This is an opinion editorial by Andrew Keir, author of a daily newsletter, where he dives deep into the transformational nature of Bitcoin.
This article was inspired by a tweet from Guy Swann“Getting things for free costs a fortune”, which precisely sums up the state of play in a fiat monetary system: a system that allows the endless increase of monetary units at the hands of small mafia cartels, and at the expense of the rest.
This dynamic reminds me of another Jeff Booth quote that goes along the lines of,
“Abundance of money leads to scarcity everywhere else. Scarcity of money leads to abundance everywhere else.
Much like what happened to the Romans when they irresponsibly inflated the denarius, the same is happening now with the US dollar and every other fiat shitcoin in existence. The damage he does to tear society apart will be studied by historians for years to come.
It’s so counter-intuitive. Most people have no understanding of money or the monetary system and they blindly trust the government crazies. They have no idea that the ability to hand out stimulus checks and just handing out cash with bailouts is actually the very thing that hurts them the most. This distorts all the natural incentives provided by free market dynamics and creates serious undesirable externalities that create alternative incentives that are far, far worse than what would otherwise be produced if the market were simply allowed to do what it does better, that is, solving myriad complexity in the most supreme way we know.
This distortion of incentives deeply corrupts us psychologically and corrupts our value structure through which all information flows as we make decisions and try to orient ourselves in the world.
The most obvious manifestation of this is kinetic warfare. There are far less obvious examples, although you don’t have to look far to see them. Two things happened this week in the United States that are examples of this disruption we are experiencing.
The FBI raided the home of former US President Donald Trump.
The looting of a former president’s house is absolutely obscene and should give you chills. I’ll be the first to admit that I don’t know all the details. I’m not sure anyone really does at this point, but there are some chilling John F. Kennedy vibes to it, and it seems like a deeply political act at the grassroots, further underscoring how much l American establishment has fallen and how far it has drifted from having no kind of moral compass.
The US Treasury has sanctioned software called Tornado Cash
I don’t care much about Ethereum, but the sanction of open source software is something unprecedented. It is not a person or business entity; it is simply information at a fundamental level. Information cannot be sanctioned. She cannot be called to court. This is for privacy-seeking Americans — all of them. The implications of this so far have been many: the freezing of funds by centralized and regulated entities and the founder of Tornado Cash having suspended his github repository, which is simply the censorship of information, of code. Unfortunately, the worst is likely to be yet to come.
What I mainly take away from this is that the American government has just warned its citizens. They don’t believe you have a right to privacy. They want to treat privacy as something sinister and criminal. This is a direct attack on American citizens, but this position is unlikely to be limited to the United States. It would seem highly likely that many other smaller “allies” will follow and join.
What does this mean for Bitcoin?
This once again shows how far the state will go to keep you as a subordinate slave. If the code is speech, it shows a complete disregard for any freedom from it, and it’s a stark reminder of the need for true decentralization and the critical nature of self-care.
Decentralization gives us the ability to remove single points of failure, like exchanges. Exchanges are regulated entities and as we see in this case, they will bend the knee instantly. They will do what they are told.
If you choose to use bitcoin in such a way as to allocate trust to an exchange to take custody of your bitcoin, it is important that you understand the risk you are taking. The reality is that bitcoin is no longer yours. All you have is an IOU, and in extreme adversarial conditions, like this current example, that IOU will not be redeemable for your bitcoin. What could have been shit money will become shit money.
I can’t speak to the properties of shitcoin mixing services like the one in question, but bitcoin mixing may involve a custodial service. The one where you give up custody of your bitcoin. If you’re using a mixing service, you’re sending your bitcoin to a third party and hoping to get someone else’s bitcoin back. CoinJoins, on the other hand, are collaborative transactions that leverage the fundamental properties of the Bitcoin protocol – namely self-custody – to provide you with a powerful tool to enhance your privacy without compromising the trust model that Bitcoin offers.
Any centralized entity – be it a custodial mixing service or any other – is a single point of failure and should be avoided. Trust them at your peril.
The question remains: if open source software can be sanctioned, can Bitcoin be sanctioned, given that it is simply free open source software?
As mentioned above, open source software cannot really be sanctioned. Can people using certain software be targeted? While the notion of such a thing sounds completely crazy, the answer is of course yes, but it becomes more of a question of how it can be applied. If the US Treasury said tomorrow that Bitcoin is sanctioned, what it is really saying is that you are sanctioned for using Bitcoin. They would criminalize the transmission of rare information. Despite how absurd it sounds, it’s worth considering the possibility given this recent development.
In this case, any bitcoin held by regulated third parties disappears and would be under government control. This is the most obvious capture point. All points of failure become targets. Assume failure. Even with that, Bitcoin would remain. The network would continue to produce blocks and facilitate transactions, which highlights the critical nature of running a node. If there were only a few nodes, it might be possible to capture and shut down the network, but there are tens of thousands of nodes and the number is growing every day. Moreover, the nodes are geographically distributed in all corners of the planet. The realistic probability of closing each of them, although not zero, would probably be close to it.
The Bitcoin network would suffer such attacks and eventually it would become stronger. But how individuals use bitcoin would have significant ramifications for individual Bitcoiners. Which brings us back to the critical nature of privacy: if you have a high level of privacy, you can’t be targeted so easily. If the majority of users have a high level of privacy, such an action becomes almost unenforceable. A powerful asymmetry would exist and would render futile any attempt to sanction or prohibit it.
There are 437,000,000 new reasons to make sure you keep your bitcoin keys, and many would-be Bitcoiners are learning that lesson the hard way right now.
Bitcoin was designed to operate under conflicting conditions. There is little the government can do to attack the Bitcoin protocol, which makes it unlikely to try. They would simply attack the users: us. Recognize the game board and act accordingly. Privacy is not just a right, it is essential. It’s all downstream of privacy and it’s a central part of the fortune you pay to get things for free.
Don’t forget: freedom is not given, it is taken. Bitcoin lets you take your own.
Fix the money, fix the world.
This is a guest post by Andrew Keir. The opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.