Bulldozer00's Blog

At first, we had the pre-banker era. Over thousands of years, the world slowly and haphazardly converged on gold as the most valuable form of global money compared to all other “hard” physical candidates (cows, sheep, shells, beads, rocks, salt, wheat, etc). People and nations exchanged gold more than any other medium of exchange to settle transactions. They “trusted” gold as a medium of exchange not because of any active, internal, functionality it provided (which is basically zero!), but because of the superiority of its built-in non-functional “ilities“: durability, portability, fungibility, divisibility, verifiability, scarce-ability. Haha, I know scarcity is not an “ility“, but I had to mangle the word and tack on the underappreciated “ility” suffix for consistency. The funny thing is that after 30+ years of developing software, the “ilities” have almost always been disrespected by both developers and managers. Everyone wanted the functionality, but no one wanted to pay for the “ilities”.

Over time, the banking industry arose. Rich people, who, by definition, accumulated lots of gold, could store their precious, but heavy, bulky, gold at a bank for security and receive an important-looking paper IOU in return. “Trust us” they said. If you want your gold, come back to us with the paper IOU and we’ll return your gold. LOL. These banks popped up everywhere and they all had their own unique IOU notes. Lots of banks with unscrupulous owners went bust by issuing more notes than gold deposits on hand. When people lost “trust” and they all tried to get their gold back, there wasn’t enough gold for everybody. Social unrest ensued.

After the fragmented local bank era came the illustrious central banker phase where a group of unelected, politically appointed, bureaucratic, oracles surfaced every once in a while to say: “trust us”. LOL

In the future, we will probably still have fiat-spewing central banks that squeeze your purchasing power from their paper IOUs by continuously printing free “money“, but we will also have a parallel, opt-in, Bitcoin-based, self-custodial, banking system in which no trust in third parties is required.

I love the following table and I’ve posted it before. I’m going to keep posting it every so-often because it really shows how Bitcoin wins the “ility” wars against gold, which in-turn wins the war against the worst form of money – sovereign fiat paper.

When I first discovered the divine invention that is Bitcoin from an obscure posting on the nerd site slashdot.org, I performed the proverbial deep, speedo-less, dive into this strange, new, multi-discipline (economics + computer science + cryptography) idea that grabbed my attention by the cajones. My first question was “how the feck can this digital monetary network be technically sound?” My second was “how the feck can Bitcoin be ‘decentralized’ (with no single point of failure or no benevolent dictator like Linus Torvalds in charge)?” My third was “what the feck do ‘trustless’ and ‘permissionless’ mean?” The questions came fast and furious out of nowhere. They were piling up inside my head and pushing every other thought overboard. Based on my gut feeling that there was something special brewing, I was primed and juiced to learn and understand the Bitcoin protocol.

Being an overpaid software engineer and not knowing anything about “real” money, I chose to go down the technical path first by downloading the C++ core source code from GitHub, compiling it, running the test suite, and then running the node software. I watched in wonder as the node software proceeded to synchronize with the worldwide Bitcoin network and download the entire blockchain. Every transaction that ever occurred over the network from t == 0, which was Jan 3, 2009, to t == now was written to my hard disk! I also interacted with some of the fiercely dedicated core developers on the web and I even submitted a simple aesthetic code change to the core development team (that was rejected, lol).

When I finally surfaced from the technical dive, I was convinced that Bitcoin was a brilliant work of original, intellectual art; the ninth wonder of the world. I developed a deep respect for, and a warm feeling of gratitude toward, whoever Satoshi Nakamoto was/is. I knew(know) that Bitcoin was(is) going to provide equal economic opportunity to billions of “unbanked” and inflation-ravaged people around the world. I just didn’t know how it would play out or how long it would take. Sadly, people who don’t understand Bitcoin from this worldly viewpoint either think of it as a scam or a speculative, profitless, stock.

One of the pleasant fringe benefits of diving deep into the Bitcoin protocol was discovering the obscure field of “Austrian Economics“. Despite taking the cookie cutter macro-economics course as an undergrad many moons ago, I never heard of this weird, heretical, way of thinking about money. Instead of classical economic growth through inflation, Austrian economists advocate for growth through deflation. Blasphemy!

The best thinkers in this reviled school of economic thought argue how something that the vast majority of us take for granted, the control of a nation’s money supply, should not be left in the hands of the rulers (politicians + central bankers). They will, as history has shown without exception, irresponsibly debase the nation’s fiat money (fiat means: you must use the paper money we control to pay taxes or else you will get rekt) over time by printing more of it whenever it’s politically expedient to fund their pet projects and wars instead of having the guts to impose taxes to pay for them. The pic below shows what inflation, via central bank and government collusion, has done to the purchasing power of the US dollar over 100 years.

Inflating away the purchasing power of fiat money happens in every country with a central bank. That’s a lot of feckin’ countries! It’s just a matter of how fast the debasement takes to destroy a nation. It’s faster for the citizens of developing countries (Zimbabwe, Venezuela, Argentina, Lebanon, Turkey) and slower for the citizens of developed countries.

Before my obsession with Bitcoin took hold, I took it for granted that government should control a nation’s fiat money supply. Hey, we should “trust” those we elect to be doing the right thing with our taxes and savings, no? That is the way it’s supposed to be, damnit! After diving deeper, I found that history has repeatedly shown that because of human nature (you know, that pesky Dawkins selfish gene), a nation’s rulers always manipulate the money supply and disrupt free markets not to “promote the general welfare” of its citizens like you, but to enrich themselves and their cronies at our expense.

The Austrian economists saw through the political charade. They learned that the only way for a nation’s citizens to truly flourish was to “take” control of money out of the hands of centralized governments and distribute it amongst the citizenry that honestly earns it through work. But what does “take” mean in the context of “take control of money out of the hands of the government?” How can anyone/group have any chance of pulling that off against a giant, multi-tiered, energy-guzzling, law enforcement apparatus? Unlike Bitcoin, which is backed by diligent Proof-of-Work, Government-controlled fiat money is backed by coercive Proof-of-Force.

One of the leading Austrian economists, Friedrich Hayek, brilliantly envisioned the blurry outline of Bitcoin, before Bitcoin, as the solution to the intractable “take” problem in 1984, 24 years before Satoshi Nakamoto conceived of Bitcoin in 2008.

It’s sad Mr. Hayek isn’t alive today to see that Bitcoin is his sly and roundabout way to “take the thing out of the hands of government“. And they can’t stop it.