Bitcoin and the Return to Hard Money

Published: January 9th 2019 (Medium)

As our increasingly secular society emerges from hundreds of years of religious repression, a cunning new foe has been able to crawl into piety’s place. As the ostensible effulgence of the 20th century dominated the public consciousness, we became complacent and failed to recognize the gradual loss of the individual’s financial sovereignty. Could it be that the progress of the late 20th Century occurred in spite of and not thanks to the prevalent Keynesian economic school?

Money has played an immensely important role in the emergence of civilization over the last several thousand years. By facilitating specialization it has enabled us to build considerable technological momentum, and yet in abandoning hard money we may have severely jeopardized our direction of travel. In an ever more digital world, participation in the post-gold standard economic game is becoming less and less optional. We have been involuntarily subjected to the whims and fees of miscellaneous third parties, payment processors, and central bank policies. Gone is our ability to store wealth long term. Gone is our incentive to save. Gone is our politico-economic sanity.

The practices of the Federal Reserve within the US economy have become so deeply entrenched that attempts at change from within have been to no avail. Ron Paul served as the Chairman of the Domestic and International Monetary Policy Subcommittee but despite his best efforts, he saw no capacity for influence. He concluded that the most effective use of his time was the education of others.

It turns out that Satoshi Nakamoto may have been one of the greatest educators of all time… On January 3rd 2009, the Bitcoin Genesis Block was mined and has since become arguably the greatest science experiment of our time. Not only does Bitcoin posses all desirable traits of sound money, it achieves a game-theoretic economic equilibrium hitherto unrivaled in all of human history. As Ammous puts it, Bitcoin is the ‘all-conquering juggernaut of economic incentives’. The immense techno-social phenomenon that is Bitcoin has not only presented a potentially viable alternative to the status quo, but has encouraged its users to challenge their (often ill-considered) views on economics, governance, and computing. It is a privilege to be witnessing the rise of a supra-political monetary system as it begins to demand attention from those up high. We must strive to maintain perspective on the wider picture and some of the drastic implications of the gradual separation of money and state. The conversion of energy into currency through the Proof-of-Work consensus mechanism is a technological marvel. With each passing confirmation and successive layer of block depth the network redefines what we thought possible, and hints at what one of the dominant narratives of the 21st century may well turn out to be: decentralization.

As we transition into an increasingly connected and programmable world it is important to recognise the significance of the design decisions currently being made. When building the core infrastructure for Web 3.0 we must carefully consider what values and teachings we code into our future, in order for only the best of our traits to cross the digital divide.

In the cyberage, these values begin to become intimately intertwined. It has transpired, for example, that a trade off to our constant access to an unlimited stream of information has been our loss of privacy as a result of Machiavellian practices from the unelected gatekeepers of the internet. The web’s monetization ability has relied heavily on curating large, unique data sets and capitalizing upon them through targeted advertising. The phrase: ‘if you are not the consumer, you are the product’ accurately encapsulates the ongoings of the past decade. The recent rapid rate of development of cryptographic technologies has coincided with a quashing of the corporate data harvesting mechanisms by major legislative bodies. Data regulations such as GDPR and CCPA are necessitating both the need for permission to collect data and the pseudonymization of it. But are we right to continue to rely on banks, governments, and regulators? What if we could minimize dependency? As far back as Ancient Greece, Plato was able to recognize that human emotion clouds judgement. Perhaps it is time for a new arbiter, one of cold hard code.

The boundless power of data has been terrifyingly demonstrated by the immense influence that Cambridge Analytica and AggregateIQ have had in recent political events. As society begins to recognise the sheer lunacy of allowing a handful of incumbents to own all of the world’s data, the decentralized data infrastructure of tomorrow is being built. Crucially, none of it would work without an immutable, censorship-resistant, and permissionless digital currency.

Satoshi recognised that the fundamental axiom of economics is the human mercenary instinct, which, when carefully channelled, could create a perfectly calibrated self-contained ecosystem. Hitherto the creation of Bitcoin scarcity was always relative, not absolute. Through its immaculate conception and Nakamoto’s kenosis, hard money (the hardest ever) has been returned to the people. Antonopoulos’ use of the Promethean analogy could not be more fitting. Bitcoin provided the activation energy required to unlock the forces stirring deep within the very fibre of society, and spearheads the financial revolution that will facilitate the emergence of truly decentralized infrastructure.

As many novel technological solutions to some of the problems faced by wider applications of blockchains and decentralization are being designed and tinkered with, the unrelenting mathematics deep within Bitcoin’s core march inexorably onwards dutifully carrying out the task of securing the world’s immutable ledger.

In the face of banks, corporations, and governments, the question finally presents itself: will you be master or slave?