Bitcoin is Alien Technology (part 1)

and it’s not meant for our time

Ming Guo
Ming Guo
May 2, 2019 · 9 min read

Ten years ago when Satoshi Nakamoto¹ created Bitcoin there’s an intentionally embedded message in its `genesis block`: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks”, in response to the financial crisis that triggered the Great Recession, as well as the beginning of the end of something that’s much larger, and older — the centralized regime that’s with us since the dawn of human civilization.

On this 10th year anniversary of Bitcoin’s creation, I feel that I do not need to explain the technological workings of Bitcoin for the sake of discussing Bitcoin anymore — you have the whole Internet for that. Since its creation, Bitcoin has steadily attracted an ever growing populace of ardent and loyal followers, up to the point that an alien descended on earth in the last couple of years could not escape knowing Bitcoin. In reality she might be bombarded with news related to Bitcoin, and cryptocurrency, for that matter.

When I first encountered Bitcoin I didn’t know what to make out of it. Bitcoin is both a `thing` and an idea, but what an alien idea it is! It is unlike anything we’ve been familiar with; it is like an out-of-our-world thing, and a higher-dimensional one at that; an idea that has many `shapes` — at least that’s the feeling I got over the years…

Of all those `shapes` of an idea that is Bitcoin, I think we can appreciate `decentralization`, `censorship-resistance`, and `trustless consensus` the most; although one can argue that the latter two are the natural result of the first one: `decentralization`.

I have always felt that `decentralization` is an underexplored concept. It is such a subtle idea that it almost feels zero-dimensional. It seems that most people `get` it naturally and no more explanation is needed; it is used to explain things but itself not the `target` for an explanation. Well, please rest assured, there is actually a whole new world hidden behind it. In fact it may really be our future — but first, let’s go back to Bitcoin.

Bitcoin started to gain both fame and traction over the years. People really wanted to copy a great, or as some put it, godly idea. Thus we witnessed the phenomenon that was the `first` cryptocurrency boom. For better or worse, Bitcoin is like Helen of Troy that launched a thousand ships: cryptocurrencies — and in the end resulted in some joy and a lot of tears. That was 2013. You would have seen a hundred-fold jump in Bitcoin price, followed by some big crash later on. In 2017 we experienced the `second` cryptocurrency boom, and this time it was Ethereum that did the launching. At first it felt like the previous boom, but it would soon become déjà vu on crack. Last year (2018) we saw the crashing of the cryptocurrency market after a stunning rise of Bitcoin price to over $20,000 USD from just $2,000 — a ten-fold jump in just a couple months’ time from a year before (at the end of 2017). Many cryptocurrencies that rode the tidal wave of this speculative craze saw their value decimated almost 90% or more from their peak value in less than a year². Right now, spring 2019, the whole market cap of all cryptocurrencies combined (of which Bitcoin occupies a big chunk) is just roughly a quarter of the market cap of a big technology company such as Apple or Microsoft. As the market cooled down, so did people’s heads, and it is about time for us to do more thinking instead of riding the emotional rollercoaster chasing FOMO (Fear Of Missing Out — a typical pathological symptom of people mired in speculative addiction).

Yet in contemplating Bitcoin’s two spectacular boom and bust trajectories one cannot escape noticing a phenomenal sense of dualism: moral enlightenment of decentralization vs. decadent addiction to speculation. For better or worse, in the end we realize that this marvelous dualism is what makes Bitcoin a potentially world forging and shattering power. In order to build a new world, you need both: the good and the unsavory; it is said that the struggle between them drives human progress ahead.

We have been living with Bitcoin for a decade now. It’s time we do a reality check with this phenomenon. What have we learned? Maybe that question is too broad and vague; obviously we learned a lot — every cryptocurrency ever devised, even the ones that are shitty, is a case study and a homework assignment done for Bitcoin learning experience. Maybe a better question would be: how has Bitcoin changed us? The answer to this very question might shed some light on how we might shape the future.

From the very beginning of Bitcoin’s creation there have been two schools of people that flock to Bitcoin: the idealists and the pragmatists. Of course there are also people who belong to both camps; that might include Satoshi Nakamoto, the creator. The idealists care more about the social implications of what Bitcoin might bring to us: decentralization, censorship-resistance, trustless consensus and also generally as an effective tool in the hope of countering the overwhelmingly far-reaching powers of the financial institutions. The pragmatists see Bitcoin as a new business opportunity and tool to streamline and solve many hard business problems; indeed many of such problems were brought on by the financial institutions that created the 2008 financial crisis in the first place, as Satoshi Nakamoto must have felt. One obvious use case for Bitcoin is as an easy and cheap payment system, which Satoshi had mentioned in the famous Bitcoin paper. However, in the end it was a third flock of people, utilizing Bitcoin as a speculative device, trumped the first two groups of people and catapulted Bitcoin to the mainstream.

After last year’s (2018) big cryptocurrency market crash, many would come away to lean towards feeling the Bitcoin idealists’ sentiment, that Bitcoin should be a revolutionary tool, an almost rebelliously progressive one at that, rather than a speculators’ selfish device for short-term profits. I used to feel that way too — but now after realizing how spectacularly alien and multi-dimensional the Bitcoin idea is — I tend to think otherwise. All the things Bitcoin brought us in this past 10 years are the projection of a much larger and different world onto our current, troubled and much smaller world. We should be humble and carefully learn from everything that Bitcoin, and cryptocurrency at large, has brought us.

I came to realize that the not-so-morally-pristine uses of Bitcoin and cryptocurrency, such as mining for profits, staking and holding (HODL as practitioners call it) for the sole purpose of speculation, are actually the projections and reflections from a very different economic scheme, the decentralized economy (which isn’t here yet), onto our current one — a centralized economy. The nastiness of these projections reflect the shortcomings of our world, not Bitcoin and the world they come from or represent.

In other words, .

Or from another angle: if Bitcoin is an alien experiment (that started 10 years ago), has anything gone wrong?

Almost everything.

The problem has less to do with runaway speculation; the problem is with compatibility.

People love to compare Bitcoin to the Internet, and take Bitcoin as the next Internet. This seems to be the root cause for the misuses of Bitcoin and cryptocurrency in many places. As with innovations of the Internet that revolve around `upgrading` existing business models (sometimes with complete revamp), people copied this approach to the business utilization of Bitcoin (and cryptocurrency) to unexpected ends: Runaway speculation. It can be argued that runaway speculation in the second Bitcoin boom was actually not caused by Bitcoin itself but Ethereum — a cryptocurrency with the ability to utilize smart contracts to make minting other cryptocurrencies as easy as clicking a button; much like how web browsers made online businesses much more viable than with earlier Internet creations such as e-mail. I think in general the statement holds, which is, Ethereum and almost all other cryptocurrencies that exist today (maybe with the rare exception of privacy coins), are not fundamentally different from Bitcoin in principle.

So far we have seen very little convincing evidence that Bitcoin or any other cryptocurrency demonstrated real utilization in our current economy. Some Bitcoin use cases do exist and proliferated, such as cheaper international remittance, but compared to the historical rise of the Internet businesses — what has the sweeping revolution of cryptocurrency achieved after 10 years? Many could point out that nowadays you can use Bitcoin to pay for coffee and beer in many places around the world; yet even in the digital payment sector, Bitcoin comes short compared to its contemporaries such as WeChat Pay and AliPay, which despite being monstrously centralized monolithic systems, truly revolutionized the way people do payment electronically at societal scale. Other use cases are very dubious to say the least. Many tried to utilize a Bitcoin technology called blockchain in many existing business sectors, such as healthcare, supply chain and internet commerce — with very weak rationale behind them. Blockchain technology, when taken outside of a cryptocurrency context, feels more like an append-only document store (database) with some clever-but-unnecessary cryptographic appendages, especially in those aforementioned sectors; a cool technology, but not a revolutionary one as many have claimed it to be. Of course one could always argue that building a whole new infrastructure for a revolutionary technology takes time, but many of those projects’ ultimate descent into being devices for speculation hinted at the hollowness of their raison d’être.

What does the above mean for us? I suspect (well, I actually believe now) that the proliferation of runaway speculation in Bitcoin and other cryptocurrencies is the result and manifestation of the ultimate and fundamental incompatibility of Bitcoin and cryptocurrency as a decentralization technology in our economy.

Bitcoin is not compatible with our current centralized economy.

So what gives? Well, please don’t take the above conclusion as a letdown for Bitcoin. No, on the contrary — the realization that Bitcoin is not compatible with our current economy is a real relief for us; it frees us from invisible shackles we hadn’t realized we had, until now, to do real innovation with Bitcoin and cryptocurrency.

Let’s start over — we need to go back to the drawing board.

I’ve seen many once true believers of Bitcoin, cryptocurrency and their revolutionary potential to mitigate and correct many of the wrongs of the world we live in — painstakingly trying to hack off features that make Bitcoin and cryptocurrency great in the first place: decentralization, censorship-resistance, trustless consensus — to the point of pity. The current Bitcoin and cryptocurrency scene for many can no longer be seen as that of a great innovation but a virulent slaughter. We need to pause and rethink.

Why hack at Bitcoin and cryptocurrency to make them fit our world? (remember they are Alien Technology!) Why not go about it the other way around — build a new world that is compatible with Bitcoin and cryptocurrency?

Needless to say, the latter approach, building a new world that is compatible with Bitcoin, seems much harder than hacking off Bitcoin and cryptocurrency to fit them into our existing world. It seems much easier to just ask for regulations, Bitcoin ETF approvals and engaging in IEOs (Initial Exchange Offerings) than figuring out a way to build something new at this point — especially when the big market crash last year (2018) made many people think that Bitcoin and cryptocurrency are hanging dangerously on a thin wire thus compromise is a must for survival. But I disagree. To me, wandering in the harsh wilderness is still much better than riding on a paved highway that leads to a dead end.

Alright, so where do we start?

As we mentioned earlier, the key is to explore the rich world behind the idea of decentralization, rethink and examine everything we know, even beyond technology and cryptocurrency, and delve deep into the dualistic world of centralization and decentralization.

This exploration will continue in part 2 and part 3 of this series.

  1. ̂ We are certain it is a pseudonym name but uncertain who that really is.
  2. ̂ Such as the most prominent cryptocurrency beside Bitcoin — Ethereum.

Bitcoin is Alien Technology

…and it’s not meant for our time

Ming Guo

Written by

Ming Guo

Ming Guo is a co-founder of the Soteria Project as well as an advocate for SSDE — a Self Sustainable Decentralized Economy

Bitcoin is Alien Technology

…and it’s not meant for our time

Ming Guo

Written by

Ming Guo

Ming Guo is a co-founder of the Soteria Project as well as an advocate for SSDE — a Self Sustainable Decentralized Economy

Bitcoin is Alien Technology

…and it’s not meant for our time

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