Satoshi Nakamoto’s white paper begins with a simple premise:

“A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.”

At its core, Bitcoin was designed to be permissionless, borderless, and beyond the reach of centralized institutions. In the wake of the 2008 financial crisis, it emerged as a silent protest. This was a system created to sidestep the pitfalls of fractional banking, manufactured scarcity, and financial gatekeeping.

But somewhere along the way, the message began to shift. What started as a tool for monetary freedom now mirrors the very system it was meant to challenge. And this is the trap of hyper-financialization.

Hyper-financialization happens when financial logic begins to override the logic of freedom. It is when the tools meant to empower individuals start serving the same old incentives, only dressed in new code.

**Fiat logic **

In 1944, the Bretton Woods Agreement established the US dollar as the global reserve currency, backed by gold. If you want a deeper look at how this came to be, I wrote more about it here.

Under the new system, currencies were pegged to the dollar, and the dollar was pegged to gold at $35 dollars an ounce. This arrangement gave the dollar extraordinary reach. Global commodities like oil and wheat were priced in USD and foreign central banks stockpiled it. Backed by a strong postwar economy and early trade surpluses, the United States became the world’s unofficial banker.

To supply enough dollars for global demand, the US had to keep sending the dollars abroad through trade and capital flows. It imported goods and services, paying in dollars. In return, other countries earned dollars by exporting to the US, then held those dollars in reserves or reinvested them in American assets. Over time, the US began running persistent deficits.

There was an advantage of being the issuer. The US could buy from the world with money it printed instead of earning it. It was the original sin of reserve currency privilege. By the 1960s, the country was issuing more dollars than its gold reserves could support. Military expansion in Vietnam, sweeping domestic programs under the Great Society, and the costs of sustaining a Cold War presence all played a role. Meanwhile, trade-rich countries like France and West Germany were accumulating dollars, while the US made no move to match that growth with more gold.

By the late 1960s, the price of gold on the open market was climbing above the official US peg,  and faith in the system began to erode. In 1971, with no viable solution, President Nixon closed the “gold window” and ended the dollar’s convertibility to gold. Bretton Woods was over. The dollar became a floating fiat currency, backed only by confidence in the US government and economy.

Even so, the dollar held on. The US remained the world’s largest economy. While European nations began diversifying their reserves, poorer countries across Southeast Asia, South America, and the Eastern bloc had fewer options.

A strong dollar, however, came with hidden costs. It made American exports more expensive and imports cheaper. This widened trade deficits and hollowed out local industries. Factory closures were accelerating, and early signs of outsourcing had already begun. The imbalance between global and domestic trade became structural. 

At the same time, financial engineering began to overshadow product innovation. With the gold standard gone and the dollar untethered, speculation flourished. Capital moved away from factories and flowed into abstract financial products.

If you are wondering what abstract financial products are, these are where financial firms pioneered tools for speculation that bet on price movements rather than funding tangible innovation.

There was also a boom in leveraged buyouts using junk bonds which meant companies were bought, stripped for parts, and resold. This brought profits for financiers but often meant job losses and factory closures for communities. Remember Pretty Woman? That was Edward Lewis’s job, well, before Vivian came into the picture.

Pretty Woman (1990) - What do you do Edward?

If you think about it visually, the economy’s engine moved from factories producing goods to Wall Street producing paper profits.

Public budgets were also redefined and were driven by a selective austerity that tightened belts in public services while bloating military spending and political office. Over time, this version of austerity became normalized and  became a mindset. 

Then came the oil shocks. 

In 1973, following US support for Israel during the Yom Kippur War, OPEC imposed an oil embargo. Prices surged and inflation soared. Although the embargo lasted only six months, its impact stretched across the next decade. To restore stability, the US negotiated a deal with Saudi Arabia.

Saudi Arabia agreed to price its oil exclusively in dollars in return for military protection and arms from the US, and other OPEC nations followed suit This was the beginning of the Petrodollar system, which ensured lasting global demand for USD.

It worked. But over time, a strong currency that discouraged domestic production and favored financial accumulation backfired on the people it was supposed to serve.

To paper over these cracks, US began relying more heavily on financial tools rather than productive ones. Interest rates spiked in the early 1980s to tame inflation, but in the decades that followed, the long-term answer was to print more money. When crises hit, whether market crashes, housing bubbles, or global pandemics, the Federal Reserve turned to a policy known as Quantitative Easing (QE). The strategy was simple. Create money and use that money to buy financial assets, flood the system with liquidity and hope it trickles down. It was elegant in theory but in practice, it drove asset prices up while wages stagnated, rewarded debt over savings, and widened the gap between capital and labor.

Similarly, speculative pressure on currencies enabled capital to flee quickly, triggering financial crises that rippled across the world. For poorer countries pegged to the US dollar, maintaining adequate reserves became a constant burden. When they faced rising debt or sudden external shocks, they often couldn’t afford to keep trading in dollars, and the system turned against them. This played out during the Asian Financial Crisis and Mexico’s Tequila Crisis among many others. When George Soros remarked that Southeast Asia would collapse under the weight of speculation, it became a self-fulfilling prophecy. Capital fled and local currencies collapsed. Small businesses were the first to fall. They had no financial hedge, no buffer, and no access to the safety nets that cushioned institutions.

The painful lessons of fiat logic are clear and simple. No single country should act as the world’s banker. No economy should be built on speculation. And no currency should dominate others to the point of dependency.

Yet we are watching a similar pattern begin to form.

This time, it is not nations exporting goods. It is companies hoarding Bitcoin while encouraging others to treat it as an asset. I’ve heard claims of institution holding one-fifth of the total supply, raising concerns about centralization and control. People are urged to spend fiat and receive shares in these companies that hold Bitcoin on their behalf.

These firms present themselves as aligned with Bitcoin’s ethos, but their actions remain deeply tied to the fiat system. They accumulate more Bitcoin while continuing to operate within the rails of traditional finance.

The result is a transfer of value from the many to the few, masked by the language of decentralization.

The wolf with bitcoin hoodies

There are two kinds of Bitcoin companies.

One builds peer-to-peer tools and open-source infrastructure. They encourage Bitcoin as payment system as what Satoshi’s white paper presented, by spreading the usage of Bitcoin and holding Bitcoin with conviction. The people who fund these projects, whether investors or public contributors, do so knowing they are supporting long-term value for everybody globally. These are my kind of people.

The other kind invites you to ride the Bitcoin wave, but you don’t actually buy Bitcoin. You buy shares, or you take loans. These companies speak the language of Bitcoin, but only to borrow your trust. You put in your time and money. They take that and accumulate more Bitcoin for themselves. The phrase “have fun staying poor” starts to feel less like a joke and more like a business model. And to be fair, it is a clever business model, but it is not a new one. It mirrors earlier moments in financial history, when trust in institutions began to fray. 

There is nothing wrong with financial products that serves the people. In fact, we need more creativity in that space. But when the balance breaks, speculation rises. Most people gain less, while a select few gain more. And when the original idea of Bitcoin as a peer-to-peer payment system fades into the background, something essential is lost.

When I first heard the same voices who once prided themselves on not holding fiat now encourage others to hold only fiat, my heart sank. That is not the kind of Bitcoin evolution I was looking forward to.

Structured trade with one-sided outcomes is not freedom. When companies frame this approach as part of the Bitcoin mission, they are not distributing power. They are consolidating it. And their proximity to Bitcoin becomes a kind of costume, a branding exercise meant to signal belonging while protecting their position.

The American Dream was built on access. It was the idea that with work, risk, and imagination, people could move forward. Over time, that promise narrowed. Trade became a financial game and power flowed upward. Local resilience faded as capital drifted into places most people would never see.

What replaced it was a fragile kind of growth that was impressive on paper, but empty at its core.

Bitcoin offers a second chance.

This is a system that lets anyone, anywhere, send money, hold value, and build without permission. It works because people use it. It gains strength through participation. But that promise begins to fade when Bitcoin is reduced to just another speculative asset. One that is hoarded, collateralized, and used mostly to feed fiat outcomes.

A different way forward

What would it mean to treat Bitcoin as money again?

It might be slower. It might not make headlines. But it would be real. It would live in tools built for everyday use, in services designed to withstand volatility, and in systems that help people spend and save without falling back on fiat.

It would look like wallets focused on sovereignty rather than speculation, and products built for access instead of valuation. It would mean more people using Bitcoin, more companies building tools for use, and fewer companies using it as collateral for something else.

Bitcoin does not need new gatekeepers. It needs users. It needs people who see what it can do and choose to do it.

Because the danger of hyper-financialization is not just debt, or risk. It is a distraction. It is forgetting what the system was built for in the first place.

The emperor may have a new hoodie, but the incentives underneath remain the same.