The Moral Case for Bitcoin

The Bitcoin Times, Ed 3

There’s no morality in fiat.

One of the most important parts of the Bitcoin journey is learning to talk about Bitcoin in a way that connects with people. There have been a lot of approaches.

There’s the investment case for bitcoin, the self-sovereignty case for bitcoin and even the societal case for bitcoin. What there hasn’t been is the moral case for bitcoin. The moral case for anything is a different beast than the others because we’re not appealing to self-interest, we’re appealing to something that’s deeper in the human soul.

For this reason, a moral argument resonates deeper and trumps other arguments. By making this argument for Bitcoin, we’re taking the moral high ground, an argument that’s stickier and more lasting.

So how do we make this moral case? Any talk of morals has to start with a framework to decide what’s right and wrong. There are two theories of individual rights that we’ll cover. Natural Law and positivism. From there we can proceed to the government’s role. There are two possibilities here:

  1. Protection of individual liberty
  2. Pursuit of a utopian or a vision imposed by the ruling elite.

Next, we can proceed to how money fits into both these systems of morals and government. Specifically, we’ll contrast fiat money versus Bitcoin. Finally, we can explore the second-order effects, or what we can expect under both systems in terms of incentives, virtue and the character of society.

Let’s start with a little bit of philosophy. There are two theories of individual rights. Natural Law and positivism. The first is the theory of Natural Law. This is the idea that rights are something we already have; that if they’re violated by anyone including the government, that it is wrong. This view is ancient, but probably the clearest expression of this is in The Declaration of Independence:

“We hold these truths to be self evident that all men are created equal. That they are endowed by the Creator with certain unalienable rights that among these are life, liberty and the pursuit of happiness.”

Life, liberty and the pursuit of happiness are three rights mentioned by the writers of the Declaration of Independence, but they’re by no means the only ones. There’s the right to property, the right to free speech, the right to religion and so on.

The reason why the colonists felt justified in declaring independence was because their natural rights were being violated by England. The English king was violating their already existing rights and therefore the government was doing something wrong and therefore was not a legitimate government. That was their argument. In other words, a government that does not respect natural rights no longer deserves to govern. That’s the basis of Natural Law. Individuals already have certain rights and any government that violates those rights is an illegitimate government.

The other view of individual rights is called positivism. This is the idea that the government grants individuals certain rights, and that the government is the arbiter of what an individual can and cannot do. Generally, this means that unless the government explicitly gives you a right, that it is not a right you have. An example of this is a license to cut hair. Individuals do not have the right to cut hair unless you get the government’s permission first. Essentially, in this framework, the government determines what’s right and what’s wrong.

First, it’s common sense, like the tract from 1776 by Thomas Paine. Saying something is common sense is another way of saying it’s inborn or intuitive. Natural Law says that it is wrong to murder people because people have a right to life, for example. That’s hopefully inborn or intuitive for you.

Second, Natural Law is just. Natural Law treats people equally, not based on wealth, ethnicity or political savvy. We don’t give certain people one set of rights and deny it to another set of people.

Third, Natural Law is individual-centric. Individuals have the right to life, liberty and the pursuit of happiness. Individuals have freedom under Natural Law.

Why would anyone like positivism? Unsurprisingly, those who like positivism are people in power.

First, positivism is much easier to enforce. Positivism defines rights each individual has so if the right is not explicitly given, then the individual is in violation. If you don’t have a license to cut someone’s hair then you are in violation. Judging right and wrong under positivism is much much easier.

Second, positivism is great for those in power because they can treat people differently. Think of the scene from Braveheart where nobles are given the right of “prima nocte”, or the right to sleep with commoner’s wives on the first night of marriage. Prima nocte is a flagrant violation of Natural Law, but under positivism, any rights, even one to rape, is something the government can give.

Third, positivism allows those in power to set the rules. They don’t have any restrictions on those rules because they are by definition moral under positivism. There’s no higher authority that you can appeal to and say this is unfair.

At this point recognize that Natural Law is moral and positivism is highly immoral. Looking throughout history, all of the worst governments with the worst atrocities, every single one of them was positivist. All of them operated under the idea that the state gives you the right to do something. The state gives you the right to cut someone’s hair, own property or even live. And they can take stuff like your life, your liberty and your property. If you look at Nazi Germany, Stalinist Russia and the Reign of Terror with disgust, you do so because they’re all positivist and believe to some degree in Natural Law.

So, if you’re a believer of positivism you can stop reading this article because I don’t really have anything more to say to you. But if you’re a believer in Natural Law, please continue.

With this distinction in mind, let’s talk about the role of government. Government can take two possible roles: protecting individual liberty or pursuing a utopian vision. If you believe in Natural Law, that we already have rights, then the government’s job is to protect those rights. The opposite is the pursuit of a utopian vision. Marx’s workers paradise and Hitler’s racially pure world are two visions that led to mass slaughter. But those aren’t the only possibilities. a utopian vision can be something as simple as not ever having any sort of terrorist attack on a plane. This is how we get ridiculous policies like the TSA. Another utopian vision is preserving the status quo. That’s how we get bailouts and too-big-to-fail. Conservatives are much more prone to this sort of vision which isn’t surprising since preserving the status quo is literally conservative. The sad reality of today’s political discourse is that we’re not arguing about protecting individual liberty, we’re arguing for different utopian visions.

When the government’s role is to protect individual liberty, we get a lot of good things. There’s a lot more entrepreneurship because no one needs permission. And that ultimately leads to civilization being built up by sovereign individuals.

When the government’s role is pursuit of a utopian vision, we get lots of bad things. There’s a lot less stuff being built because there’s permission required. There always needs to be some sort of bureaucratic stamp of approval on whatever it is that anyone wants to do. Violations mean you lose your property, your liberty, and possibly even your life. Ultimately individuals become slaves to the state. When the government protects individual liberty then the state takes the proper role of being a servant to the people. But when the government pursues a utopian vision, individuals become the slaves of the state.

What we’re seeing in the last 200 years is that governments around the world have moved from protecting individual liberty towards pursuing utopian visions.

A positivist pursuit of a utopian vision has its own money: fiat. A Natural Law protection of individual liberty has its own money: bitcoin. We can see that clearly in its properties. Fiat money is clearly centralized, with control of money from a powerful central entity, like the Federal Reserve. Bitcoin is decentralized with every individual having power, through running a node. Fiat money requires permission to possess it. Bitcoin is better than even gold in the sense that it is unconfiscatable. Fiat money can be devalued at will, giving positivist governments the funds to pursue their utopian vision. Fiat lets governments tax without the consent of the governed. Bitcoin gives power back to the individual not allowing this stealth taxation and respects individual property. Fiat money uses violence to get its ends. Fiat is a zero-sum game where the state benefits at the expense of individuals. Bitcoin is voluntary and positive-sum because people only trade when it adds value to both parties. Fiat money is a positivist money, a tool of governments pursuing a utopian vision. Bitcoin is a Natural Law money, a tool to protect individual liberty. Bitcoin is therefore the more moral money.

The second order effects of Bitcoin are in the realm of individual character. We can look at this in terms of the four classical cardinal virtues. Prudence, Temperance, Justice and Fortitude.

Prudence is what we in bitcoin call low time preference, that is planning for the future. Fiat money is the opposite and you can see it in the enormous amounts of debt everyone has. Individuals become more high time preference and become slaves to their debt.

Temperance is doing things the right amount. Fiat money encourages consumption and thus, individuals are not incentivized to learn self-control. This causes everything from materialism to obesity to addiction. Bitcoin is the opposite and causes people to save and measure their consumption. This means there’s more self-control and more temperance.

Justice is doing things fairly. Fiat money is unfair in a whole host of ways. Politically connected people get rich through rent-seeking. Bitcoin is much more fair because there’s no apparatus to rent-seek from. Instead, we get a free market and a meritocracy.

Fortitude is courage or guts. Unfortunately, fiat money and positivism means a highly politicized environment since the government is in control. Fiat money incentivizes rent-seeking, not risk taking entrepreneurial endeavors. Positivist change is brought about by force and violence. Bitcoin incentivizes entrepreneurship and new goods and services. In other words, Bitcoin induces Natural Law change, which is brought about by creation and innovation, not government decree.

Prudence, temperance, justice and fortitude.
Bitcoin makes civilization not just better but more moral.

The moral case for Bitcoin is that Bitcoin aligns with Natural Law. Bitcoin gives us protection for individual rights, something most governments are slowly abandoning. The sad reality is that the world is becoming more and more tyrannical. Those in power both on the left and right pursue utopian visions instead of protecting individual liberty. If you care about protecting individual rights, then Bitcoin is what we must pursue and fiat must be destroyed.

Fiat delenda est.

By Jimmy Song
October 2020

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