Had a quick discussion with Chat GPT in regards to paper Bitcoinization and it practically confirmed what's common sense after I cornered it a couple of times.
1/
2/ Assume exchanges, treasury companies, ETFs are compromised. Take your coins off exchanges.
3/ Proof of reserves as baseline. Do not invest in ETFs, treasury companies, miners who do not provide proof of reserves and proof of liabilities.
4/ Shame people who invest in paper BTC companies, ETFs (no proof of reserves), etc.
Self-custody is best, but if you're going to invest in a BTC treasury company, or an ETF, make sure it provides proof of reserves and liabilities.
5/ Promote circular economy
6/ Bottom line
I'll have to write a post on the incentives that make paper Bitcoinization inevitable (in my opinion).
This is not a black pill - the more self-custody/proof-of-reserves becomes the norm, the less effective paper Bitcoin games become.
This is much easier to achieve with Bitcoin than with gold.
2/ Assume exchanges, treasury companies, ETFs are compromised. Take your coins off exchanges.
3/ Proof of reserves as baseline. Do not invest in ETFs, treasury companies, miners who do not provide proof of reserves and proof of liabilities.
4/ Shame people who invest in paper BTC companies, ETFs (no proof of reserves), etc.
Self-custody is best, but if you're going to invest in a BTC treasury company, or an ETF, make sure it provides proof of reserves and liabilities.
5/ Promote circular economy
6/ Bottom line
I'll have to write a post on the incentives that make paper Bitcoinization inevitable (in my opinion).
This is not a black pill - the more self-custody/proof-of-reserves becomes the norm, the less effective paper Bitcoin games become.
This is much easier to achieve with Bitcoin than with gold.
ChatGPT's points on preserving the dollar hegemony, taxation & surveillance control and maintaining monetary policy effectiveness are self-explanatory.
Using Bitcoin peer-to-peer at scale makes transactions more difficult to surveil and practically impossible to block. That's why there is a massive government push for stable coins usage instead of using Bitcoin - they want to be able to block/sanction.
Its point on suppressing Bitcoin to prevent it from becoming a collateral layer for CBDCs because it undermines US Treasuries is interesting.
Currently, 137 countries and currency unions, representing 98% of global GDP are developing CBDCs. They are building state-designed, controllable digital rails, not adopting permissionless Bitcoin as reserve collateral, no matter what Trump tells you.
2/ Not betting on reversals of state incentives
3/ How suppression could be done - we basically tick almost all boxes, and it had to lie a couple of times as evident by the "eggplants".
One legal way to suppress the price is by mass selling of Bitcoin during the weekend to deleverage it by liquidating leveraged traders by hitting their stop losses at times there's very low liquidity, aka stop-loss hunting.
If you regularly do this, Bitcoin's volatility to the upside is muted as long-side leverage cannot overextend as in previous bull markets.
So Bitcoin is more volatile to the downside than to the upside.
Artificial Bitcoin price suppression over time causes real Bitcoin price suppression as more and more newcomers get discouraged, and more and more long-term Bitcoiners are forced to sell larger parts of their stack to the State to fund living expenses.
4/ Why Not Just Ban It?
The answer is simple, you don't ban it for the same reason, you shadow ban people on social media instead of outright banning them.
"Freedom of speech, but not freedom of reach"
Attempts to blatantly censor information leads to greater public awareness.
Similarly to how Barbra Streisand's lawsuit to remove a photograph of her home resulted in the image gaining widespread attention instead of being suppressed.
Just to be exhaustive, I also asked it to give me the incentives for governments to pump the Bitcoin price in fiat terms, and it basically said "so that governments and Bitcoin holders can become rich", which is obviously complete nonsense, so I had to corner it a little for it to admit the truth.
5/
For governments:
- as control increases, wealth increases
- as control decreases, wealth decreases
So allowing Bitcoin to rise without restraint risks legitimizing it as an independent monetary layer, undermining the Treasury + Fed monopoly.
Control over money = control over everything (sanctions, taxation, compliance, capital flight).
The obvious solution is in the post below - we have to fight paper Bitcoinization, otherwise, we get castrated like the gold/silver bugs.