Bitcoin is a special-interest group

(Financial disclosure: I still own the same modest amount of Bitcoin and Ether that I bought way back in 2017.)
I thought I didn’t have anything else to write about Bitcoin. It turns out I thought of one more thing to write!
Bitcoin is a thing you can own and trade. But beyond that, no one really seems sure what it is, exactly. It was conceived as a means of payment, but almost no one really uses it to pay for anything. Some people think of it as an inflation hedge — a sort of digital gold, insurance against the collapse of fiat currencies. Others think of it as a sort of tech stock — the basis of a future flowering of decentralized finance and other crypto applications. Still others believe it’s just a worthless fad or ponzi scheme. (There are also some less plausible notions, such as the debunked idea that Bitcoin is a store of energy.)
But as I’ve watched the crypto world over the last couple of years, it has dawned on me that Bitcoin now has one more function: as a special interest group.
Whatever the reasons that people value Bitcoin, the fact is that it’s certainly worth a whole lot. The original cryptocurrency’s value has climbed over the past year, and is now back up to over $800 billion:


$0.84 trillion is not an enormous amount of wealth compared to gold (total market cap of ~$13.8 trillion as of this writing) or the U.S. stock market ($46 trillion). But it’s enough to create a whole class of people all over the world for whom Bitcoin is a major source of wealth, or even their main source of wealth. And people with wealth want to protect it and grow it.
Thus, Bitcoin’s increase in value has created a natural constituency for policies that will pump up Bitcoin’s price even more in the future. If you think about it, that isn’t particularly unusual. People who own real estate are always trying to pump up its value with local politics. Shareholders like it when the government enacts business-friendly policies. Wealth always creates its own constituency, and always will, whether you call this “capitalism” or something else.
Bitcoin, though, is a different sort of asset than real estate or stocks (and crypto as a whole is subtly different from Bitcoin itself). We’re pretty well aware of the political-economic effects of real estate and stocks, since these have been around for a long time. But since Bitcoin is new, it’s interesting to think about what kind of things Bitcoin owners might to pressure governments to do.
My basic thesis is that the recent institutionalization of Bitcoin, especially the SEC’s approval of Bitcoin ETFs, fundamentally changes the political economy of cryptocurrency.