Bitcoin donations pour into Ukraine - proving the intrinsic value of Bitcoin as a "currency" that can substitute for the dollar

The mood surrounding Bitcoin is anything but ordinary. Until now it has only ever been handed extreme, irreconcilable reputations - from gambling-grade speculation to herald of the Fourth Industrial Revolution, from tulip bubble to safe-haven asset. Lately, however, Bitcoin has begun to attract a well-founded suspicion: that it possesses an "intrinsic value" no other asset has.

On March 1 (local time), the American magazine Forbes ran a provocative headline declaring that Bitcoin had shown the world its intrinsic value. Forbes cited four recent events as proof that Bitcoin is demonstrating what it is. First, the Canadian government's freezing of the donation accounts of anti-vaccine-mandate protesters. Second, refugees crossing from Ukraine into Poland carried Bitcoin with them, and donations to help Ukraine are in fact pouring in as Bitcoin and other cryptocurrencies. Third - unsurprisingly - Bitcoin is also regarded in Russia, which is about to face Western financial sanctions, as a means of circumventing financial controls. Fourth, the Turkish lira, whose value is falling faster than paper.

Crypto that crosses borders and pierces financial sanctions

Bitcoin can cross borders without passing through the financial network. It can evade the airport screening line and the body search of the border guard. It reaches the far side of the planet at a speed only slightly slower than light. From the moment Bitcoin first appeared in the world, many people recognized that it could become a geopolitical asset. Or rather, it is the fruit finally obtained by people who had set out from the beginning to create precisely such a currency, and who failed again and again for thirty years.

The problem is that people have lived for far too long in an extremely unrealistic world. The world that was made in 1945 with the end of the war was outwardly in a wretched state, but in terms of order it was able to begin from a condition of simplicity rarely seen in history. The empires, Britain among them, had all but collapsed, and even the Soviet Union, which had won the war, had suffered enormous damage. Only the United States stood intact. America was able to design the world order to fit the ideal it had long held in mind. Although the challenge of communism persisted, among the countries that embraced the market economy a clear hierarchy took hold, together with the concept of the rule of law.

Global finance was the source of the optical illusion that the world had always been a place that moved according to law. In long-distance trade conducted through banks, the only problems to consider were shipping costs and natural disasters such as typhoons. Because statistically calculable natural disasters can be handled with insurance, every risk in long-distance trade could be converted into a cost. At last, a world had been created that economists could grasp with equations.

But this unrealistic world is drawing to a close. Whether you like the United States or hate it, whether you call it an empire or a hegemon, the order we have known is collapsing. From the outset, making a single country's domestic currency the settlement medium of world trade was logically untenable. The first to point this out was the economist Robert Triffin, a professor at Yale. Triffin foresaw early on that a reserve-currency country would take on trade deficits in the course of supplying liquidity, and that once those deficits piled up it would inevitably lose national credibility, so that faith in the reserve currency itself would be shaken. His prediction proved correct, and the United States had no choice but to print dollars in order to maintain the enormous naval power it needed to intervene in conflicts large and small across the Eurasian landmass. Those unrealistically good years could be sustained only by this vast invisible tax.

The Eurasian landmass is crowded with ancient states and peoples. Ethnic conflicts are tangled beyond any hope of unraveling. Ships loaded with oil and goods must pass back and forth through such zones of conflict. And yet they were able to do so without paying tolls, without being swept up in conflict and sunk or seized. The foundation of the modern economic system - one that appears in no economics textbook - was American naval power and America's willingness to intervene in Eurasian conflicts. Of course, it was not free. That the United States is the only country that can print dollars to repay its debts without falling into a national moratorium, and that even as it accumulates trade deficits the surplus countries must buy its bonds to prop up the value of the reserve currency: these realities are the invisible tax paid for the geopolitical protection that underwrites the global economic system. No country's politicians want to say so out loud, but it is a fact all the same.

In a sense, the world is returning to its original form. The United States did not put down Myanmar's military. This despite the fact that the junta overthrew the government of Aung San Suu Kyi, whom the West had exalted as a hero, even conferring the Nobel Peace Prize on her. When it left Afghanistan, it staged for all to see the spectacle of the country with the greatest military power on earth running away. And although Western media gave beautiful coverage to the Kazakh people denouncing their government, while Russian special forces cleaned up the situation the U.S. government's spokesperson offered nothing but empty words indistinguishable from comedy.

The Eurasian landmass may now be facing, for the first time since the Second World War, an era without America. The chapters of history are not like those of a book or a play. They do not break off cleanly at the joints like bamboo. They overlap; they run backward. Hasty conclusions are therefore likely to end in error, and when such prejudgments are tied to investment decisions they can be catastrophic.

Even so, the Russia-Ukraine war announces that an era is coming to an end. The plains of Poland and Ukraine are the corridor connecting Germany and Moscow - a road once traveled by carriages and cavalry, and in the modern age by tanks. Napoleon and Hitler, too, could not resist the temptation of the open plain, and thereby hastened their own downfall. This plain is stable when it lies within the sphere of Russia, or else of Germany. In an ideal world the two great powers could keep the peace by treaty, but the reality we are witnessing only reminds us of the self-evident fact that the world is not an ideal place.

The end of the era of "dollar hegemony"

Germany and Western Europe, long domesticated to unreality under American hegemony, will begin with this event to recognize a Eurasia without America. Confusion in that process is unavoidable, but the European continent - which has long learned, at the price of blood, how to maintain a balance of power among great states - will find its equilibrium one way or another in a world without America.

The problem is individuals. Until a new hegemony settles over Europe and East Asia, people will experience a world in which everything, measured against the familiar past, is utterly strange. And that experience will be anything but pleasant. Above all, there is a strong chance that people will find they cannot withdraw money from a bank or send money at all. They will be searched when they cross borders, and everything of value may slip out of their hands like grains of sand. Those who do not want to hand over their real estate, cars, and precious metals intact to the enemy may have to content themselves with setting fire to them, reducing them to ash, and posting a mocking photograph on Instagram.

The intrinsic value of Bitcoin that Forbes says has been proven presupposes a world this unpleasant. It is unpleasant - but what if it is closer to reality? No. Even if the chance that the unpleasant reality comes to pass is a mere 1 percent, Bitcoin can be the lifeline of your family. Because when order collapses, there are things only Bitcoin can do. And even if a world as untroubled as the present one continues, the odds of losing all the money you invested in Bitcoin are not high.

Somewhere in the world, almost always, things like what happened in Ukraine, Turkey, and Canada are happening. Bitcoin is therefore likely to benefit even the citizens of countries where the unpleasant reality has not arrived. This may read as a scheme to make money out of others' misfortune, but in fact the opposite is true. The reason Ukrainian refugees holding Bitcoin can flee headlong across the border into a foreign country and still avoid destitution is precisely that the citizens of peaceful countries are willing to buy their Bitcoin at a high price, is it not?

At any rate, the fact that rational wealthy people - who are slowly coming to realize that the world they have experienced until now is the unrealistic one - will have no choice but to invest in Bitcoin is, right now, the single most important piece of information for you.

Oh Tae-min, author of "Bitcoin Was Strong" and "The Genealogy of Bitcoin Wisdom"