Bitcoin is a Perfect Protest

VbitcoinThe most intelligent comment I have read about Bitcoin is that it’s a perfect protest. Bitcoin went live in 2009 shortly after the 2008 financial crisis. The 2008 crisis was a defining moment. Prior to that date I believed that the US government, despite its obvious warts, short comings and long checkered history was still partly accountable to the electorate.  I didn’t buy the widespread cynical notion that modern elections are largely meaningless dog and pony shows that help sell the illusion that the people are in charge. I seriously thought there were important differences between Barak Obama, Hillary Clinton and John McCain. It’s embarrassing to confess such naivety.

Before 2008 I was a good little cog in the machine: obediently paying my taxes and being a productive member of society. I was a chump: a silly stupid chump, but lucky for me, the “crap sandwich” bank bailout cured my naivety. Despite being overwhelmingly rejected by the public and initially rejected by Congress the crap sandwich was forced down our throats and all three presidential contenders voted for it.  When push came to shove there were no significant differences between liberal democrats and conservative republicans, both groups lined up to betray and indebt the public and we’ve been suffering, and will continue to suffer, the consequences for years to come.

The 2008 financial crisis, and the comical US election that followed it, taught me some important lessons:

  1. If none of the above is not on the ballot the election is fraudulent. The political systems in the countries I have lived in depend on presenting limited, and frankly insulting choices, to the electorate. If anyone is going to seriously argue that Barak Obama and John McCain were the best that a country of three hundred million souls could offer then we are lost. If I was lost in the woods with Obama and McCain I wouldn’t take a millisecond of direction from either and might consider getting rid of them on the spot to improve my chances of survival. A candidate must be better than nothing, and if nothing is superior to the highly gamed political selections put forward then nothing should be on the ballot! I will return to this theme in future posts. The next time you cast a ballot look for none of the above. If none of the above is not present the election is illegitimate and you are being used to put a stamp of public approval on what’s very probably a vacuous choice.
  2. You can tell we’re dealing with a real issue when the ruling class closes ranks. Our idiotic media maelstrom is inconsequential noise that is best ignored.  Will a society with gay marriage manage their finances better than a society without gay marriage?  Will free birth control pills for sluts impact trade balances? Will crosses on public lands constrain money creation?  Does the size of Kim Kardashian’s ass moderate capital controls?  Get in the habit of asking such questions. If the question is absurd, or if the answer doesn’t matter, it’s a distraction.  On the other hand if you see alleged ideological enemies coming together to promote a critical common good beware! In 2008 the flamboyant cosmetic differences between liberals and conservatives vanished removing even the illusion of choice. To bailout, or not bailout, was a real issue and with real issues there is no choice. We’ve recently witnessed rank closing on Edward Snowden. Again, both left-wing democrats and right-wing republicans lined up to declare Snowden a traitor and praise the glories of our NSA surveillance state. Clearly public privacy is another real issue and with real issues there is no choice.
  3. Human beings cannot be trusted with money creation.  The 2008 bank bailout was outrageous for two primary reasons. It lavishly rewarded bad behavior and it created money to do it. Money creation is convoluted; many argue that commercial banks create the bulk of money through loans, others claim the Federal Reserve creates money when buying government bonds and treasuries. The food chain is twisted but nobody disputes that at the base of the chain money is created out of nothing. Everything boils down to ledger entries made by sanctioned authorities. There is no mining, there is no collateral, there’s nothing but an invisible yoke that’s eventually placed on the public’s head. The invisible yoke has briefly shown itself in the fiery debt limit fights about the full faith and credit of the United States. What the hell is the full faith and credit of the United States? It’s nothing more than a promise that the government will somehow extract the means to make payments to that long forgotten ledger entry. If the public fully understood that their labor is balanced against nothing they would refuse to pay and the entire system would collapse. The system is such a perfect scam it’s hard not to admire it. Oh, it will eventually collapse; fiat money always goes to zero, but in the meanwhile it affords unlimited fiscal flexibility to the ruling class. Who gets to create money is a real issue and once again there is no choice about real issues.

There has been a lot of nonsense written about Bitcoin but one thing is clear it serves as a brilliant financial foil so I am not surprised to see recent worldwide efforts to suppress it. The most frightening thing about Bitcoin is that it gets people asking questions about money. For example:

  1. Exactly what is money?  Every crank has their own definition of money. What amuses me is that both Gold cranks and fiat cranks have lambasted Bitcoin for being arbitrary and made up. One of the best retorts to this confused drivel notes that Bitcoin is to “real money” like the Flying Spaghetti Monster is to “real religion.” Everyone sees the Flying Spaghetti Monster is made up, but – oddly – nobody can mount rational arguments explaining why it’s more made up than the “real thing.” Bitcoin is capable of playing the role of money, so in proper contexts it is money.
  2. Why do banking authorities have exclusive money creation rights? The historic rationale was to prevent counterfeiting. Counterfeiting is irresistible to anyone in a position to do it. By giving money creation rights to select authorities and using deadly force on counterfeiters governments could claim they were protecting the “currency of the realm.” It is many orders of magnitude more difficult to counterfeit Bitcoins than US dollars or any national currency. To counterfeit a Bitcoin you have to break a hard cryptographic hash.  Technology has rendered the rationale for central money creation authorities obsolete.
  3. Should money be created without limit from nothing? Now that monetary creation restraints, historically ties to gold, no longer exist the only limit on creating money out of nothing is the stupidity of the public. How much debt can you get poor dumb suckers to accept before they rebel? Bitcoins are not created out of nothing. The mining process validates the public ledger, the Blockchain, and insures that nobody is counterfeiting coins or double spending. Mined coins are a reward for valuable network services. Additionally, there is no central creation authority. Competing miners create Bitcoins all over the world. This system is not without fault and Bitcoin variants are exploring technical improvements but the Bitcoin creation process is essentially a mathematically secured network phenomenon and it is much harder to corrupt than bribing a few central bankers.
  4. Why do authorities maintain the right to confiscate private funds? A Bitcoin feature that is particularly disturbing to authorities is that it’s not difficult to prevent even powerful entities from seizing coins. A coin cannot be moved or spent unless you get its private key. If you do not know the private key a Bitcoin will just sit in the Blockchain taunting goons that covet it. In a Bitcoin economy it will be difficult to garnish wages, block money transfers and seize assets. How will the state survive?
  5. Why must fees be levied when moving money across national borders? The public has never accepted this little rape. How many of us have lied to custom officials when asked about how much cash we’re carrying?  I’m guessing a fair fraction of all travelers. We all know it’s none of their damn business but being good little cogs we bend over and submit to state sodomy. Bitcoin penetrates borders with the same ease that custom authorities conduct cavity searches. Go ahead cut off coin movement! All you have to do is turn off the Internet, commander all USB ports, block old fashioned paper mail and learn how to read people’s minds. Any information storage and transmission device, including the human brain, can be used to move coins. Go fuck yourself customs. One day money will be free to move without your permission or consent!

Obviously we cannot have too many people asking such questions. Mathematically sound, open source, publicly validated and distributed real money like Bitcoin must be ridiculed, harassed and stopped. Left unchecked it will cauterize an important component of state power: arbitrary money creation rights.  By providing an elegant mathematical model of how a world without central banking and national currencies might function Bitcoin is a perfect protest: a good idea that our corrupt “leaders” cannot honestly answer.