Bitcoin's future has never looked so ambiguous

Bitcoin's future has never looked so ambiguous. On the one hand, the U.S. is creating a strategic Bitcoin reserve; on the other, many prominent supporters of the first cryptocurrency are concerned that the project is moving away from its roots.

The future of Bitcoin has never looked so ambiguous. On the one hand, the U.S. is creating a strategic Bitcoin reserve. On the other, many prominent supporters of the first cryptocurrency are concerned that the project is moving away from its roots.

Jack Dorsey: "If #bitcoin ends up being just digital gold, I think it has failed."

Jack Dorsey, founder of Twitter and a well-known Bitcoin enthusiast, stated earlier this year that if Bitcoin becomes simply a form of "digital gold," the project could be considered a failure. A national Bitcoin reserve may be good for the state, but I'm not sure it's good for Bitcoin itself.

Dorsey is convinced that Bitcoin needs to return to the original concept described in the white paper and work towards becoming a form of peer-to-peer cash that can be used around the world – only then can the project succeed.

Closed-loop Bitcoin economies vs. Wall Street

Around the world, "closed-loop Bitcoin economies" – localized economic systems that use BTC as currency – are being created to demonstrate the viability of the cryptocurrency and show what the future of Bitcoin might look like.

The Bitcoin Federation defines the closed-loop Bitcoin economy as "a localized economic ecosystem where Bitcoin is used as a medium of exchange, a unit of account, and a means of preserving value." There are places where Bitcoin fulfills all three functions of currency in the usual sense.

Such communities are scattered around the world, but they are united by the belief that Bitcoin is a superior form of money that should be used "as a means of payment for goods and services and to settle other financial obligations."

This approach differs significantly from the prevailing attitude in the United States, where crypto-enthusiasts view Bitcoin as a reserve asset to be hoarded – a kind of digital gold. President Donald Trump, at a Bitcoin conference in Nashville in July 2024, bluntly stated, Never sell your Bitcoins.

In a lecture at the Bitcoin Policy Institute on March 17, Strategy CEO and Bitcoin maximalist Michael Saylor compared the digital currency to an investment asset. In his view, a significant hoard of Bitcoins would allow the US government to establish dominance in the digital economy, similar to how it expanded its territory and influence in the 19th century under the banner of manifest destiny.

Manifest destiny was a 19th century U.S. concept and political doctrine that Americans had a historical right and even divine destiny to expand their territories and spread their values across the North American continent, an ideological rationale used to justify U.S. territorial expansion.

The golden mean – inevitability of acceptance by states

There's no denying that the mass adoption of Bitcoin by countries like the US does indeed distance the cryptocurrency from its founding principles. But that's the paradoxical beauty of Bitcoin – it's created equally accessible to everyone, even potential opponents of the seed itself.

The adoption of Bitcoin by governments was inevitable from the beginning. If there was a way to prohibit governments from using Bitcoin, it would go against the most fundamental principle of cryptocurrency – to be money that doesn't require anyone's permission.

That said, the Bitcoin community has a set of core values that promote the adoption of cryptocurrency at a grassroots level, not as state charity. Bitcoin is now at a stage of development where it is more important to think about how it is accepted rather than whether it is accepted at all.

Closed-loop economies are crucial to creating a future where Bitcoin is owned and used by ordinary people, not just stored as a pure asset in the digital vaults of big banks and governments.

The benefits of Bitcoin adoption by governments cannot be overlooked. Adoption in a large country like the United States could have a positive effect, given that many view the United States as a benchmark in the financial world. Plus, the adoption of Bitcoin by the U.S. will raise awareness of the first cryptocurrency, which will benefit the entire network and have a beneficial effect on closed-loop economies around the world.

What is Bitcoin doing within the closed-loop economy?

Closed-loop Bitcoin economies are present all over the world. They are especially prevalent in developing countries where the local currency is unreliable as a store of value.

In Cuba, where inflation is galloping and wages are unbearably low, Bitcoin and closed economies have allowed locals to protect their savings.

In rural Peru, where most people do not have bank accounts or access to financial services, Bitcoin has provided a way for locals to save money and pay for school and daily expenses.

However, there are also challenges. In particular, Bitcoin's notorious volatility makes it difficult to promote it as a savings instrument in rural communities. Such exchange rate volatility makes it challenging to explain to rural residents, especially in developing countries, why they should entrust their funds to an asset whose value can change dramatically in a short period of time.

Bitcoin communities also face challenges in expanding beyond the group of existing expats and enthusiasts. Bitcoin supporters flocked to El