Harvard University students and alumni have announced the launch of the “New Bretton Woods Project,” an initiative focused on creating a Bitcoin-based stablecoin to address the global debt crisis.
The project aims to build a Bitcoin (BTC) stablecoin on the Bel2 network, a Bitcoin layer 2 solution that allows users to maintain control over their BTC while creating lending, borrowing, and stablecoin issuance opportunities.
A spokesperson for the initiative explained that the Bel2 infrastructure leverages Bitcoin’s superior security by executing Bitcoin payments on the main layer and communicating with Ethereum’s (ETH) protocol to mint stablecoins.
source: Peter Brandt.
This hybrid approach maximizes the liquidity of decentralized assets while preserving Bitcoin’s store-of-value properties. The founders of the New Bretton Woods Project released the following statement when announcing the project:
“This initiative comes at a critical time when global debt is reaching record levels. By combining the decentralized nature of Bitcoin with the stability of a pegged currency, this project provides a financial system that mitigates the risks of the traditional economy.”
Harvard Innovation Lab, an entrepreneurship and startup incubator run by the prestigious university, will also collaborate with students and alumni on this project.
relevant: Nixon ended the gold standard 53 years ago today. What happened in 1971?
America’s Debt Crisis
The U.S. national debt will surpass $35 trillion by July 2024. To put debt levels and deficit spending into perspective, it took the U.S. about 200 years to reach $1 trillion in national debt. At current spending levels, about $1 trillion is added to the debt every three months.
Economists and experts point out that the interest payments on the debt alone now exceed the entire spending of the Department of Defense.
A chart showing annual interest payments on the national debt compared to annual defense spending. Source: James Eagle.
This rampant debt has been caused by years of money printing and structural deficits. Structural deficit is a macroeconomic term that refers to the persistent inability to balance the budget regardless of market cycles or economic conditions. In other words, the structural deficit continues even when the economy is operating at full capacity.
U.S. lawmakers like Senator Cynthia Lummis are starting to get the picture. In July, the Wyoming senator introduced the Bitcoin Strategic Reserve Act in the Senate, which would acquire 5% of the total supply of Bitcoin as Treasury assets.
Former President Donald Trump recently raised the possibility of using Bitcoin to pay off the national debt.
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