Harvard students and alumni have unveiled the “New Bretton Woods Project,” an innovative initiative aimed at developing Bitcoin-backed stablecoins to address the ongoing global debt crisis.
The endeavor is set to create a Bitcoin (BTC) stablecoin on the Bel2 network, a layer-2 solution for Bitcoin. This structure allows users to maintain control over their BTC while simultaneously facilitating lending, borrowing, and the issuance of stablecoins.
Representatives of the initiative shared that the Bel2 framework harnesses Bitcoin’s unmatched security by performing settlements directly on the Bitcoin main layer while interacting with Ethereum protocols to mint stablecoins.
Source: Peter Brandt.
This hybrid model not only safeguards Bitcoin’s value retention properties but also enhances the liquidity of the decentralized asset. The founders of the New Bretton Woods Project released a statement in conjunction with the project’s announcement, indicating that Harvard Innovation Labs—a prominent incubator for entrepreneurship and startups at the university—will partner with the students and alumni on this venture.
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The Debt Crisis in the United States
As of July 2024, the national debt of the United States surpassed $35 trillion. To contextualize this staggering figure, it took nearly two centuries for the U.S. national debt to reach its first trillion, yet at current expenditure rates, the debt increases by approximately $1 trillion every three months.
Economists and analysts have noted that the interest payments on this debt now surpass the total annual spending of the entire Department of Defense.
A chart illustrating annual interest payments on the national debt compared to annual defense spending.
Source: James Eagle.
This mounting debt stems from years of excessive monetary printing and structural deficits—a macroeconomic term that describes the ongoing failure to achieve a balanced budget, regardless of market cycles or economic conditions. In essence, a structural deficit persists even when the economy is operating at full capacity.
U.S. legislators, including Senator Cynthia Lummis, have begun to recognize the urgency of the situation. In July, the Wyoming Senator proposed the Bitcoin Strategic Reserve bill in the Senate, which seeks to acquire 5% of Bitcoin’s total supply as an asset for the Treasury.
Recently, former President Donald Trump also suggested the potential use of Bitcoin to address the national debt.
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