Author: Matt Huang, Founder of Paradigm

Compiled by: 0xjs, Golden Finance

When Paradigm was founded in 2018, we firmly believed that the value of BTC (then around $4,000 each) would multiply several times in the coming years, partly due to increased legitimacy and institutional adoption (for more reasons to be optimistic about BTC, please see the previous article "Preaching Bitcoin to Open-Minded Skeptics").

However, at that time, the likelihood of sovereign nations adopting BTC was still very low. It now seems that this possibility was underestimated.

Currently, several sovereign nations hold BTC, the most well-known being El Salvador.

The Abu Dhabi sovereign wealth fund is involved in Bitcoin mining.

U.S. President-elect Donald Trump spoke about strategic Bitcoin reserves on the Bitcoin stage in Nashville.

U.S. Senator Cynthia Lummis proposed legislation for strategic Bitcoin reserves.

The prediction market platform Polymarket estimates that the likelihood of Trump establishing a strategic Bitcoin reserve is about 30%.

So what? As Tyler Cowen likes to say, seek equilibrium. The game-theoretic equilibrium of BTC adoption has changed.

Sovereign nations can no longer ignore BTC. From a game-theoretic perspective, BTC is like gunpowder, not an iPhone. Christopher Nolan can choose not to adopt an iPhone; his deliberate Luddism may even enhance creativity (Note: The famous director Nolan has stated that he never uses a smartphone, does not use email, and even writes scripts on computers that are not connected to the internet). But once gunpowder is discovered, every sovereign nation is forced to adopt it… otherwise, the consequences are dire. Today, the same applies to AI, drones, and other critical technologies.

Now that the Overton window for the U.S. to adopt BTC has opened, other sovereign nations will not wait. Sovereign nations that establish BTC reserves early will benefit from significantly more favorable entry prices.

The race for sovereign nations to establish BTC reserves has begun.

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