Behind Bitcoin: Understanding the Politics

BITCOIN-STRATEGY.IO
Behind Bitcoin
Who owns the Bitcoin project?
Bitcoin Strategy in Hong Kong
2018/4/1
Provide an essential framework of knowledge that enables readers
to have critical thinking on analyzing the politics behind Bitcoin.

Copyright © bitcoin-strategy.io 2018. All Rights Reserved. 1
Prologue
'Bitcoin price will be fluctuating vigorously before the coming financial
crisis. It would go up steadily during the crisis and skyrocket to the
highest astonishing point before the end of the crisis. Afterwards, it
would fall off a cliff...'
Above prediction was made by the author on the price trends of Bitcoin
in early 2018. A series of articles would be written to elaborate the
logic behind this prediction. ‘Behind Bitcoin’ is the first one. More
articles would come. Of course, our prediction may have some
adjustments corresponding to changing political situation. Please keep
in touch with us.
Readers are recommended to browse the front page of our website
(https://bitcoin-strategy.io/) first to have a preliminary concept on
currency monopoly and sovereignty before reading this article.

Disclaimer
Investing in volatile virtual currencies is highly risky. It is advised to
never invest more money than you can afford to lose. Our analysis is
suggestive based on studies of international political economy. It may
not be absolutely objective and is primary for educational purpose.
Kindly do your due research before investing your hard-earned money.
We are not liable if you lose money.

the US not only to free from war damage in local territory, but also to
develop the war machine and economy due to sharp military supply
demand overseas. When WWII ended in 1945, the United States
emerged as the undeniable world leader, possessing around two thirds
of the world gold reserve and more than 50% of the world industrial
productivity. The predominant economic and military might helped the
US to achieve its hegemonic currency and monetary status in the
post-WWII era.
Being the chief planner, the US led its victorious allies, mainly British,
France, Soviet Union and China, to establish various world-wide
organizations and rules, reconstructing the post war order with regards
to its own interests. During the Bretton Woods conference in 1944,
international monetary system was designed to underpin the Dollar’s
supreme status, superseding the sterling, as the predominant global
reserve currency. This was actually a Gold Exchange Standard where
the Dollar was pegged to gold at the fixed price of $35 per ounce gold
and the currencies of the rest of the world were pegged to the Dollar
with fixed exchange rate.
International Monetary Fund (IMF), World Bank, World Trade
Organization (WTO) and Bank for International Settlements (BIS) were

vehicles for enforcement. Eventually, the Dollar’s uncontested
monetary hegemony was secured. A normal state might only obtain
revenues from currency issuance domestically in terms of seigniorage
revenues and inflation tax. Owing to the Dollar’s special status, the US
earned the revenues from all over the world by the issuance of the
Dollar to the world! It was a huge sum of money! Nevertheless, this
was only a small portion of explicit economic benefits!
In a bid to foster the US’s monetary hegemony and exert economic and
politic influence on other countries, especially those war-torn nations in
WWII, the US offered various plans of financial aid to its allies, helping
them to rebuild their countries from the ruin of wars. The most
famous one was the Marshall Plan (officially the European Recovery
Program, ERP) adopted in 1948. Western European countries swiftly
recovered from war after they received a total of $13 billion of economic
assistance from this generous plan. Of course, there was no free lunch.
The US aimed at stepping in the affairs of Western Europe by means of
financial influence. Also, a recovered and strong Western European
could better serve the US’s strategic purpose. With respect to military
threats from the Soviet Union and its allies in Eastern Europe, the US
integrated the military forces in West Europe countries to form a unified
commander system led by the US. As such, the North Atlantic Treaty

Organization (NATO) was established in 1949. Since then, the US took
control of defense system in Europe which originally dominated by
German and France. It was a huge success in geopolitics for the US.
In reaction to the formation of NATO, the Warsaw Pact was signed
among Eastern Europe countries and the Soviet Union in 1955. A
balance of power, controlled by the US and the Soviet Union was formed.
We call this as a security framework of Europe.
On the other side of the world, the US was overstretched in the Korea
and Vietnam War. Due to deficits and excessive military expenditure,
the Fed printed far more money than its gold reserve could afford.
When France requested getting back their gold deposit from the US,
confidence on the Dollar slumped. Since the US could not free itself
from the nightmare of Vietnam War, it could only maintain its military
might in the expense of the Dollar’s credibility.
Finally, the Bretton Woods System collapsed, when U.S. President Nixon
lifted the peg between the Dollar and gold in 1971. Prior to this, the US
got prepared for retraction:
1) Henry Kissinger met with Chairman Mao, leader of China at that time,
in an attempt to develop diplomatic relationship with China and

retreat from Vietnam War in an order and descent way, amid the
challenge of the Dollar hegemony. The US gave up containing China,
helped it to integrate into the international society and cooperated
with it to deal with threats from the Soviet Union. In exchange, the
China government would not alter the geopolitics environment in
Southeast Asia after the retraction. Also, China would not pose
threat to the US allies in northeast Asia i.e. South Korea and Japan.
As a result, a balance of power, controlled by the US, was formed in
Western Asia Pacific. We call this as a security framework of
Western Asia Pacific.
2) In the Middle East, the US signed a secret but vital agreement with
Organization of the Petroleum Exporting Countries (OPEC) through
the royal family of Saudi Arabia that the sale of crude oil must be
denominated exclusively in the Dollar in 1971. Saudi Arabia was
requested to use the surplus from the sale of crude oil to invest in
debt securities of the US. This was the so-called petrodollar. In
exchange, the US provided military security to the Saudi Arabia.
With US’s military support, Israeli won the Yom Kippur War in 1973.
After a series of wars with Israeli since its establishment, the Arab
states finally realized the fact that their reliance on the Soviet Union’s

military support could not defeat Israeli as long as the US was on its
side. In their desperate, some Arab states, especially those of the
Persian Gulf changed from the Soviet Union’s bloc to that of the US.
A balance of power, controlled by the US, formed in the Middle East
between Israeli and Arab states. We call this as a security
framework of Mideast. The US became the middle man between
them, and maximized its interest and strategic needs through playing
the game of balance of power.
By controlling the three security frameworks mentioned above, with
complementary military presence at the rest of the world, the interests
of the US could be safeguarded. Among those, the Dollar hegemony
and the US monetary hegemony were utmost importance. After the
‘Nixon Shock’, the US invented the petrodollar and the value of the
Dollar was seemingly backed up by crude oil, which was viewed as blood
of economy in modern society. Countries would need to earn the
Dollar first if they wanted to buy crude oil. In fact, the value of Dollar
was backed up by nothing, except the military might of the US.
Therefore, the US hegemony was supported by two pillars i.e. the Dollar
and its military might. The Dollar pillar could help obtaining various
kinds of resources in bulk quantity and virtually free of charge from all

over the world, which could only be theft by wars or colonialism in
human history, by simply turning on the printing machine. Based on
the Dollar pillar, the monetary hegemony was established and became a
vehicle to manipulate the monetary, commodity and stock market, and
other financial sectors for strategic needs. It could also be utilized to
harvest extra Dollar liquidity caused by excessive printing of the Dollar
that circulated around the world to complete the petrodollar recycling
process, through making financial turmoil. It was believed that a
number of finance cries in modern history were well planned and made
by the US. We would talk more about this on the topic of ‘the coming
financial crisis’. The military might of the US became the ‘backing’ of
the Dollar by intimidation or simply violence for countries refusing or
posing threat to the Dollar and monetary hegemony. Since then, the
US took off the shackles of gold from the Dollar and had monopoly
authority, like the central bank of the world, to print paper money for
the whole world. Paper money becomes the most important
commodity of the US’s export. A new page of monetary history was
turned. The world entered into a new era of fiat money.
Defusing challenges on currency hegemony
Japan

2) The wider the acceptance of reserve currency status of its currency
from central banks of the world, the greater the power and benefit
the nation possesses;
3) In order to maintain its currency hegemony, the US knocked down
any competitor, even allies, by any means, even waging war. WWII
provided an excellent opportunity to the US for accomplishing its
strategic target. As such, the US faced relatively less confrontation
from the Great Britain and paid relatively less effort to persuade the
world accepting the Dollar.
4) The military pillar of the US provides the strongest “backup” for the
Dollar. The most crucial platforms for the military might of the US
are the three security frameworks.
5) The Dollar hegemony is the basis for monetary hegemony, which in
turns, contributes to the US hegemony. The road to the US
hegemony is proved to be long enduring and with twists and turns,
while the gain is gigantic.
6) If the Dollar hegemony status is lost, not only the US hegemony
would be collapsed, but also the whole financial system of the US.
The direct consequence is the collapse of the country.
7) All great nations including the US, EU, UK, China and Japan, having its
currency as major international reserve currency status, would
definitely endeavor a wider acceptance of its currency from the rest

of the world, and would not allow its share to be diminished.
The owner of the Bitcoin project
Every Bitcoin supporter knows the name of Satoshi Nakamoto, the single
founder of Bitcoin. In reality, the extreme complex and creative
project of Bitcoin is impossible to be completed by a single man. It
requires a big team of elite experts from various fields, such as
computing, networking, mathematics, cryptography, finance, sociology,
political economy, political science and so on. Given that the time
spent on the project would not be short, money spent on research and
development is huge. We have good reason to believe that the Bitcoin
project should be worked out by a remarkable startup company of
certain sizable scale, which was funded with certain sizable amount of
capital. Given that Bitcoin’s success in eroding currency sovereign of
many influential great nations and were not banned by them, at least up
to this moment, there must be strong political backing for Bitcoin. It is
logical to presume that Bitcoin bears political implications and the will of
nation.
To know the backing behind, we have to investigate the acceptability of
Bitcoin by various countries. Owning to barely influence on geopolitics

for small countries, they are not taken into our consideration. For your
better visualization, please refer to below diagrams. Note that they
may not be analyzed accurately and updated properly.
(Source
https://howmuch.net/articles/bitcoin-legality-around-the-world)

(Source:
https://blogs.thomsonreuters.com/answerson/world-cryptocurrencies-c
ountry/)
For simplicity, two categories are made, namely countries having
friendly and unfriendly attitude on Bitcoin, and are listed and explained
in below:
Countries having friendly attitude on Bitcoin
 US, UK, Western Europe, Australia, Brazil, Canada, Japan and etc…
There are lots of common characteristics between these countries,
except Brazil. First, they are developed countries and most of them

belong to G7. Second, they are traditional allies of the US. Third,
some of the countries’ currencies are global reserve currency, including
Japanese Yen, British pound, US Dollar and EU Euro. Australian and
Canadian dollar are only considered as regional reserve currency.
As far as the author knows, Japan even officially declared Bitcoin as a
legal tender and encouraged its citizens to invest in Bitcoin. This
means that the Japan government is using its Yen to back up Bitcoin, and
its credibility to assure the investment prospect of Bitcoin.
Suppose that Bitcoin is so prevailing in Japan that no one uses Yen.
Then, the Japanese government would lose its currency sovereignty as
well as revenues originated from currency issuance. Suppose that
Bitcoin is so prevailing in the world that no one uses any existing fiat
currencies in the world. United Kingdom, EU, Japan, China and,
especially the US, would lose extra gains originated from special
monetary privileges as global reserve currency.
If the Japanese government does not have any vested interests on
Bitcoin behind, there is no ground for its backing up of Bitcoin in the
expense of Yen. Although the rest countries in this category are not as
‘generous’ as Japan, yet they recognize the legality of Bitcoin

transactions and Bitcoin as a medium of exchange. Laterally, they are
backing up Bitcoin in the expense of their currencies in an implicit way!
The US, Japan, EU and UK are suspicious of having vested interests in
Bitcoin. Owning to its invasion history, Japan is an economy giant, but a
dwarf in politics. In addition to its reliance on the US, it cannot be the
greatest beneficiary.
As explained above, the Dollar hegemony is the basis for the US
hegemony. It makes sense to presume that Bitcoin poses the greatest
threat to the interests of the US. Nevertheless, the US’s friendly
attitude on Bitcoin clearly shows that it is not the case. The leads us to
think about the possibility of Bitcoin being a part of the US’s monetary
system.
One may argue that Australia, Brazil, Canada and other small countries
or regions are also friendly to Bitcoin, so why don’t we suspect them?
The fact is that normal countries have not much room for bargaining in
international affairs and are not subjected to privileges great powers
enjoyed. In addition, currencies of those countries are not global
reserve currency. It is not much difference for them whether the world
uses Bitcoin or the US Dollar. Countries like Australia, Brazil and
Canada are allies of the US and may receive some kinds of protection

and benefit financially for aligning the strategy of the US bloc. This can
compensate their loss, if any. On the other hand, some small countries
or regions may have special consideration on adopting Bitcoin, for
example, being the regional hub of crypto-currencies development.
Countries having unfriendly or hostile attitude on Bitcoin
 Venezuela, Russia and China etc…
There are also lots of common characteristics between these countries.
First, they are developing counties. Second, their relationship with the
US bloc is not good. They are always the targets of containment by the
US bloc. Third, their currencies are soft currencies, except China. All
these countries’ unfriendly attitude towards Bitcoin is realistic. Since
their currency is not strong enough, their currency sovereignty is easily
compromised, especially if Bitcoin is a part of their enemy or rivalry’s
monetary tools.
The rising superpower country, namely China, deserves our attention.
The country has comparable strength to the US in almost every aspect.
The US had considered it as the greatest rivalry and had been trying to
contain it for decades. Last year, the Chinese government banned
Bitcoin in spite of the Chinese’s big share and gains on Bitcoin. This

reflected the Chinese government had no control on Bitcoin and had to
cut off its influence by banning it. This also implied that another
country or a political bloc indeed had overwhelming control on Bitcoin.
Otherwise, there was no ground for China to be afraid of Bitcoin if it was
a pure ‘decentralized system’, given that the Chinese’s big share in
Bitcoin market. In fact, Bitcoin indeed can be a financial tool of
‘massive destruction’. You can learn more about it in the article of
‘Bitcoin as a tools’.
Conclusion
Another important fact that we should not omit: Bitcoin is created,
maintained and operated in the US. Very possibly, those developers
and the management are citizens of the US.

Therefore, the organization is under the US government’s full scrutiny,
and, very likely, works for the leadership of the country and its
shareholder’s interests, namely the capital interest group, as mentioned
in the beginning of this article.
Perhaps, "Satoshi Nakamoto" is a pseudonym and the real name is
Federal Reserve Bank of the US. The owners of the Bitcoin project are
those private stakeholders own the Fed. The capital interest group is
used to and is good at manipulating behind the scene and ruling through
the operation of capital. Its hidden hand manipulates Bitcoin in similar
way as it does in the Fed. If you don’t believe in our conclusion, then
you should sell all your Bitcoin off before it is too late. The US would
not endure the basis for the US hegemony, namely the Dollar hegemony,
to be eroded by Bitcoin, unless it is a part of its monetary system.

Behind Bitcoin: Understanding the Politics

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