Trump Says Bitcoin (BTC) Not Money, Blasts Facebook’s Libra Cryptocurrency, Claims US dollar Stronger Than Ever — Despite Losing 36% of Its Value Since 1999

July 12, 2019 / by Zachary Mashiach

US President Donald Trump launched an attack Thursday on Bitcoin (BTC) and cryptocurrency in general in a series of three tweets. 

In the first, he derided Bitcoin (BTC). Then he blasted Facebook’s Libra cryptocurrency. Finally, Trump declared that the US dollar (USD) the only real currency, saying it is stronger than ever.

It’s important to note that, since this tweet storm, Bitcoin (BTC) has risen $400, so it has either had no effect on Bitcoin’s (BTC) value or Trump joins CNBC in being a contraindicator for crypto. 

Trump starts his attack on Bitcoin (BTC) by saying that it is not money, nor is any other cryptocurrency. Yet Bitcoin (BTC) can be sent anywhere in the world instantly to buy literally any good or service. There is an expansive network of 5,000 Bitcoin (BTC) ATMs, allowing Bitcoin (BTC) to be bought and sold for fiat, so Bitcoin (BTC) can be used to pay for anything. 

A Google search for the best definition of money says:

Money is any good that is widely used and accepted in transactions involving the transfer of goods and services from one person to another.

Bitcoin (BTC) certainly meets the criteria to be considered money.

Trump then says Bitcoin’s (BTC) price is based on thin air. The reality is Bitcoin (BTC) has value since it can be sent anywhere in the world instantly, and it is decentralized so it cannot be frozen or reversed. Also, Bitcoin (BTC) cannot be printed at will and is long-term deflationary as opposed to fiat currency that continuously loses value due to money printing. 

That’s why people want Bitcoin (BTC). They want control of their own money, never having to worry about it being frozen or reversed, and Bitcoin (BTC) is a good safe haven against fiat inflation. This fuels demand for Bitcoin (BTC), which gives it value. 

Finally, Trump finishes his attack on Bitcoin (BTC), saying it is used for illegal activities like the drug trade. But blockchain analysis firm Elliptic found that less than 1% of all Bitcoin (BTC) transactions are associated with illegal activity. Aside from that, since the US dollar (USD) is the most dominant global currency, certainly there is far more illegal activity facilitated with US dollars (USD) than Bitcoin (BTC). 

“Although virtual currencies are used for illicit transactions, the volume is small compared to the volume of illicit activity through traditional financial services,” said Jennifer Fowler, deputy assistant secretary for terrorist financing and financial crimes at the US Department of the Treasury.

His next tweet focused on Facebook’s Libra cryptocurrency, which has not launched yet. 

As we discussed in an episode of The Crypto.IQ Daily Radio Show, Libra is an attempt by Facebook and other corporations to create their own sovereign global currency and their own central bank. It is no surprise that Trump is against Libra, calling it undependable and disreputable. This is because Libra would threaten the US dollar’s (USD) power, and therefore would threaten the power of the United States. 

Trump likely has a valid point about Facebook needing to obtain a banking charter in order to operate the Libra cryptocurrency network. Aside from what Trump says, due to the centralized nature of Libra, Facebook will have to satisfy every regulator in the world. That would likely severly restrict Libra and include the possibility that it never launches thanks to thick red tape. 

Just like Libra, Bitcoin (BTC) threatens the power and dominance of the US dollar and the United States. The difference is Bitcoin (BTC) is decentralized, so the government cannot stop it or change its network via regulations. So Bitcoin (BTC) is probably an even bigger threat to the US dollar (USD) than Libra, which likely explains why Trump would attack Bitcoin (BTC).

The final message in Trump’s tweetstorm talks about the supposed strength of the US dollar (USD). 

Trump says the US dollar (USD) is the only real currency in the United States, but that’s false. Every foreign fiat currency can be effectively used in the United States via currency conversion services. Those include the Euro (EUR), Japanese Yen (JPY), Chinese Yuan (CNY), and Swiss Franc (CHF), among many others. Also, gold, silver, other precious metals, various commodities like oil, Bitcoin (BTC), and numerous cryptocurrencies are real currencies and used as such within the United States. 

Trump says the US dollar (USD) is stronger than ever, when it is, in fact, weaker than ever. Due to money printing, the US dollar (USD) loses value long term. This inflation is captured by consumer price index (CPI) statistics that show the cost of a basket of goods through the years. Since 2010 the US dollar (USD) has lost 17.5% of its value, since 1999 the US dollar (USD) has lost 36% of its value, since 1989 the US dollar (USD) has lost 53% of its value, since 1979 the US dollar (USD) has lost 73% of its value, and since CPI statistics started in 1913 the US dollar (USD) has lost 96% of its value. 

These statistics make it obvious why people would choose to hold Bitcoin (BTC) rather than the US dollar (USD). The US dollar (USD) is continuously losing value long term, while Bitcoin (BTC) is skyrocketing in value long term, rising from less than $0.01 in 2009 to over $10,000 currently. 

All that puts Trump’s anti-crypto tweet storm in a different light than he probably expects. It is riddled with falsehoods and is likely a response to the increasing power of Bitcoin (BTC), which may ultimately threaten the power of the US dollar (USD). The fact that a sitting US president is threatened enough by Bitcoin (BTC) to publicly talk about it is actually a bullish sign.

Indeed, as we’ve already said, Bitcoin (BTC) has risen $400 since Trump’s tweets yesterday evening. 

Maybe he should tweet more.