The bleak future where payments are politicized and Bitcoin wins

Satoshi Nakamoto planned for Bitcoin to be used for online payments. But it has never been a common payment option.

The main obstacle to the widespread adoption of bitcoin in cash is its wild and potentially lucrative price swings. This roller coaster problem is not going to go away. Which means the only way for bitcoin payments to become mainstream is if the country’s reliable payment pipelines, the ones that have woven them together for decades, stop doing their jobs. Only then will the second and third best payment rails like bitcoin come into play.

Here’s a short story on how the US payments infrastructure is slowly imploding and Bitcoin payments are going mainstream.

We all know America is ideologically divided. This turmoil has already enveloped both mainstream and social media, with many conservative voices now migrating to Talk while the Liberals stick to Twitter.

Banks and payment processors have also become places of conflict. For example, activists have successfully put pressure on card processors to cut White supremacist Counter-Currents book seller, the Proud Boys merchandise store and Gab social network, which describes itself as pro-freedom of expression but has high concentrations of toxicity.

Imagine a world in which these divisions were to deepen. Suppose some payment processors start cutting all customers deemed too Republican. In 2023, the Wall Street Journal is outdated by its acquirer, the bank that connects it to the Visa and Mastercard networks. Companies whose executives back Trump like Home Depot and Goya Foods are also being cut off by their banks.

See also: JP Koning – The standard on the verge of revolutionizing payments

And conversely, Republican activists are starting to pressure financial institutions to disconnect Democrat-aligned companies. In 2024, several large banks agree to stop connecting abortion clinics to card networks.

What emerges by 2026 is a divided ecosystem of payment processors. Half specialize in connecting Republican businesses and nonprofits to basic payments infrastructure, the other half specializing in connecting Democratic businesses. Any bank or processor that tries to stay neutral is avoided – the one that connects my enemy to Visa is my enemy.

Even at this level of division, Republicans and Democrats can still do business together. As long as Mastercard and Visa remain neutral in letting Republican and Democratic payment processors connect to their networks, dollars can flow through the ideological chasm.

But in 2029, Democratic activists are pressuring Visa to end its neutrality and disconnect all Republican payment processors. As a result, Republican businesses can no longer accept Visa cards. Next year, Mastercard becomes Republican. All the companies with democratic tendencies are exiled from the Mastercard network.

America is now divided into two card fiefdoms. Consumers will need a card from each card if they want to shop at Republican and Democratic stores. Democratic buyers shamefully hide their Mastercards and Republicans their visas, lest their friends and family see that they are marrying the enemy.

By 2031, cracks are finally appearing at the heart of America’s payments plumbing. The neutrality of the Federal Reserve, made up of 12 district reserve banks, ends. The CEO and directors of the Federal Reserve Bank of Kansas City, all staunch Republicans, unilaterally decide to stop providing Democratic banks in their district with access to Fedwire. The Kansas City district includes the states of Kansas, Wyoming, Nebraska, Colorado, and Oklahoma.

Fedwire, the Federal Reserve’s real-time settlement system, is America’s largest payment service. When someone makes a payment from their bank to another bank, it will ultimately be settled by a movement of funds along Fedwire. By cutting Democratic-leaning banks and their customers off this key utility, the Kansas City Fed is effectively removing their access to the rest of the U.S. banking system.

The Atlanta Fed, also a Republican, follows the Kansas City Fed a month later. In retaliation, the Federal Reserve Banks in San Francisco and Boston disconnected Republican Banks from Fedwire, in one fell swoop unlocking all Republican-leaning businesses located in their districts.

In 2033, the San Francisco Fed stops all incoming payments from the Kansas City and Atlanta reserve banks. Suddenly there is no universal US dollar. Money held in accounts in Georgia, Florida, and Oklahoma cannot be transferred to accounts in California or Washington, and vice versa. The web of payments that once connected all Americans has torn apart.

The collapse of the American payment infrastructure would only be a theater in a much larger fractionalization of American society along ideological lines. Other key pieces of America’s infrastructure would also begin to crumble: the courts, law enforcement, the education system. There would be great physical dislocations as Republican families migrate to Republican enclaves and Democrats to Democratic enclaves.

But commercial life would continue. Within their own enclaves, Democrats would continue to do business with Democrats and Republicans with Republicans. They would likely rely on local credit-based systems to engage in trade. Credit, which is built on trust, is the most efficient way to transact.

See also: JP Koning – How Bitcoin is like Amateur Radio

What about trade between Democrats in one enclave and Republicans in another enclave? Each side will produce the goods the other needs. Neither side trusting the other, IOUs would be unacceptable currency.

It is possible that silver and gold will once again become popular, as they were in the 1600s and 1700s. Or perhaps bitcoin would become the preferred means of the United States for conducting faction trade. The good thing about bitcoin, like gold, is that it doesn’t depend on a trusted counterparty. Suspicious traders don’t have to worry about the IOU issuer celebrating.

But if America’s electricity and telecommunications infrastructure collapsed, would it even be possible for people to use bitcoin?

It’s overkill, but one can imagine that distributed solar power solves the electricity problem. When it comes to accessing the Bitcoin network, tinkerers could try connecting old-fashioned amateur radios to Blockstream’s Bitcoin satellite. If AT&T and Verizon leftovers can only provide fragmented internet service, so-called decentralized mesh networks could offer another way to access the web.

This dystopian future is unlikely to happen. So far, bitcoin has found a role as a popular medium for Americans to speculate, much like gold. Hopefully it stays that way. No one wants to live in a country where bitcoin has become vital for payments.