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Shortly after World War II, the US gave over $12 billion ($100 billion in today’s money) to Western Europe.

The money, as you may expect, didn’t come without conditions.

The Marshall Plan, as it was called, “required a reduction of interstate barriers, a dropping of many regulations, and encouraged an increase in productivity, as well as the adoption of modern business procedures.”

The main idea behind the Marshall Plan – other than to help rebuild Western Europe – was to stop the spread of communism.

The US also offered the Soviets the same money with the same caveats, but they refused, and forbid any Eastern Bloc countries to accept either.

As the decades passed by, countries in the West did indeed reduce barriers, increase productivity and adopt modern business practices. In short, they prospered, while countries in the Eastern Bloc suffered.

It was only after 1991, with the end of the Cold War and the fall of the Soviet Union, that these countries slowly started to flourish.

Today, some of those in the former Eastern Bloc are among the most technologically advanced in the world.

Estonia, for example, is now “home to more tech unicorns, private companies valued at more than $1 billion, per capita than any other small country in the world,” according to CNBC.

How did it manage this? Well, instead of shutting itself off from the world, as it had been forced to do when it was stuck behind the Iron Curtain, it encouraged promising tech companies to start businesses there.

Again, from CNBC:

Another key feature of Estonia’s digital society is e-Residency, a first-of-its-kind initiative that allows individuals to start businesses in the country without living there. The program serves as a launching pad for companies looking to do business in the European Union (EU) and benefit from the EU’s single market.

More than 50,000 people from around the world have applied for e-Residency since it launched in 2014.

“People who have global businesses, have a global lifestyle, they want to be served, and we want to be the best ones in that area,” Taavi Kotka, Estonia’s first-ever chief information officer who helped create the program, told CNBC.

I thought all this was interesting, given what’s happening today with regards to crypto regulations and the US.

In short, the US’s increased regulation and lack of clarity about said regulation has scared many of crypto’s top businesses out of the country.

How the US is becoming a second class citizen when it comes to crypto

As we now know, walling yourself off from the rest of the world and not adapting to new technology, doesn’t tend to do you country much good.

But what if it’s not that your country is walling itself off from the rest of the world, but the world that is walling itself off from you?

How do you fix that situation, and what does it mean for your future prosperity?

This is exactly what’s happening to the US right now in terms of crypto.

Many of the world’s top crypto exchanges are effectively blocking the US from taking part in the creating, developing and trading crypto.

They are creating two tier businesses: one for the world, which is fully featured, and one for the US, which has many features missing.

In the last few months, the following companies have announced they are blocking the US from their main platforms.

The world’s biggest crypto exchange, Binance:

Another major exchange, Bancor:

Key crypto exchange, Bittrex:

Source: Coin Telegraph

Circle-owned, Poloniex:

And many more besides, including Huobi and bitMEX – although bitMEX never officially served the US in the first place.

This is a strange development that has only really kicked into gear in the last few months.

It’s also strange that it’s the companies themselves that are blocking the US, rather than the other way around.

There have been a couple of high-profile lawsuits against crypto companies in the US recently, and it seems that these exchanges simply don’t want to risk the same thing happening to them.

The whole scenario is a strange one, given what we know about the Marshall Plan I opened with. The US has somehow managed to cut itself off from the rest of the world and increase – rather than reduce – barriers.

Could the US really miss the boat on the next wave of technological innovation and end up falling behind the rest of the world?

This is an idea I brought up back in February 2018, after a major US hearing on crypto. At the time regulators came out and shocked the world with their positive stance.

But since then, the rest of the world has moved with the times – especially Europe – and massively encouraged crypto innovation, while the US hasn’t done much of anything.

Last February I said: the US led the way on the last tech innovation on this scale – the internet – and it did very, very well out of it. It’s clear the US wants to lead the way on crypto, too.

But so far the opposite has happened.

The lack of clarity and heavy-handed lawsuits in the US have scared off many crypto projects who have instead based themselves around Europe and blocked the US.

Meanwhile the US continues to reject any new technology that comes out of China, while the rest of the world does not.

As I wrote a few weeks back:

Over the last few months the US has been upping pressure on its allies to drop all business with Huawei.

This, it claims is for reasons of national security. And ultimately, it is.

In yesterday’s Exponential Investor Premium video, Eoin Treacy showed that Huawei is close to controlling 50% of the world market for 5G infrastructure. If it gets there, it will be able to set all the standards.

And if a Chinese company is setting the worldwide standards for 5G, and controlling more than 50% of the market, that is very bad for the US. At least, if you take a tribalist view of things – as most politicians do.

However, instead of just calling it like it is and saying, we can’t compete with Huawei on a level playing field, the US has decided to rewrite the rules of the game.

It has declared Huawei a national security threat and ordered its allies to stop dealing with the company, for national security reasons. Huawei, it says, is essentially a Chinese government agency, whose sole purpose is to infiltrate and spy on the West.

Of course, it has provided no evidence for this. To date, no country has. However, that’s where good old propaganda comes in.

Throw enough mud, and some of it will stick, as the saying goes. The US has now managed to get enough mud to stick that it can declare Huawei a national security treat without too much public backlash.

And because Huawei is now officially a threat to democracy and world peace, it can order Google to blacklist its devices. Opening up millions around the world to real security threats when their phones stop receiving critical updates.

The question is, how is it all going to play out?

Will the US really fall behind the rest of the world when it comes to technology, or will it change its tone?

Or to put it in even more dramatic terms: will the US learn from the mistakes of history or is it doomed to repeat them?

I’d be interested to know your take, email me at: harry@southbankresearch.com.

Until next time,

Harry Hamburg
Editor, Exponential Investor

PS If you have any interest whatsoever in crypto, you’ll probably have seen that bitcoin, once again, topped $10,000 over the weekend. As I type, it’s currently sitting at $10,906.

So it’s up more than 190% since the start of the year.

The question everyone seems to have now is, when will it top its all-time high?

Well, the last time bitcoin hit $10,000, in November 2017, it reached its $19,909 all-time high within three weeks. That is a crazy run up, even for crypto.

I’m going to be covering bitcoin’s monster run and how I think it will play out in tomorrow’s Exponential Investor. So look out for that.

But, in the meantime, if you want to learn how to buy, sell, store and trade crypto, I can highly recommend this book. It will give you everything you need to know.

Category: Cryptocurrency

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