Topic: Bitcoin and Triffin Dilemma (Read 262 times)

In my opinion, Bitcoin will not actively change some countries, but whether the people of these countries actively choose Bitcoin. Now we are seeing similar facts happening in Venezuela, Zimbabwe and other countries. The people of these countries are actively abandoning their country’s fiat currency, and they choose to embrace Bitcoin. Yes, similar things are happening all over the world. More and more ordinary people are awakening, and Bitcoin has given them a new choice and real freedom.



The current IMF is an important part of the existing world monetary system, and it is also adopting various policies to balance the world monetary system. However, its SDR, like the existing legal tender, is of pure credit nature and has no real value support. Therefore, it cannot fundamentally solve the current economic and financial crises in human society. But Bitcoin is different. It is part of the store of value. At the same time, its issuance is completely decentralized, and there is no force that can be tampered with, so that it may become a truly fair, equal, and free super-sovereign currency.

The IMF already uses some form of supranational currency to make up for the limitations of sovereign currencies.  Keynes proposed a supranational currency called Bancor, and while it was never implemented, SDRs are a close analog and currently in use by the IMF.  It's therefore extremely unlikely that we would see radical change like Bitcoin becoming the standard supranational currency when we have in practice something that already mimics the effects of doing so, and radical change like the kind you talk about will lose out to the inertia of "good enough" every time.

Perhaps one day Bitcoin will indeed become the super-sovereign currency of the world currency and the anchor of the global national currency, but in countries like Venezuela, what can Bitcoin change? I have seen in your previous posts about the bit civilization. Since it is the bit civilization, how can Bitcoin, which has become the anchor of the world, change countries like "Venezuela and Zimbabwe" and how can Bitcoin save them? What?

Not all monetary systems were monolithic or state based. Proof of work has been used by aborigines who fashoined stones into various shapes using hand tools to mint money. We have precursors to modern cryptocurrency PoW from ages past to draw from.

The biggest issue with international reserve currencies is trust. Everyone wants to do business with a nation who can be relied upon to manage their native currency in a friendly, stable and reliable format. This arrangement works over the short term, with everyone being happy. Over time responsible handling of currencies naturally deteriorate. People take for granted basic protections built into the system to prevent catastrophic collapse. They think "things will be different this time" and decide to relax safeguards and deregulate. Lessons of past crisis like the Great Depression are forgotten, opening the door for history repeating itself in a bad way.

Bitcoin being a "trust less" system grants it potential to avoid currency based boom and bust cycles, common throughout history.

Today even metals markets can be prone to high market manipulation. As exhibited by common metals like aluminum having artificial scarcity created in markets through shipping issues deliberately built into supply chain networks. The internet and information ages have opened the door to widespread market manipulation, which were impossible in previous eras. The idea of a gold standard and natural market mechanics guaranteeing some semblance of stability, no longer applies.

Yes, the Triffin Dilemma tells us from an economic point of view that the currency of a sovereign country cannot serve as the world's currency. Sovereign currencies cannot balance the inherent contradictions between intra-country trade and world trade. This system is fundamentally unreasonable and will eventually collapse. Bitcoin has given humans a better choice. The non-sovereign digital currency based on mathematical algorithms is used as the world currency to establish a world currency system centered on Bitcoin. This is the best choice for building a new world currency system in the future.

This requires the U.S. to reduce its trade deficit and even its trade surplus to maintain the stability and strength of the U.S. dollar. Only in this way can the world's confidence in U.S. dollar convertible gold be maintained.
So the problem of whether to control the trade deficit arises.
The Triffin Dilemma shows that the currency of any sovereign country cannot be used as an international solvency monetary system.

The Triffin problem is not complicated. The main contradiction is the transformation of the United States from the largest creditor nation during World War II to the largest debtor nation.

The Triffin Dilemma shows that the currency of any sovereign country cannot be used as an international solvency monetary system.

Bitcoin relies on the underlying technology of the blockchain, immutable, irreversible, decentralized distributed accounting and other advantages, plus the characteristics of Bitcoin.

1. Stable value

2. Rule-based issuance

3. Controllable supply schedule

As Bitcoin gains more users, more people learn about cryptocurrency, use cryptocurrency to trade, and bridge the gulf of thinking of currency as an effective means of payment. Bitcoin is getting closer and closer to its status as a world reserve tool. . This tool has great potential and can really solve the long-standing Triffin dilemma. It is only a matter of time. This is the basic function and meaning of Bitcoin.

The present is certain, but the future is constantly changing. Each of us has our own reserves of knowledge and our own unique insights into the future. Now we don’t have to argue about these uncertain futures, we can leave it to time to deal with. For example, five years later, let’s look at today’s post again. Looking at what stage Bitcoin can develop in five years, I believe the answer will have a certain reference at that time.

I would never confuse the private sector and nation-states in that context, because while it may seem to you that no one thought institutional investors would invest in BTC, it has been the subject of speculation for years. Because they don't care about Bitcoin as such, they invest for profit and nothing more. On the other hand, it is hard to imagine a country buying Bitcoin as its national reserve knowing that its value could fall by more than 50% at any time. After 12 years we don’t have more than 5% of people generally involved in cryptocurrencies, some of which are 100% in altcoins - so at least 95% of all people in the world still believe in fiat - do you consider that a success?



In what world do 20-year-olds control political power and influence anything but the amount of drugs, alcohol, and sex? If people wanted to change the world for the better, then they would have already done so - but obviously it is much easier for them to live like sheep following their shepherd without using their brains at all.

The things you imagine are possible, but realistically not in the next 50 years, or maybe even in this century.


Bitcoin can’t fulfill its purpose without the internet, crypto miners and crypto exchanges - in the event of a global war that would almost certainly be atomic, everything digital would become more or less worthless - haven’t you watched a single movie or series about what the post-apocalypse world looks like?

I understand what you mean, you think my view is too exaggerated, or you think I am looking forward to the future of Bitcoin too good. The political forces in the world are very strong now, and big countries such as the United States, China, or India all have a negative attitude towards Bitcoin. They will not allow Bitcoin to shake the country's monetary system. However, this is where we are using the present vision to interpret the future.

Who would have thought three years ago that a large number of institutional investors would go crazy buying Bitcoin in 2021? So five years later, it is also possible that the central banks of many countries start to reserve Bitcoin as foreign exchange reserves? I prefer to look at today from the perspective of the future, such as 10 years from now, or 20 years from now. After 12 years of development, the Bitcoin network has gained recognition and support from more and more ordinary people, and ordinary working people have begun to say no to legal tender.

Then give Bitcoin another 10 years, what kind of global consensus will Bitcoin develop to? I believe that Bitcoin's consensus must be accelerated. Bitcoin's global consensus will become stronger and stronger. The existing political forces will certainly not allow Bitcoin to replace the existing legal currency, but in my opinion, no one can stop the future trend of Bitcoin.

As I said in the article, the "Triffin Dilemma" described, the existing world monetary system is unreasonable and will definitely collapse. With the massive release of legal tender, a worldwide financial crisis will definitely occur in the future, and the existing world monetary system will collapse at any time. This cannot be prevented by a single political force, it is determined by the laws of social evolution.

When the existing world currency system collapses, a brand new order will be established. At that time, do you think the people will continue to choose fiat currencies? Or to embrace Bitcoin? At the same time, 10 years later, today's young people have gradually grown up. They have begun to control political power. At the same time, they are also Bitcoin supporters. Will these young people who have grown up promote the establishment of laws that support Bitcoin? Everything is possible in the future. Let us not let the difficulties we face today constrain our imagination.


This is also a great idea. If a new world war occurs and the Internet infrastructure is destroyed on a large scale, which currency system will be destroyed first? In my opinion, the fiat currency system must first collapse. Legal currency will depreciate extensively. If a country is defeated, its currency may really become waste paper. And Bitcoin will, like gold, first become a safe-haven asset. A large amount of wealth will be stored in the form of Bitcoin. Similarly, even if there is a worldwide war in the future, it will be difficult to eliminate the Internet 100%. In extreme network situations, the Bitcoin network can also exist independently of the existing Internet.

You don't stand firmly on the ground, and you live in one of your fairy tales and imagine things that are actually impossible. Bitcoin as a decentralized value system will never be able to become what you imagine, because if you haven't noticed China and the US as the world's leading powers have a completely negative or partially negative opinion when it comes to Bitcoin - and it's no different with India or the EU.

Bitcoin may be an alternative to the existing financial system, but it will certainly not replace it - after all, every country is stable and strong as much as, among other things, its national currency is strong. If you think it’s possible for 200+ countries of the world to agree on something, then you really have no idea about politics.


What if a new world war happens, if the internet infrastructure falls and we go back a hundred years to the past? You think only in one direction, and you don't take into account that the systems you claim will be replaced in 10 or 20 years have their roots hundreds of years in the past.

Thank you for your wonderful reply. I mentioned in my previous article that I have been immersed in the learning of Bitcoin for the past three or four years. As I learn more knowledge, the more I discover the greatness of Bitcoin. So as to become a true Bitcoin believer. I am now recording my in-depth thinking about Bitcoin in the past three or four years. Because my original thinking was fragmented and unsystematic. When I record these fragmented thoughts into words, they will form systematic knowledge. I will record this knowledge to share with you, so that I can force my own growth. I will start my own blockchain project in the next one or two months. Time is very precious. So use this limited time to try to write as many articles as possible before starting my new business.

Whether it is the Bretton Woods system or the Jamaican currency system, history has proven that the sovereign currency of any country cannot become a world currency or a super-sovereign currency.

I have a few questions:

First, what is the nature of world currency? The essence of the world currency or the world currency system is an open, fair and perfect trust system, which is the same between people and countries.

Second, what is the meaning or purpose of world currency? The meaning and purpose of the world currency is to balance the interests of countries. The country cannot die. Don’t test human nature. If you get the answer, it’s imbalance. If the country’s desires are not realized, there will be wars, economic crises. U.S. dollar is a realistic example. All the activities of the U.S. government are for the U.S. dollar.

Third, whose hands should the world currency be in? (Sovereign countries are also controlled by individuals or teams)No sovereign country’s currency can become the world’s currency. This is a law, because all countries will take self-interest as the fundamental starting point. Don’t question it, just like what the President of the United States said.

The essence and premise of currency is trust, so how to rebuild a new trust system?

Bitcoin perfectly explains how to rebuild trust, a decentralized, peer-to-peer electronic cash payment system, an open, transparent, non-tamperable, irreversible, and distributed accounting method. These are the basis for building trust, which is the Bitcoin consensus.

Despite the difficulties now, the long road is long. But under the premise that the Bitcoin Forum and the global consensus are getting stronger, this day will come and Triffin’s dilemma will be broken.

There is only one reason. Bitcoin gives us a super strong certificate of trust, without the approval of any sovereign state or institution.

Give the author an opinion. What is the purpose of your frequent posting? I don’t feel like you are simply stating your point of view, for the sake of merit or to become a legend? However, I still hope you bring some valuable posts.

In fact, Triffin himself wanted to use the Triffin Dilemma  to criticize the gold standard system and the pound-gold standard system, not the Bretton Woods system. But this does not prevent Triffin from perfectly predicting the collapse of the Bretton Woods system.

The Triffin Dilemma warns us: The system that relies on the currency of a sovereign country as an international currency will inevitably fall into the Triffin Dilemma and collapse.

 Regardless of whether this currency can be exchanged for gold, no matter which country’s currency the currency is.
 Regardless of whether this currency is a national currency or an average of several national currencies, this will undoubtedly have an important enlightenment for our analysis of the future development of the international monetary system.

What we care most is always the future of Bitcoin. Will Bitcoin be a universal currency recognized by all countries? My answer has always been yes. My view is that Bitcoin will not only be recognized by each government, but become a true super-sovereign currency, anchoring the entire economic and financial system of human civilization.

As young people of the time, most of us were born under the current monetary system. Currencies are issued and guaranteed by governments without the need to be anchored with any precious metals. They can be released free from restriction. Used to this institution, we would instinctively believe that currency should be launched and controlled by the government, exploiting our ability to say no to the legal tender that continuously steals our wealth.

But everything changed the moment Bitcoin got delivered . As Bitcoin gathers growing consensus, more and more people are beginning to realize its nature. Bitcoin can truly enable us to achieve freedom in wealth, thought and personality. We can store our wealth without being controlled by any centralized organization, nor can any power freeze or plunder it. We accomplished freedom, our heart gained freedom and soul breathed the freshest air. We are now living under the free sky thanks to Bitcoin.

Meanwhile, as I said earlier, please don't think the contemporary monetary system reasonable and justified since the currency system in the past half century, when the currency is of pure credit, the launch of currency has no any precious metals as support and a single sovereignty currency functions as the world currency, is the most unconscionable years in the history of human civilization.

In fact, since ancient times, the global currency system is of super-sovereign. Silver standard and gold standard both have precious metals as evaluation. Wealth means silver and gold, not printed money or bank account. At the same time, if the world currency is linked to the sovereignty of a country, then the power would dominate all others to maximize the seigniorage, damaging the whole system.

My point is, the world currency should be of super-sovereign, not any sovereign currency of any country. Bitcoin was born to become a world currency that transcends sovereignty. That is determined by the nature of Bitcoin and in line with certain economic logic. In order to better understand that, let's think about why did the Bretton Woods system disintegrate?

With respect to the issue, maybe a famous case, Triffin Dilemma, can help us understand the economic foundation of Bitcoin's becoming the world currency

wiki:https://en.wikipedia.org/wiki/Triffin_dilemma
Triffin Dilemma was put forward by American economist Robert Triffin in 1960, when the USD was experiencing a series of crises under Bretton Woods system. At that time, USD was not pegged to gold but to currencies of other countries. To develop international trade, all countries had to use USD, the core international currency, as the settlement and reserve currency. Which rendered USD flow out and become the foreign exchange reserves of other countries. That created a chronic deficit for the balance of payments of the United States. However, the prerequisite for USD to serve as the core of the international currency is to maintain the stability of USD, which in turn required the US to be a country with a long-term surplus in international trade balance. These two demands are contradictory and therefore a paradox called Triffin Dilemma.

WWII changed the entire world economic structure tremendously. The US became the world’s largest creditor with the greatest economic strength, signed the Bretton Woods Agreement in 1944 and established Bretton Woods monetary system——an international monetary system with USD as the central currency of the international reserve based on gold, thus ensured USD's status as the world currency. The existence and operation of the Bretton Woods ended the chaos in the international monetary and financial field, made up for the lack of solvency in the balance of payments, and greatly promoted the progress of international trade and the world economy. Nevertheless, this system of using the currency of a sovereign country as international reserve asset has an inherent insurmountable contradiction: member states other than the US must rely on the support of the US’s international payments to continuously maintain a deficit and increase their international reserves by means of importing USD. This is bound to affect the credit of USD and shake its status as the most important international reserve asset. On the contrary, if the US wants to remain its international balance of payments and stabilize USD, the increase of other countries’ international reserves is certainly a problem, which will result in insufficient international solvency and harm international trade and economic growth.

That is Triffin Dilemma. Based on this, Triffin predicted that the Bretton Woods system would unavoidably fall apart and it really did ten years later. The essential implication of the dilemma is: the demand for international solvency cannot be met for a long time relying on the output of the international currency deficit. That is to say, the sovereign currency of any one single country is not suitable for functioning as the world currency.

When the Bretton Woods system is over, the Jamaican system centered on USD with multi-reserve and managed floating exchange rate began to establish, which is also the main currency system in our society. Achieving diversification in international reserves to some extent, it still cannot fundamentally solve that problem particularly when sovereign currencies start to decouple from gold, entering the era of pure credit currency. The issuance of legal tender expelled the anchor of value, and the world monetary system completely moved into disorder.

The radical imperfection of Bretton Woods system and Jamaican currency system alike is: USD is not only the sovereign currency of a country, but the world currency. Its launch must take both the domestic monetary policy of the US and the overall economic structure of the world into consideration. This is a kind of contradiction, which gave rise to constant crises of USD.

Triffin Dilemma warns us that a monetary system that depends on the currency of a single sovereign country as its only tool in international liquidity will undoubtedly be trapped into Triffin Dilemma. And if we want to set a stable international settlement and currency system, super-sovereign currency is required to handle financial and trade settlements among countries in a fair and just manner. It cannot directly act as a single sovereign currency to participate in specific economic affairs. Briefly, it cannot be both an athlete and a referee.

Now maybe you'll understand why Bitcoin is the best choice for super-sovereign currency. The basic mission of Bitcoin is to become a world currency and an anchor in the economic and financial order of the entire world from the moment Bitcoin was created. It can naturally replace gold and become digital gold. In the end, we will gain a new global currency and financial system with Bitcoin as the kernel. Of course, that could be long, maybe ten or twenty years. But it will certainly come.