Money in the Bank is not yours
A follow up to how bitcoin could solve the nuclear stalemate
Since the start of 2022 Canadians and Russians have learned that their wealth can be wiped out (frozen) by governments and opposing central banks at the push of a button.
In Canada, anti vaccine mandate protestors (and their friends and family) had their bank accounts frozen by the government after emergency powers were invoked which allowed the freezing of private and corporate accounts without a court order.
In Russia, the Russian central bank has had its assets frozen, making it impossible to process international transactions. Additional sanctions have been levied against Russia and every man and his dog has been virtue signalling their opposition to Russia by shirking all ties with the place:
Sainsbury’s rebranded their Chicken Kiev’s to Chicken Kyiv in support of Ukraine. They also pulled all Russian Vodka’s
The International Cat Federation has banned Russian breed cats from competing in their shows
Milan University discussed banning lectures on Dostoevsky (a famous Russian author). They have since backtracked on this decision
It’s still early days in 2022 and the geopolitical environment is already pretty tense. Covid has finally been replaced in the corporate press with the Ukraine war while the protests in Canada appear to be largely over. Both events have had some serious financial power moves. Let’s take a look.
Canada
During the Trucker protests the Canadian Government invoked emergency powers (designed for war time) to tackle the protestors. These powers included the ability to freeze company and personal accounts without a court order.
The Canadian government froze more than 200 bank accounts holding over $7.8m Canadian Dollars. Frozen accounts belonged to known activists and some financial supporters. Accounts are now apparently in the process of being unfrozen.
The Takeaway: If the Canadian government does not like you, they can freeze your assets and prevent you from accessing your wealth. Does the governments absolute control over everything in your bank account increase or decrease the value of that money?
Ukraine
Russia invading Ukraine has kicked off a monumental sh*t storm and we have been able to watch a lot of the action online courtesy of social media. The West is supporting Ukraine by providing weapons and supplies. Western troops appear to be staying out of the conflict to prevent the war escalating out of control.
Instead of ‘boots on the ground’ The West has been supplying Ukraine with training and equipment whilst also unleashing the most savage financial sanctions on Russia in history. In the UK over a thousand individuals will have their UK assets frozen which means no UK citizen or company can do business with them and they are also banned from travelling to or from the UK. Other countries are taking similar steps.
What Does This Mean for Bitcoin?
While Bitcoin can help a lot of people it is unlikely the Russian Oligarchs will use it to circumvent the sanctions. All transactions are public and all big transactions are monitored by hordes of cyber hornets online. Also, the sanctions affect the exchanges that act as gateways to the crypto network and you can bet your bollocks at the barn dance that any exchange helping oligarchs circumvent sanctions are in for a world of legal and reputational trouble.
We don’t know whether Bitcoin has been of any use to the Russian elite avoiding sanctions. We do know that Bitcoin has provided financial support to Canadian protestors who had their assets frozen. The Canadian authorities were able to seize some Bitcoin from protestors who were storing their Bitcoin on an exchange (let that be a lesson) but these seizures were trivial compared to the amounts raised. Reports on the use of Bitcoin during the Canadian protests are pretty vague which suggests that authorities don’t know what’s going on.
How could this play out.
Bitcoin is a global payments system that recognises no government not any borders. Government control over your Bitcoin is limited to what you have on public exchanges. Once you take personal custody they cannot stop you making transactions or spending it however you like. While their transaction trail is public for everyone to see there is nothing anyone can do to stop you using your Bitcoin.
If Bitcoin continues to grow we will see the financial might of governments begin to fade as they become increasingly incapable of manipulating the money markets to pay for their election pledges. Eventually they may be forced to live within their means and spend only what they can tax.
We live in interesting times
Until Next Time
The Wealth Gap Team