Harvard students and alumni have announced the launch of the 'New Bretton Woods Project' — an initiative focused on creating Bitcoin-backed stablecoins to combat the global debt crisis.
The 'New Bretton Woods Project'
The project aims to build a Bitcoin (BTC) stablecoin on the Bel2 network — a Bitcoin layer-2 solution — allowing users to retain control of their BTC while simultaneously creating opportunities for lending, borrowing, and stablecoin issuance. Spokespeople for the initiative explained that the Bel2 infrastructure leverages Bitcoin's unparalleled security by executing Bitcoin settlements on the main layer and communicating with protocols on Ethereum (ETH) to mint stablecoins. This hybridized approach preserves Bitcoin's store-of-value properties while maximizing the decentralized asset's liquidity. The founders of the New Bretton Woods Project issued this accompanying statement with the announcement of the project: quote: {"text":"This initiative comes at a crucial time as global debt reaches record levels. By combining Bitcoin’s decentralized structure with the stability of a pegged currency, the project offers a financial system that mitigates the risks of traditional economies.", "source": "CITE_NA"} Harvard Innovation Labs — an entrepreneurship and startup incubator hosted by the prestigious university — will also collaborate with the students and alumni on the project.
The Debt Crisis in the United States
The national debt in the United States crossed the $35 trillion mark in July 2024. To put the level of debt and deficit spending into perspective, it took approximately 200 years for the US national debt to reach $1 trillion. At current spending levels, roughly $1 trillion is added to the debt every 3 months. Economists and pundits have pointed out that the interest payments on the debt alone now eclipse spending for the entire Department of Defense. chart: {"image": "https://s3.cointelegraph.com/uploads/2024-09/01920bef-40ef-7372-b9cf-5fd1fd4074b5", "source": "James Eagle"} This rampant debt was caused by years of monetary printing and structural deficits — a macroeconomic term referring to the persistent inability to balance a budget independent of market cycles or economic conditions. In other words, a structural deficit continues even when the economy performs at full capacity.
Lawmakers' Reaction
US lawmakers like Senator Cynthia Lummis have started to take stock of the situation. In July, the Wyoming Senator introduced the Bitcoin Strategic Reserve bill in the Senate, to acquire 5% of Bitcoin's total supply as a Treasury asset. More recently, former President Donald Trump floated the possibility of using Bitcoin to pay the national debt.
The 'New Bretton Woods Project' and lawmakers' efforts highlight the push towards exploring alternative financial solutions amidst the global debt crisis.
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