Bitcoin: The SDR That Never Was
The Monetary Reset that is Unfolding
As a follow-up to my February 9th note, I wanted to touch on how Bitcoin can achieve what SDRs attempted to.
The challenge facing US Administrations and Central Banks around the world is that we’ve reached the end of the Fiat Era. They’re now trying to navigate the rise of a New Monetary Order. A monetary order that revolves around physics and exponential properties.
For over a century, the global financial system has been built on fiat money, government-backed credit, and excessive leverage. For a great set of short videos on leverage, refer to
’s The Dollar Endgame series.Way back in 1969, the International Monetary Fund (IMF) introduced a “digital currency”— Special Drawing Rights (SDRs) — as a way to stabilize global trade and provide a neutral reserve asset to reduce reliance on the U.S. dollar.
SDRs still exist, however, they failed to work. Why?
Because they were still fiat-based, politically controlled, and incapable of solving the core problem of monetary debasement. That’s the task Bessent and team have been handed by Trump.
Now, as the global financial system reaches a breaking point (US Debt to GDP at 123%), Bitcoin is emerging as the reserve asset that SDRs were supposed to be—but without the government intervention and central planning that doomed SDRs from the start.
The question is: What will governments do?
Will they revert to gold-based money, introduce Bitcoin as the backbone of a new monetary system, or fight to maintain control through politically backed fiat and CBDCs or tokens like Ripple - XRP?
🔍 The Original Purpose of SDRs (1969)
SDRs were created with the intention of being a supranational reserve asset—a way to settle international trade imbalances without relying solely on the U.S. dollar.
SDRs were supposed to:
✅ Provide global liquidity by supplementing national reserves.
✅ Reduce reliance on the U.S. dollar as the sole global reserve currency.
✅ Stabilize exchange rates by acting as a bridge between fiat currencies.
With the creation of the Bretton Woods system (1944-1971) global currencies were pegged to the U.S. dollar, which was backed by gold. As the BW system began to falter, SDRs were created to help countries manage reserves and avoid dollar shortages, but in 1971, Nixon officially closed the gold window, ending gold’s backing of the dollar (see 1933 when the US first came off the gold standard).
🔴 Why SDRs Failed:
Still fiat-based – SDRs are just a basket of weak, inflationary fiat currencies (USD, EUR, JPY, GBP, and CNY).
Politically controlled – The IMF dictates supply and allocation, making SDRs another tool of centralized power.
Limited adoption – The U.S. dollar remained dominant, and SDRs never became a widely used reserve asset. Additionally, they could only be used by Central Banks so they had no real value to users in the various economies.
In the end, SDRs were supposed to be a neutral global reserve, but they became just another bureaucratic failure. This is the crucial pitfall Bitcoin must avoid—becoming politically compromised. It must remain neutral to help the financial system heal.
⚡ Bitcoin: The Free-Market SDR
Bitcoin has organically evolved into what SDRs were supposed to be—a neutral, global reserve asset, but without the central control of the IMF or governments. Furthermore, technologically global communications systems are truly ready and seeking a real digital currency. One that can traverse the internet and cellular networks. A store of value and digital currency that is instantaneously settleable.
How Bitcoin Fixes the SDR Problem
✅ Decentralized & Permissionless – No single person, country, or institution controls Bitcoin.
✅ Non-Debt-Based – Unlike SDRs (which rely on fiat currencies backed by government debt), Bitcoin is backed by energy, cryptography, and scarcity.
✅ Hard Money Standard – Bitcoin has a fixed supply of 21 million, preventing monetary inflation.
✅ Instant, Borderless Settlement – Bitcoin can be sent anywhere, instantly, without intermediaries—SDRs require the IMF’s approval and bureaucratic delays.
In short: SDRs are a failed fiat experiment and Bitcoin is a self-regulating, market-driven global reserve. It’s a true technology where SDRs were paper ledger IOUs pretending to be transmittable.
These two principles were the basis of solutions promoted by Ludwig von Mises, Hayek, and Adam Smith:
Mises, Adam Smith, and Friedrich Hayek: Free banking, a gold standard, and a system that does not allow governments to expand credit artificially. Limiting government spending, avoiding currency debasement, and allowing free markets to self-correct. A return to decentralized markets and a currency that cannot be manipulated by central banks.
These principles are what back the playbook promoted by Donald Trump, Elon Musk and Scott Bessent. They are the tenants of Bitcoin and some of the features offered by tech in the broader cryptocurrency ecosystem.
The goal of the Department of Government Efficiency (DOGE) aligns well with Adam Smith’s ideals, limiting government spending, avoiding currency debasement, and allowing free markets to self-correct. We just need to confirm it’s not another political stunt.
Additionally, using Bitcoin (cryptocurrency) as financial system pairs well with Hayek’s view of returning to decentralized markets and a currency that cannot be manipulated by central banks.
🌍 The Transition: Bitcoin as the New Reserve Asset
While Bitcoin was originally dismissed by governments and central banks, institutions and sovereign nations are now quietly accumulating it. The transition from fiat dominance to a Bitcoin and gold-backed system is already underway.
Growing Institutional & Sovereign Adoption
El Salvador has adopted Bitcoin as legal tender, setting a precedent for sovereign Bitcoin reserves.
BlackRock, Fidelity, and global institutions are now holding Bitcoin via ETFs, and BlackRock is adding it to their recommended models.
Russia, China, and BRICS nations are reducing dollar exposure—Bitcoin provides a neutral, censorship-resistant alternative.
Geopolitical Shifts
If second and third world countries wanted to setup their version of Bretton Woods. Bretton Woods 2.0 to level the playing field that has been tilted by today’s geopolitical landscape.
The U.S., China, and Russia have been accumulating gold. The latter aggressively since 2016—a signal that a monetary reset is coming.
The fiat-based Bretton Woods and Petrodollar system (post-1971) is breaking down, and a new reserve standard will be needed. That is the challenge the US and Trump or any administration finds at their doorstep.
Could Bitcoin and gold form the basis of Bretton Woods 2.0? Or will Bitcoin be just another liquidity asset sopping up all the printed currency?
As the dollar-based system unwinds, Bitcoin is increasingly viewed as an independent, trustless monetary network—the asset of last resort.
🏛 The Coming Monetary Reset: Bretton Woods 2.0
What Comes Next?
1️⃣ The collapse of the fiat-based, paper-leveraged system (which has been running on debt since 1971). Either a bumpy or chaotic unwind. It’s too early to call.
2️⃣ A new global reserve standard will emerge, likely backed by commodities (gold) and digital assets (Bitcoin).
3️⃣ Central banks will re-anchor money to hard assets—just like when Bretton Woods 1.0 pegged the dollar to gold.
4️⃣ Will Bitcoin serve as the digital gold reserve of an internet powered financial system, allowing for instant global settlement? Or will we run two parallel systems? One on gold and one on Bitcoin with optionality and on and off ramps for each?
💡 This is what SDRs were supposed to do in 1969. Bitcoin is doing it naturally in 2024.
🔥 The Critical Question: Will Governments Accept or Fight Bitcoin?
Two Possible Paths:
🔹 Bitcoin Integrated Into the New Financial System
Governments and central banks accept Bitcoin as a reserve asset.
A hybrid gold/Bitcoin-backed system emerges, preventing reckless money printing.
Bitcoin becomes the new international settlement layer, reducing the need for fiat intermediation.
OR
🔹 Governments Fight Bitcoin and Push CBDCs
Central banks attempt to replace Bitcoin with government-controlled CBDCs (Central Bank Digital Currencies).
Fiat inflation continues, and trust in money deteriorates further.
Bitcoin remains the opt-out system, growing in parallel to fiat and central banks.
📌 Final Thought: The Monetary Reset is Happening
Are You Ready?
For over a century, the world has operated on a debt-based fiat system, with reserves now failing and SDRs never truly serving as the neutral global reserve they were supposed to be.
The existing fiat system is collapsing on two fronts. Too much debt (leverage) and too much political fraud robbing taxpayers of their hard-earned money. Individuals are awake globally and forcing a shift back to moral and monetary standards that serve the people not policy makers.
The transition won’t be smooth, but it is inevitable. It’s happened to every great empire and reserve currency man has ever conceived. Governments and institutions are trying to resist. To spread propaganda and deploy psyops to protect their power and limit Bitcoin and gold’s role.
However, history has shown that superior monetary technology always wins.
💡 The big question: Are you positioned for the transition, or will you be caught on the wrong side of history?
If not, you may want to check out a good friend of mine, Lawrence Lepard’s new book, The Big Print.
