Hegemony in the Head
Obi Nwosu is the CEO and co-founder of Coinfloor, the UK's longest-running Bitcoin exchange. He has over 20 years’ experience building online marketplaces and bringing virtual currencies to tens of millions of people. Obi writes The Road to Bitcoin Hegemony, a weekly recap of some of the most impactful developments in Bitcoin.
Hegemony in the Head
Professors and practitioners of geopolitics have long been debating which civilization will replace the West as the world’s hegemon. But if you told these scholars that the challenge to the West would come from what we patronizingly used to call the Third World, they would shake their old, learned, respectable bald heads and tell you you’re living in fantasyland.
That didn’t stop me predicting in December that the global South represents the most vigorous and dynamic challenge to the dominance of the rich North (for which read: the West).
If you thought my New Year’s forecast was fanciful, then new figures on crypto adoption in developing nations should give you pause for thought. Last week the World Economic Forum revealed that a third of Nigerians either own or are using cryptocurrencies, which—let me tell you from my own experience—means almost exclusively Bitcoin. Meanwhile, more than one in five Vietnamese and Filipinos are using crypto.
Compare that to a paltry six per cent in the United States, five in Germany, and just four in tech-mad Japan.
I’ve talked before about the attraction of Bitcoin in developing countries which suffer from economic and political turmoil. If you live in a country with rampant inflation, decrepit or unreliable banking infrastructure, or where an authoritarian state can freeze your bank account on a whim, the driver for Bitcoin adoption is less about getting rich than it is about protecting your financial assets.
But the precipitous rise in Bitcoin adoption shouldn’t be seen as a “local” phenomenon. In developing countries, led (I’m proud to say) by Nigeria, we’re on the cusp of the 51% revolution. And that has implications that no one, not even the West, can ignore.
This revolution won’t be an attack on blockchain, as we’d see in a hypothetical 51% attack, but in people’s minds. When half of the population is using Bitcoin, we won’t just pass an economic milestone, but burst through a psychological barrier: a Hegemony in the Head.
Where Bitcoin is the predominant means of holding wealth, where friends and neighbours shake their heads at you for continuing to transact in the Naira or Dong, it becomes so firmly established that government attempts to ban it become irrelevant.
And this Hegemony in the Head is reinforced whenever people dip their toe into the water. Say a relative abroad convinces their family to receive remittances in Bitcoin to avoid the 10% fee on international money transfer. If the recipients can’t immediately cash out the $100 in bitcoin their relative sent, they might find that this has grown to $120 or more in the space of a few days.
This quiet revolution in the developing world is taking place at the same time as major investors and corporations like Tesla and Oracle are backing the ?. People in Nigeria and Vietnam read the news too, and they have more interest in learning how to protect their wealth than we in the (so far) “stable” West.
And remember, the surge towards Bitcoin in these countries has occurred without the Bitcoin ecosystem of exchanges, advertising, and education on which adoption in the West relies.
For 500 years or more, the West has been dishing out lessons to the rest of the world, preaching the superiority of its values—including its financial system. What we’re witnessing is a revolutionary shift in the direction of education. It is becoming harder to ignore Bitcoin adoption in the rest of the world, especially when these countries’ diasporas, living over here, are rejecting established financial networks and institutions in favour of a better system.
In the battle for monetary supremacy between the defenders of fiat and the advocates of Bitcoin, I predict the countries whose citizens can effectively protect their wealth first will be the global winners. And that should set the wise old heads of foreign affairs rethinking who will be the true hegemons of the 21st century.
Three Wise Men
While I praise the wisdom of Bitcoin investors in developing nations, the same smarts are evident here in the West, even if adoption numbers don’t begin to match those in Nigeria, Vietnam and the Philippines.
You’ll all remember that MicroStrategy was one of the first major corporates to back Bitcoin back in August, and earlier this month its CEO Michael J Saylor said that 2021 was “the year of institutional investment” after Tesla took its stake. Last week it was MicroStrategy’s turn to stun the markets again, announcing a cash call for $600 million so that it could add to its existing Bitcoin holding. As demand for Bitcoin surged, this amount was upped throughout the week, ending at a barely credible $1.05 billion.
The news came at the same time as BlackRock gave its clearest endorsement yet for the Orange gold. In December I wrote about how Larry Fink’s admission that Bitcoin had caught the public imagination; last week, the asset manager’s Chief Investment Officer, Rick Rieder, told an interviewer that BlackRock had “begun to dabble” in it. When you have more than $7 trillion under management, we can only speculate about the extent of BlackRock’s “flirtation” with Bitcoin.
And to complete the trinity, on Tuesday, New York Digital Investment Group’s CEO, Ross Stevens, announced that they had filed for a Bitcoin ETF.
These three wise men, Saylor, Rieder, and Stevens, are bearing their shareholders a more precious gift than myrrh, frankincense, or even gold.
From the world’s biggest businesses looking for profit, to citizens in the developing world seeking control of their financial future. From east, west, north and south, Bitcoin’s global hegemony has become relentless, unignorable, ubiquitous. Buckle up: we’re in for the ride of our lives.