Separation of Money & State
Crypto and Sovereign Individuals
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Disclaimer: AB Research is a culmination of research & insights from the diverse capacity of the AB Team. Ultimately our focus & mission is financial freedom. This is a special edition. Whitetail owns ETH.
The American Revolution produced the US Constitution, which codified rights for all Citizens of the United States. This included, for the first time, the separation of Church and State. For centuries, religious groups (e.g. Catholic Church) had power over sovereign states and persecuted citizens for what they deemed violations against the Church, no matter how arbitrary or hypocritical.
After religious freedom was established in the USA, new religions emerged such as Mormonism (17M people), Seventh-day Adventism (21M), Jevovah’s Witnesses (9M), and Southern Baptist Convention (13M). There are now many options.
In 2025, it is taken for granted that there is no third party controlling the religion we practice. I believe a similar change is underway for the relationship between Money and State. Crypto’s neutrality will increase its value proposition over time among sovereign nations, individuals, and multinational corporations. Consensys released a great report titled “The Industrialization of Trust.” It is a fantastic read for understanding Ethereum’s value proposition.
One of the reasons the US Capital markets have the most liquidity and best rates is because people trust the rules and laws of the United States. As Ethereum continues to develop people will realize that trust in this network - built over a decade with zero downtime - is extremely valuable.
There is no other blockchain like Ethereum. Born via proof of work which helped decentralize its holder base. The switch to proof of staked allowed it to become a productive asset which reduces sell pressure over time. Ethereum has diversity across its execution and consensus layers to prevent any downtime in case of bugs.
Advantage Blockchain has previously published pieces focused on Ethereum, investing in Crypto, valuing Ethereum, and getting onchain.
When did the separation of Money & State begin?
In the post WWII power vacuum, the United States rose to the top. The USA established it’s Empire via military bases along with international trade required to be denominated in dollars. Having the reserve currency gave the United States extreme privilege compared to other countries.
After the USA left the gold standard in 1971, many in the current economic system didn’t immediately realize the massive change that was underway but decades later the trend has become apparent, look at the price of Bitcoin.
The Orange Coin is not alone, the prices of everything has gone up. The US Dollar is continually being devalued. There is no political party practicing fiscal discipline. Politicians get elected by spending money, not saving it. Eventually this behavior shifts to the extremes.
Think about it - for any country or company outside the US government, to generate $1 trillion dollars, they must sell 1 billion items for $1,000 each. And that’s just revenue, not any costs. The US government though - literally prints that much money every few months. Out of thin air.
As mentioned by Balaji in a recent podcast, this is a tax on the rest of the world. There are 330M US citizens and about 9B people using the US dollar. This money printing doesn’t just affect US citizens, it affects everyone who touches dollars around the globe. Yet the demand for dollars is soaring via adoption of stablecoins across the world. US dollar denominated stablecoins are the best and most accessible unit of account in crypto.
Stablecoins are just part of the overall ecosystem, crypto is emerging technologies based on blockchain. It is accessible to anyone with a smartphone.
The Federal Reserve controls the most important interest rate in America. It says said they are data dependent yet almost every month unemployment and jobs data are revised down. This means the Fed isn’t using correct data. In Zoomer terms - they’re governing the most important rate in the world based on “vibes”. How many times have they wrong? 2008, 2018, 2020, 2022 in the past 20 years.
Crypto interest rates are more predictable, one of the many reasons this technology is seeing rapid adoption. I prefer to create value in a system where I know the rules of the game and will not be rug pulled. We know the tokenomics of Ethereum and Bitcoin well. It is based in code.
How many other people feel this way after the absurd money printing, the confiscation of (Russian) assets, and tariffs that ruined a lot of businesses that import into the USA? It is clear that the USA is becoming increasingly reckless with the power of the reserve currency (like every empire prior).
Crypto has emerged to fill the void.
Look at Aave - the leading crypto lending protocol. There is a reason it is now a top 50 bank in the world, recently crossing $60B in deposits. It is built on Ethereum, which Fidelity compares to an emerging economy. Stablecoins are growing and people are realizing ETH is the best way to gain exposure to the trend. The dollar is not dead - it is being exported onto the blockchain and there is clear demand for it. The world is going more digital. However, the United States no longer controls the rails which transfer that value, it is not crossing state lines or moving in any physical sense. It is being exported onto the world’s leading credibly neutral smart contract platform.
Ethereum treats everyone fairly and by the same rules. As more companies generate revenue from Ethereum, Ether will be treated as a premier asset with consistent yield. Public DATs (Digital Asset Treasury) such as SBET, ETHZ, BMNR are pitching traditional markets the ability to acquire Ethereum at a very attractive cost basis.
Do these companies implode or diamond hand? They could be pioneering a new business model - digital infrastructure companies. If SBET / BMNR / ETHZ buy Ethereum and also make it productive via staking and restaking or lending via DeFi protocols, it will provide the flywheel that makes the underlying asset (Ethereum) more valuable as it secures more value onchain.
As crypto grows, it will increase the demand for USD yet this is just a small fraction of the new value being created. The best digitally native businesses are among the best businesses in the world. Tether is headquartered in El Salvador but is a remote global business.
The reduction in government power is a good thing, it should not be in charge of value transfer between private citizens. The government is inefficient capital allocators and abuse spending. Crypto Tokenomics are much more stable. The world is catching on. Trust in the Ethereum capital markets continues to grow everyday. It’s only a matter of time until Ethereum has its El Salvador moment.
With a shift of this magnitude and potential network effects, some crypto users are lost in the casino. After years of memecoins and mixed incentives, there is always a new token to buy. This creates buyers fatigue. There will always be another Alt Layer 1 but there is only one Bitcoin and one Ethereum. Ethereum just finished its first decade of a very long life. Its impossible for the market to price it correctly because of its uniqueness but I believe the value of human trust is decatrillions.
Can you HODL until then?
Cheers,
Whitetail & Co