Bitcoin: The Separation of Money and State (Proof-of-take #005)

Proof-of-Take: a dose of perspective and context in the world of Bitcoin

Welcome back to Proof-of-Take:

It’s been a while, sorry I ghosted you 👻. I was having trouble finding time & energy to write detailed posts. I’ll try to send more frequent, shorter, and informal ones.

Onward.


I have a confession. Initially, when I set out to write this newsletter, I said it would be about “cryptocurrency and blockchain technology.” I lied.

I want to be honest with you, and honest with myself. My thinking has evolved: I’m interested in Bitcoin, and Bitcoin alone. Why?

The separation of money and state is the most important problem for civilization to be working on right now. And Bitcoin gives us the best chance at that.

The Founding of the United States gave us the separation of church and state. It was a radical idea at the time, and codified into the US Constitution. Bitcoin gives us the separation of money and state. It was a radical idea at the time, and codified into the Bitcoin Source Code.

The United States was an insane experiment. Previously, government and religion were joined at the hip. Today, we view government and money the same way.

The power to say “what is money” and then print is an immense privilege and responsibility. With this power, governments can ditch their accountability to the public (adios “Democracy”) and royally screw over their citizens.

Lack of Accountability: Printing money means the government doesn’t need to tax us each year to pay for things like trillions of dollars in military spending. Must be nice. Worse, the US low-key uses the banking system as a 4th branch of government. The government decides who can be a bank. The government tells banks what transactions to allow. The government can snoop on a bank’s customers. And if the bank flinches at any of this, the government can threaten to revoke its license. This effects things like Wikileaks, but also weed companies 🌲, sex workers 🍆, and others operating in legal gray areas.

Screwing its Citizens: We don’t need to look far to see what happens when government money policy goes haywire. Just google “Hyperinflation” and Argentina, Germany, or Zimbabwe. Throughout history, if you had the bad luck of being born in a place that mismanaged the money policy, your wealth could be completely destroyed.

Where does Bitcoin come in?

To be clear, we won’t get multiple attempts at the separation of money and state. We have one chance, and it’s Bitcoin.

We got one shot at creating the internet, and it’s left many people disappointed. There’s a small group of tech companies who own our data, sell it to the highest bidder, and decide who gets to exist online. Imagine trying to reinvent the internet? It’s a project so ambitious that it borders on lunacy.

Decentralized, distributed money has the same risks and ambition. We must get it right the first time for a couple of reasons. First, money has “network effects.” It’s more convenient to use one currency. So whichever money wins, we’ll be stuck with it for a while. Second, if this decentralized experiment fails, then people will never trust anything like it again. A reputation takes a lifetime to build up and one catastrophic bug to destroy. Bitcoin is no different.

So, why Bitcoin over all the others?

We’ll dive deeper next time.


Thank you for reading! Like it? Hate it? Still processing it? Please share it with a friend or enemy, and tell me why I’m wrong. Let’s continue the conversation; the best way to reach me is on Twitter — I’m @CantHardyWait.