Would Hamilton Buy Bitcoin?
Mar 12, 2018 Emily Lewis, Thinker, Drinker, and Finance Tinkerer
Hamilton: An American Musical is still dazzling the entire world, and, while the show knocks socks off and teaches people about the shaping of the USA, a few burning questions were overlooked.
Namely: What would Alexander Hamilton make of Bitcoin, Ethereum, et al.?
Okay, so that wasn’t on my mind when I was in “the room where it happens” but it’s high-time to ask the critical questions.
A “young, scrappy, and hungry” politician - served as George Washington’s advisor and the first Secretary of the Treasury. Hamilton architected the Bank of New York to start in on Empire State debts then clawed his way through Congress to establish the Bank of the United States for a national economy.
An enigmatic infant market entity with Greek Firepower. It feeds off government distrust and intentionally has no center or intrinsic value.
The Issue On The Table
Creating prosperity. Do we bolster an institution led by a central authority and backed by tangible assets, or buy into a system that garners success from nobody trusting anybody, and supports returns reflexively?
The Bank of the US, Hamilton’s brainchild, was born in an idealism-fueled time of unsurpassable leadership. Under Washington, it was okay to trust the government (weird, right?). More importantly, the revolution was expensive, and the United States were still rebel backwater. Foreign trade wasn’t smooth sailing.
None of the states could survive alone economically, and Hamilton decided that meant they should put all of their financial eggs in one bank-y basket to create viability. This was fine, except that some states were in a lot of debt. Wealthy states would have to enter into debt to make the plan work, and wealthy states tended to have wealthy people who did not want to pay taxes on their assets, which was a cornerstone of Hamilton’s plan to repay nationalized debt. And so the rift became legislatively locked horns, and the feud became a musical. The usual.
Cryptocurrency is virtually Hamilton’s denouement. Notably, it isn’t trying to settle debts but starts from zilch and booms to zeros. Also, we have 242 years of experience with our government and national economy, and boy is it vulnerable. A crash in one sector can wipe the rest out. Cryptocurrency relies on a network of peers to hold integrity and has blossomed on individual responsibility rather than strong backing. Since it works only with itself, it isn’t as susceptible to other market slumps (or government crises). Since you can’t point to something like a bank and say “there’s my crypto!" it wouldn’t quickly fall to corruption. The system is so spread out that nobody can control Cryptocurrency. Seriously, try it.
There are probably localized earthquakes at Trinity Church when the “Ten-Dollar Founding Father” rolls in his grave. While cryptocurrency fits modern suspicion and individual power, it doesn’t perform towards Hamilton’s goal of creating a wealthy Union. And unbacked currency always blows up in holders’ faces, as Alexander Hamilton would probably explain in a few of his 51 oppositional essays.
Hamilton: An American Musical, by Lin-Manuel Miranda.