What the first U.S Senator to own bitcoin has to say about it

U.S senator Cynthia Lummis is a United States Senator from Wyoming and is passionate about enacting change in the U.S and global financial system. Before becoming a Senator, Cynthia served as a state Senate, state representative and state treasurer. In a recent interview with Anthony Pompliano, Cynthia provided an in-depth explanation as to why she believes bitcoin should be part of every individuals investment portfolio.

Cynthia explains that for every blue-collar worker, saving cash can be a pitfall because the dollar is “designed to be worth less every year”. When hard working individuals reach retirement, their purchasing power and nest egg will be eroded away through inflation. Cynthia concludes that what the U.S financial system needs is a mechanism for capturing and storing the value of hard work. This would enable us to cash-in on our work for a fair value in the future when we are older and need it most.

A self-described “fiscal hawk”, Cynthia describes her dismay at the United States’ handling of the mounting debt problem (currently over $27tn) [1]. To pay off this debt, it makes sense for the United States as the worlds global reserve currency to leverage inflation of the dollar so that over the long-term it’s repayment in real terms is less, despite the nominal debt obligation remaining the same. Unfortunately, this significantly impacts those who are working hard to save money as asset prices increase and incomes stagnate.

Cynthia doesn’t think that bitcoin is all we should own, but that everyday workers should be given the access and opportunity to buy and hold bitcoin as part of their investment portfolio. Cynthia goes on to say that investors may also want to hold S&P500 stocks, index funds and other income producing and growth assets as part of their portfolio. Cynthia sees bitcoins’ role as a store of value and this is something that the technology enables it to do uniquely well due to its finite supply of 21 million coins.

Asked about how she avoids getting ‘tuned out’ by her colleagues as the bitcoin person, Cynthia explains that they are forming a financial innovation caucus in the senate as a springboard to educate other members of the senate and politicians more broadly about the use cases and innovation happening in the financial sector.

One of the key areas to better understand and indeed an area of criticism of cryptocurrencies is with regards to its use as a technology to launder money. Cynthia is quick to point out that there are emerging capabilities from companies like Chainanalysis which show the proportion of transactions used for criminal activity is ~1% on the blockchain. Cynthia concedes this is an issue that needs to be solved for, however, using blockchain might just be the best way to do it. Indeed, as every transaction is recorded on a publicly available ledger, using cryptocurrency isn’t really a good money laundering tool at all.

Excerpt from Chain Analysis 2020 Crypto Crime Report:

“Nonetheless, cryptocurrency’s decentralized, semi-anonymous nature makes it a uniquely appealing option for criminals, and their embrace of the technology has helped shape its overall reputation. But the upside is that unlike cash and other traditional forms of value transfer, cryptocurrency is inherently transparent. Every transaction is recorded in a publicly visible ledger. With the right tools, we can see how much of all cryptocurrency activity is associated with crime, hone in on the types of crime that dominate the ecosystem, and share insights with law enforcement and the industry to curb its impact and stop bad actors from abusing the system and, in many cases, taking advantage of vulnerable people”.

You can find out more about Cynthia’s thoughts here and access more interviews by Anthony Pompliano on his youtube channel here.