over 2022. This caused devaluation of long-term US treasuries and other assets, such as mortgage-backed securities. It also changed the behavior of depositors who started to move their deposits into money market funds – and became much more mercenary than previously expected. This resembled a yield farming behavior in DeFi. Hence TradFi winter.
Balaji has a prescient saying that social media is American glasnost and cryptocurrency is American perestroika. He said this in 2019, before the state overreach during Covid and subsequent revelations of Twitter Files, where US agencies cooperated with social media in silencing and shadow-banning dissident point of views.
Soviet system couldn’t handle a move towards free speech (glasnost) and free markets (perestroika) and rapidly disintegrated. With Elon Musk taking over twitter and revealing Twitter Files, we got a freer social media, where noosphere creates a patchwork of narratives and people engage in a fight club of ideas. With the beginning of the current central bank crisis, or an outright fiat crisis, people sense crypto is an exit towards financial freedom and prosperity.
Orange coin is the new blue jeans, says Balaji. Behind the Iron Curtain, in the socialist regimes, denim jeans were very hard to get, and became a symbol of freedom and prosperity. Crypto is to the US, what the America once was to Europe. A new frontier and an opportunity to exit.
These times are different from the Global Financial Crisis of 2008. This is a consumer-facing crisis, and Balaji sees signals like Indian founders moving their funds from US banks back to India. This is one of the most fascinating flippenings that he saw in his life.
He doesn’t want the US-dominated financial system to fail, but he believes that we are lucky that this time Satoshi gave us bitcoin – as a direct reaction to the previous 2008 banking crisis.