Peg USD to Bitcoin

An open letter to Elon Musk and the Vick Ramaswamy, Co-directors of the new Department of Government Efficiency (DOGE):

With Bitcoin approaching $100,000 USD, as a lover of the freedoms we have in the US, believer in the original vision of our founders to have a small federal government, co-founder of the South Carolina Emerging Technology Association , and a Fellow of the School for Information Sciences, Entrepreneur-in-Residence for the College of Mass Communications, mentor of the Entrepreneurship program in the Darla Moore School of Business at the University of South Carolina , formerly teaching blockchain, cryptocurrency, decentralization, and data privacy, I had to write up an idea I've been mulling around awhile.

Pegging the US Dollar to Bitcoin

and Reimagining Our Monetary Policy

For over a century, the Federal Reserve has been the linchpin of the United States' monetary system, attempting the management of inflation, employment, and financial stability for the US and the World. I believe the time is done for the FED and I see Elon and Vivek figuring it out how to get it doing!

With the emergence and continued success of Bitcoin and blockchain technology, we are presented with an unprecedented opportunity to rethink our economic architecture. By pegging the US dollar to Bitcoin and dismantling the Federal Reserve, we could establish a decentralized, transparent, and tamper-resistant monetary system that aligns with 21st-century innovation without central control.

The Case for a Bitcoin Peg

A monetary peg is not a new concept; the gold standard operated on this principle, where the dollar’s value was tied to gold.?The United States was on this de facto gold standard from the 1830s.?While the gold standard ensured some level of monetary stability, it was abandoned in the 1930's as the Federal Reserve emerged as a powerful force in the US economy (and Washington politics). Due to its rigidity and inability to accommodate dynamic economic needs as viewed by the administrations of Roosevelt and Nixon, the gold standard was abandoned creating the fiat USD we have today.

Bitcoin, alternatively, offers the potential for a modern, adaptable monetary anchor for today's world of chaos and instability due to economic and military wars.

Here’s Why

Bitcoin provides a fixed supply capped at 21 million coins, making it inherently deflationary. Unlike fiat currencies, which can be printed at will by a government, Bitcoin’s supply is "scarce." It is governed by mathematical algorithms and a decentralized consensus mechanism. Pegging the dollar to Bitcoin would impose fiscal discipline and curb inflationary pressures stemming from excessive money printing.

Bitcoin is increasingly recognized as a store of value and medium of exchange to the world. Major corporations, financial institutions, and even governments are integrating Bitcoin into their financial systems. A Bitcoin peg would align the dollar with a globally accepted asset, enhancing its competitiveness and stability in an increasingly interconnected world.

The blockchain underpinning Bitcoin is an open, transparent ledger. This feature would mitigate the opacity (transparency) often associated with central bank operations, fostering trust and accountability in monetary policy.

Unlike fiat currencies, Bitcoin operates beyond the control of any single institution or government. This decentralization protects it from political interference and market manipulation, creating a neutral foundation for a stable monetary system.

Strengthening the USD Against Geopolitical Challenges

One of the most pressing economic and strategic issues facing the United States is the concerted effort by nations like China, Russia, and the BRICS alliance to weaken the US dollar’s dominance as the global reserve currency. These countries are exploring alternatives, including the development of new trade frameworks and digital currencies.?

A Bitcoin-backed USD would:

By anchoring the dollar to Bitcoin, the United States would position itself as a pioneer and the undisputed champion in adopting the most advanced monetary technology available. This move would reinforce the dollar’s appeal as a stable, forward-looking currency, countering attempts by BRICS nations to erode its influence.

Bitcoin’s decentralized nature makes it a more attractive alternative to the central bank digital currencies (CBDCs) being developed by nations like China. A Bitcoin-backed dollar would overshadow these efforts, as it combines the trust of the US economy with the innovation of decentralized finance.

Nations like Russia and China have sought to bypass the dollar through bilateral trade agreements and alternative payment systems. A Bitcoin peg would insulate the dollar from such maneuvers, as Bitcoin’s global, borderless nature makes it impervious to geopolitical interference and manipulation.

A Bitcoin-backed dollar would set a new standard for global trade. By integrating the decentralized features of Bitcoin, the United States could attract all nations and businesses seeking a transparent and secure monetary system, reasserting the dollar’s dominance in global commerce.

Eliminating the Federal Reserve

The Federal Reserve’s dual mandate to promote maximum employment and stable prices often involves trade-offs that can distort economic outcomes. Critics argue that the Fed’s interventions, such as quantitative easing, exacerbate wealth inequality and create asset bubbles. By transitioning to a Bitcoin-backed dollar, we could:

Centralized monetary control concentrates power and creates single points of failure. Eliminating the Fed would decentralize monetary governance, spreading risk across a broader, more resilient network.

Markets often outperform central planners in allocating resources and responding to economic shocks. A decentralized monetary system, anchored to Bitcoin, would allow market forces to dictate interest rates and currency values, fostering greater efficiency.

The Fed’s ability to monetize debt enables fiscal profligacy. A Bitcoin peg would limit the government’s capacity to accumulate unsustainable debt, promoting fiscal responsibility.

Addressing Challenges

Transitioning to a Bitcoin-backed dollar and dismantling the Federal Reserve is not without challenges. DOGE policymakers and economists would need to address several critical issues:

1. Volatility?Bitcoin’s price volatility poses a significant obstacle to its adoption as a monetary anchor. To mitigate this, policymakers could implement phased integration, allowing markets to stabilize over time.
2. Technological Infrastructure?Widespread adoption of Bitcoin requires robust technological infrastructure to support secure transactions and prevent cyber threats. Public and private sectors must collaborate to build scalable, resilient systems.
3. Social Equity?A sudden transition could disproportionately impact those without access to digital financial tools. Ensuring equitable access to Bitcoin and blockchain technology is essential to avoid exacerbating existing inequalities.
4. Global Coordination?Pegging the dollar to Bitcoin would have profound implications for the global financial system. International coordination and dialogue would be necessary to minimize disruptions and ensure a smooth transition.

The Path Forward

For those looking at the numbers, seeing that the US currently has a total amount of $21.22 USD in circulation and bank deposits, and Bitcoin will only ever have 21 million created, you may think it won't translate. What most people do not know is that Bitcoin (BTC) has a significant number on the other side of the decimal point. Here is how one Bitcoin is actually expressed:

1.0000000000 BTC

Everything after the decimal is called a Satoshi. At today's price, one Bitcoin equates to $90,000 USD, where one USD equates to:

0.0000111005 BTC

Said in another way...

$1 USD = 111,005 Satoshi

So, our $21.22 trillion USD would look like this when equated to Satoshi:

21,220,000,000 USD

1,987,472,500,000,000 Satoshi (1.987 quadrillion)

and we still have 1,125,275 Bitcoin left to be mined over the next 120 years.

Pegging the US dollar to Bitcoin and eliminating the Federal Reserve

would mark a paradigm shift in economic policy. While this radical proposal demands rigorous analysis, open debate, and careful implementation, the potential benefits—enhanced transparency, reduced inflation, and a more equitable financial system—make it an idea worth exploring.

As we stand at the intersection of technological innovation and economic evolution, the time has come to reimagine our monetary system. Bitcoin’s decentralized nature and technological robustness offer a foundation for a future where money is free from manipulation and aligned with the principles of fairness and transparency.

The question is no longer whether we should embrace this change but how we can do so responsibly and effectively.

I believe the dynamic duo can and will make it happen!

Respectfully Submitted,

Dr. Gordon Jones

PS - I would love to be a part of the Trump DOGE team and help explore the possibilities of a future United States' financial stability (and the world's for that matter) based on Bitcoin!

PS - Please make your thoughts known in the comments and pass it on to your network. If this idea is something worthy, we all need to talk about it.