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@ BitcoindollarBook
2025-04-29 16:00:19The "Bitcoindollar" system—an emerging term which describes the interplay of U.S. dollar-denominated stablecoins and Bitcoin as complementary forces in the evolving monetary framework of the digital era (and which replaces the defunct Petrodollar system)—has sparked an interesting debate on Nostr with PowMaxi.
You will find the thread links at the bottom of this article.
Powmaxi argues that attempting to merge hard money (Bitcoin) with soft money (the U.S. dollar) is structurally doomed, because the systems are inherently contradictory and cannot coexist without one eventually destroying the other.
This critique is certainly valid, but ONLY if the Bitcoindollar is viewed as a final system. But I never claim that. To the contrary, the conclusion in my book is that this is a system that buys time for fiat, absorbs global demand for monetary stability, and ushers in a Bitcoinized world without the immediate collapse and the reset of the fiat system which would otherwise cause dramatic consequences. The Bitcoindollar is the only way to a gradual Bitcoin dominance in 10-20 years time while avoiding sudden collapse of the fiat system, so that also the power elites who hold the keys to this system can adapt.\ At least this is my hope.
Therefore the "fusion" isn't the future. The siphoning is. And the U.S. may try to ride it as long as possible. The Bitcoindollar system is a transitional strategic framework, not a\ permanent monetary equilibrium. In the end I agree with PowMaxi.
His detailed critique deserves an equally detailed analysis. Here's how the objections break down and why they don’t necessarily undermine the Bitcoindollar system.
1. Hard Money vs. Soft Money: Opposed Systems?
Objection: Bitcoin is a closed, decentralized system with a fixed supply; the dollar is an open, elastic system governed by central banks and political power. These traits are mutually exclusive and incompatible.
Response: Ideologically, yes. Practically, no. Hybrid financial systems are not uncommon. Bitcoin and stablecoins serve different user needs: Bitcoin is a store of value; stablecoins are mediums of exchange. Their coexistence mirrors real-world economic needs. The contradiction can be managed, and is not fatal at least for the transitional phase.
2. Scarcity vs. Elasticity: Economic Incompatibility?
Objection: Bitcoin can’t inject liquidity in crises; fiat systems can. Anchoring fiat to Bitcoin removes policymakers' tools.
Response: Correct — but that’s why Bitcoin is held as a reserve, not used as the primary medium of exchange in the Bitcoindollar model. Fiat-based liquidity mechanisms still function via stablecoins, while Bitcoin acts as a counterweight to long-term monetary debasement. The system’s strength is in its optionality: you don’t have to use Bitcoin until you want an exit ramp from fiat.
3. No Stable Equilibrium: One Must Win?
Objection: The system will destabilize. Either Bitcoin undermines fiat or fiat suppresses Bitcoin.
Response: Not necessarily in this transitional phase. The “conflict” isn’t between tools — it’s between control philosophies. The dollar won’t disappear overnight, and Bitcoin isn’t going away. The likely outcome is a gradual shifting of savings and settlement layers to Bitcoin, while fiat continues to dominate day-to-day payments and credit markets — until Bitcoin becomes structurally better in both.
4. Gresham’s and Thiers’ Law: Hollowing Fiat?
Objection: People save in Bitcoin and spend fiat, eroding fiat value.
Response: Yes — and that’s been happening since 2009. But this isn’t a flaw; it’s a transition mechanism. The Bitcoindollar model recognizes this and creates a bridge: it monetizes U.S. debt while preserving access to hard money. In the long run, my expectation is that naturally bitcoin will prevail both as a SOV and currency, but until then, stablecoins and T-bill-backed tokens serve useful roles in the global economy.
5. Philosophical Incompatibility?
Objection: Bitcoin prioritizes individual sovereignty; fiat systems are hierarchical. They can't be reconciled.
Response: They don’t need to be reconciled ideologically to function in parallel. Users choose the tool that suits their needs. One empowers individual autonomy; the other offers state-backed convenience. This is a competition of values, not a mechanical incompatibility. The Bitcoindollar model is a strategy. It’s a bridge between old and new systems, not a permanent coexistence.
6. Fusion is Impossible?
Objection: It’s only a temporary bridge. One side must lose.
Response: Exactly. The Bitcoindollar system is a transitional bridge. But that doesn’t reduce its value. It provides a functional pathway for individuals, companies, and governments to gradually exit broken monetary systems and experiment with new models.
In the meantime, the U.S. benefits from stablecoin-driven Treasury demand, while Bitcoin continues to grow as a global reserve asset.
Bottom line: A Strategic Convergence, Not a Permanent Fusion
The Bitcoindollar system isn’t a contradiction. It’s a convergence zone. It reflects the reality that monetary systems evolve gradually, not cleanly. Bitcoin and fiat will compete, overlap, and influence each other. Eventually, yes — hard money wins. But until then, hybrid systems offer powerful stepping stones.
Thread links:
Thread started from this initial post.