Bitcoin is Now “Fighting the Final Boss” in the Video Game

0. Introduction

This brilliant analogy, made by Bitcoin analyst, Willy Woo, in a recent episode of the popular podcast, What Bitcoin Did, by Peter McCormack, suggests that Bitcoin is now facing the ultimate test in its adoption journey. But what tactics will the “Final Boss” use in this epic battle and will it be a fight to the death, or a slow attritional war?

In Willy Woo’s assessment, El Salvador’s move, in June of this year, to recognise Bitcoin as legal tender, was a crucial trigger in moving the battle for broader adoption to the Boss Man stage. Why? Because, this move calls out the World Bank’s own charter, which allows its loans to be paid back in ‘notes or similar obligations’.

1. Banging at the gates of international power

The World Bank — along with the IMF — is part of the international financial framework created, in the aftermath of World War II, to aid economic reconstruction. Based in Washington, it has evolved into a fundamental pillar of the prevailing monetary system.

So in a sense El Salvador’s move has jumped Bitcoin several levels in the adoption game, moving from localised attempts to win over institutional favour, to banging loudly on the gates at the heart of international financial power. And it seems the Final Boss may have been caught off guard.

Many within the Bitcoin community were surprised by Nayib Bukele’s — El Salvador’s president — move, and the World Bank’s direct reaction was more of a gentle brush-off than violent roundhouse to the head.

The IMF, on which El Salvador relies for loans, was more passive-aggressive in its response:

The IMF spokesman Gerry Rice, may not have been cradling a white cat (Bond Villain style) as he made that briefing, but the thinly veiled threat was clear.

2. The ongoing FUD attacks Bitcoin faces

The World Bank chose to rebuff the approach citing two predictable types of FUD — Fear, Uncertainty & Denial — environmental concerns of Bitcoin mining’s energy consumption, and the facilitating of criminal activity.

Both of these have been widely debated and debunked. In its 2020 Crypto Crime report Chainalysis estimates that less than 1% of crypto transactions are related to criminal activity, while the recently formed Bitcoin Mining Council estimated that “Bitcoin mining’s electricity mix increased to 56% sustainable in Q2 2021”

Though ESG and criminality are common attack vectors used to undermine Bitcoin, they are just two weapons in a growing arsenal that Bitcoin will face in this ultimate fight.

El Salvador is just one of many battlefronts and the World Bank/IMF just two of the many opponents ranged against it.

The Final Boss is in reality, more a Coalition of forces loosely coordinated by a shared agenda — defending the right of the state to create and control money.

3. The Final Boss Coalition

China’s approach to stifling Bitcoin has been to ban the infrastructure, forcing mining operations to shut-down and relocate (as happened in May 2021). But banning Bitcoin is part of a broader aim to wrestle currency hegemony from it’s arch-rival, the US. So there is a multi-dimensional aspect to this confrontation.

The PBOC has led the way in developing a hybrid digital currency, a so-called CBDC — Central Bank Digital Currency — taking elements of cryptocurrency that suit its agenda, particularly around control and surveillance, and trying to beat Bitcoin at its own game. And it isn’t alone.

According to a survey by the Bank for International Settlements (BIS) 86 percent of 65 central banks contacted have carried out research on digital currencies.

Though not directly targeting Bitcoin, the SEC is filing charges against a number of entities for operating as securities or falling foul of its regulation; this is part of a long game seeking to undermine the legitimacy of the wider crypto ecosystem.

In July of this year the EU proposed extending to crypto the FATF (Financial Action Task Force) “travel rule” that applies to electronic money transfers. This would essentially place a heavy onus on exchanges to identify senders and recipients, and — in theory — clamp down on anonymous wallets.

The regulatory pressure from the US is clearly ramping up, illustrated by a recent three-day hearing the Senate Banking Committee which made no attempt to hide its contempt with an open session entitled “Cryptocurrencies: What are they good for?”

Senator Elizabeth Warren had a starring role, churning out yet more FUD and taking a particular pop at bitcoin developers “Crypto puts the power in the hands of a shadowy, faceless group of super- coders and miners”

And in a sign that the Final Boss is just getting warmed up, the US Senate is about to vote on a must-pass infrastructure bill that includes an eleventh-hour provision that would dramatically expand surveillance of the crypto economy.

The latest move suggests that Bitcoin’s confrontation with the Final Boss, the central bankers, isn’t going to be a Pay Per View blockbuster. More likely a slow, attritional wrestling match, with not one, but a number of national and international regulators, governments and central banks, using a variety of tactics to subdue, subvert and pin down Bitcoin, to neutralise its threat, or push it to the margins.

4. Bitcoin’s Unique Antifragility

But Bitcoin is an opponent with unique qualities. Its antifragility means that it thrives under stress. China’s Bitcoin ban cratered hashrate, but mining just moved elsewhere, and is not only recovering, but is less centralised — making the network stronger.

El Salvador chose Bitcoin, because it wants an alternative to the dollar and the expensive remittance cartel, and it seems other countries feel the same. Mexico and Paraguay are rumoured to be looking to join the Rebel Alliance, with several others making inquiries.

Bitcoin’s price suffered during the wave of attacks this year, dropping 50% from All Time High’s, but net accumulation has resumed. Bitcoin doesn’t become a bad idea overnight.

The amazing thing is that it has only taken twelve years for Bitcoin to advance from an idea shared in an obscure mailing list, to challenging the ultimate powers controlling global money. And as a decentralised technology, it has made that progress with no one in charge, but millions behind it.

It may take a little longer to complete the storyline, as the Final Boss has too much to lose, but if history teaches us one thing, the hardest money always succeeds, and in that respect, there can be only one winner.