A most peaceful revolution

Art by Jason Benjamin (@perfecthue)

Make no mistake, Bitcoiners are revolutionaries

Libertarians had it all wrong. They sought to shrink the State’s influence by participating in the democratic process. This has been and remains a hopeless, Sisyphean task. Like Tolkien’s Ungoliant, the State hungers without limit, and its most engaged constituents duly reward it with votes for more growth, receiving in exchange ever-greater entitlements. Libertarians are, in a word, stuffed. Like the creeping gelatinous menace in The Blob, the State grows regardless of what you throw at it. Participating in democratic processes empowers it and entrenches the Orderly Civic Ritual as the only legitimate mode of political engagement.

Legality of Bitcoin — Green: permissive; Orange: some restrictions; Pink: contentious; Red: Hostile. (Source)

Cryptocurrency tilts at the State

Just as sixteenth century Protestants began to question the official doctrine of indulgences and the scope of the Pope’s authority, so too came to wonder a ragged bunch of nerds and cypherpunks: is inflation really necessary? In a free market economy, should central banks really have the right to arbitrarily set the price of money? Should the State really have full discretion over one’s saving and spending? Should savers really be forced to trust banks (and ultimately, the taxpayer) to redeem and honor their savings? What does an entry in a bank’s database really mean?

Rare image of Bitcoin in physical form
Source: https://dolartoday.com

Not for the faint of heart

Because of the extremely high stakes, reinventing a monetary system is a profoundly unpleasant task. It takes irrational zeal and an unwavering commitment to a firm vision of the future. Given the immensity of this task, and the existential threat it poses to the state, only the most committed could possibly take up the cause. The great sin of altcoiners is not that they backed the wrong horse, but that they did so with insufficient conviction. They sold a dream that they themselves did not truly believe.

The only questions that matter

After ten years of experimentation, misallocated capital, and hubris, we have learned valuable lessons about value accrual. The scientists and engineers mistook the monetary and political revolution for a technological one. Their experiments were impregnated with an insistent prescriptivism:

  • why are you choosing to reject all of the alternatives and proposing to replace them with your own?
  • from where do you derive your authority?
  • how are you enshrining fairness and equality of opportunity in the distribution of this new money?
  • how will you ensure that the system is free from corruption when even the U.S. Federal Reserve is vulnerable to political capture?
Above: a list of all the utility tokens that fulfilled their stated purpose and saw meaningful adoption

Values set Bitcoin apart

So what are these values that Bitcoiners hold dear? Bitcoinism is an emergent political and economic philosophy combining strains of Austrian economics, libertarianism, an appreciation for strong property rights, contractarianism, and a philosophy of individual self-reliance. Some libertarians will recoil at social contract theory, understanding it to be coercive (since one is not actually offered a political contract to sign at birth or at maturity). Not so with Bitcoin. No one is defaulted in: it offers a fairly explicit contract to would-be users. You have the right but not the obligation to participate in the most transparent, auditable, debasement-free, and and well-defined monetary system the world has ever known.

Damned if they do, damned if they don’t

Let’s say major countries colluded to ban Bitcoin. This would merely turn Bitcoin into a black market commodity. But it would not be sufficient to obliterate it. Consider for a second another widely banned commodity, reliant on significant energy for creation, produced by a mixture of industrial and informal entities, chiefly circulated on the black market, enjoyed by millions. I’m referring of course to cannabis, and you can probably obtain it from a dealer nearby — legal or not — in under 30 minutes. To believe a ban would abate Bitcoin’s popularity is comical. It would only reinforce Bitcoin’s literal raison d’être: protection from the whims of the capricious State. A State so obviously threatened by a financial commodity would reveal itself to the world as paranoid and controlling, making its true parasitic nature very clear.

At your disposal: the always-on financial machine

Negative interest rates are now orthodoxy at virtually all central banks in developed countries. The IMF openly speculates about how to impose ever-deeper negative rates, including the forced depreciation of physical cash. Regardless of whether you believe savers have a divine right to a positive yield, they certainly start to bristle when you propose confiscating their savings. If arbitrarily negative rates are permissible to achieve policy outcomes, at what point do central banks pause for breath and give savers a reprieve? Already in untrammeled territory, it seems unlikely any restraint will materialize this ends-justify-the-means approach to monetary policy.

  • Miners have cumulatively collected $14 billion in exchange for their services in securing the network
  • The average cost basis of all Bitcoin holders is approximately $100 billion
  • The market value of all outstanding bitcoins is approximately $190 billion
  • The network has settled roughly $2 trillion worth of transactions
  • The Bitcoin network now produces 80 exahashes per second (that’s 8 * 10¹⁹ hashes). These hashes cost about $19.8 million dollars a day on highly specialized equipment

Partner, Castle Island Ventures. Cofounder, Coinmetrics.io

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