When Trump spoke at the Bitcoin 2024 conference, he said the United States would become a global leader in cryptocurrency. He also promised that the U.S. government would not sell its existing 213,000 bitcoins, which he considered an important part of the country's strategic reserve.
While this promise may be challenged due to some transaction issues, it brings up an old concept - how countries decide whether to adopt Bitcoin.
Game theory is a tool used to understand competition and strategic decision-making, and can help us understand how countries view the use of Bitcoin. It is particularly suitable for making decisions under conditions of incomplete information. In the context of Bitcoin, game theory can help us understand how countries make decisions on innovation, taxation, adoption, and regulation.
To understand a country’s Bitcoin adoption strategy, we can start with two core concepts of game theory: First Mover Advantage and Payoff Matrix.
First-mover advantage:
If some countries are the first to adopt Bitcoin, other countries may follow suit to avoid being left behind. This is the "bandwagon effect". This effect is driven by the potential benefits of adopting Bitcoin and the risks of not adopting it. In this way, the speed of Bitcoin's adoption will accelerate.
Practical Applications of Game Theory:
In 2021, El Salvador became the first country to announce Bitcoin as a reserve asset and legal tender. So far, they have purchased 5,825 Bitcoins, worth about $394 million.
In May 2024, Wisconsin became the first U.S. state to announce the purchase of Bitcoin. They submitted documents to the Securities and Exchange Commission, revealing that they bought $160 million worth of Bitcoin ETFs for their pension funds. Although this is not a huge investment, it shows their views on Bitcoin and the advantages of being a pioneer.
MicroStrategy is a classic example of first-mover advantage. At the end of 2020, Michael Saylor announced their plan to buy Bitcoin and had already purchased 226,000 Bitcoins, accounting for more than 1% of the world's total supply. Although it was not optimistic at the time, Saylor's foresight allowed them to create huge value for themselves and their shareholders.
Future Outlook:
Trump’s ideas at the Bitcoin conference may or may not come to fruition, but his public mention of Bitcoin and its properties is a sign of victory in itself. We’ve already seen some initial evidence of this.
From a broader cryptocurrency adoption perspective, we see another example of the adoption strategy of dollar-denominated stablecoins and the consolidation of dollar hegemony. There are now 180 fiat currencies in the world, but most of them are not performing as well as Bitcoin. By promoting the use of dollar-denominated stablecoins in economically unstable regions, this will help the United States consolidate global dollar dominance.
Summarize:
2024 may be the year of the main uptrend in this round of bull market. Don't think about the big rise in 2025. It is recommended to focus on the leading positions in each sector. 2025 may be the time to reduce positions and harvest.
Finally, there are still many things that are not written down, such as specific opportunities and specific decisions. These things are often not something that can be summarized in one article.
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