Bitcoin Will Stop The Bleeding When It Is Used As The Standard Monetary Unit Of Account
When a Doctor operates on a wounded patient the first thing they have to do is make sure they can stop the bleeding. There is no point operating on someone if you can’t get the bleeding under control because they will die. The same goes for your wealth. Fiat currencies are bleeding out in value which is incentivizing less people to save. If you want to stop the bleeding in your financial life you are going to need to find a way to store your wealth in something else. There are plenty of options but only one that is programmed to stop all bleeding in 2140.
The people’s money is not the only thing being bled out. Our education, time, and I’d even argue our mental sanity are being “bled” by bad actors. Blood isn’t oozing out egregiously but rather being siphoned off from tiny cuts so the majority of people don’t even realize it is happening. This is a hard pill to swallow. Most western societies teach people not to question authority, raise your hand if you want to ask questions, and trust the experts. Breaking out of this mentality is not an easy task. Just watch this clip of the White House Press Secretary to get an idea of how those at the top will treat people who dare question the narrative. It is a near impossible task to try and calculate the variables that bring about the emergent complex behavior of society. That said, it should not be a surprise that the past two years have been full of chaos in the form of riots, protests, and supply chain issues as the theft increased from Government’s printing trillions of dollars out of thin air and blaming it on Covid.
For better or worse, pain is the best teacher. A great example of this is Trezor (a hardware wallet provider) reporting a 300% increase in sales revenue after the FTX debacle. My heart goes out to those who lost money because they decided to trust FTX. If you have not spent countless hours learning about Bitcoin and why holding your private keys is so important it is understandable why one would trust FTX. They seemed to have the stamp of approval from every mainstream news outlet, politician and celebrity in the space. The silver lining is that their fraud was so egregious that many people are waking up and starting to see through the charade. Even the puff pieces are being exposed and starting to tarnish the credibility of these once notable media outlets.
The remedy to most people’s problems is a better education which requires a great deal of work. I can attest that I’ve never had such a fun and condensed period of learning like I’m having going down the bitcoin rabbit hole. It has opened my eyes to how much people are not taught during their traditional schooling. Learning one thing typically leads to ending up with twice as many questions and that number grows exponentially. There is only so much time in the day and Teachers must prioritize their curriculums accordingly. I just have a hard time understanding why taxes, how to vote, and basic financial literacy aren’t at the top of most of public school curriculums. I’ll let the reader come to their own conclusions why those things aren’t taught in school. What’s important is finding a teacher that speaks your language and a subject that brings out your natural curiosity. Learning becomes one of the most euphoric feelings in the world when those two needs are met.
The standard way of learning has horrible mental models for teaching people. Memorizing things for a test is not a great way to learn any subject. Asking permission to apply your newfound knowledge on a project is the wrong mental framework and the one my traditional schooling always seemed to enforce. Those who changed the world for the better didn’t ask for permission to make the world a better place. They just did it. People want a hero to fix all their problems but the truth is no one is coming to save you. The hero’s journey starts with identifying your heroes and the dysfunctional relationship that might be present. For many SBF was a hero who turned out to be an ultra villain. I’m not saying don’t find great mentor; it’s great to listen to those who have become experts in their field in order to learn. The problems start when people worship someone like a God who can’t make mistakes. SBF is on the record talking about how his biggest regret after this whole debacle is not being able to try and trade his way out of a multi billion dollar hole. Seems like stealing from customers should be his number one remorse but then again if I was a multibillionaire by the time I hit 30 I’m sure it would be hard not to develop a God complex.
I hope those who lost funds will learn from their pain and come out as stronger and more resilient individuals. Most people come to understand the difference between paper bitcoin and bitcoin you actually hold the keys for via an expensive lesson. Once the majority of people slay their heroes, self custody their coins, and stop blindly trusting others is when the world will really see fireworks in regards to Bitcoin’s price action. Every person is different and has various forms of risk tolerance. This is the time where those who learned a valuable lesson double down on their education and help the next round of newcomers learn so they don’t end up making the same mistakes. There is always pain involved when you stop the bleeding. However, the more educational content Bitcoiners can put out the more we can help to minimize the initial pain for the those looking to get off zero. Rome was not built in a day. Sometimes the only way to get a lesson through someone’s head is for them to suffer through the initial pain that results when you start learning about a new subject.
What is interesting about watching FTX fail so rapidly is the same thing would happen with our traditional financial system if we didn’t have Central-Banks acting as lenders of last resort. It was gross and wrong of SBF to take customer funds and trade them, but when a registered bank does it 99.9% of the world either turns a blind eye or just doesn’t know that is how fractional reserve banking works. In his book Human Action Mises writes,
“The rich, the owners of the already operating plants, have no particular class interest in the maintenance of free competition. They are opposed to confiscation and expropriation of their fortunes, but their vested interests are rather in favor of measures preventing newcomers from challenging their position. Those fighting for free enterprise and free competition do not defend the interests of those rich today. They want a free hand left to unknown men who will be the entrepreneurs of tomorrow and whose ingenuity will make the life of coming generations more agreeable. They want the way left open to further economic improvements. They are the spokesmen of progress.” (p. 83)
Technology should be rapidly reducing prices for the majorities of things in the world. Unfortunately, regulatory moats and monopolies prevent this. An example is Apple and Google who have massive monopolies on their app stores. If you want to release a phone application you will have to go through Apple and Google unless you want that app to only be used by the. less than 1% of people who don’t use the two mainstream app stores. FTX tried to create their own monopoly by lobbying Congress and creating a regulatory moat around their business that would’ve made it impossible for competitors to compete. They spent tons of money lobbying regulators and donating to the Democrats. The world is fortunate their system blew up before FTX was able to get their way with D.C because if the leaders at FTX were willing to use customer funds as they saw fit one can only imagine what they would have done to the crypto industry as a whole. As a self proclaimed Bitcoin maximalist I’m not worried about the other coins but I feel very strongly that Mises was right. The invisible hand will regulate and figure out what makes our life more agreeable. Bitcoin has over 10,000 competitors and that number is growing everyday. I don’t think any of them can compete with Bitcoin in the long run but that isn’t for me alone to decide. It is the market’s job. We need more people advocating for a free hand that lets entrepreneurs innovate. Ultimately, the great entrepreneurs won’t ask for permission. They will just build like Satoshi did. The reason I advocate for free markets and less regulatory moats for the incumbent is because free markets will increase the speed of hyper-bitcoinization so we can get to a world where one doesn’t have to hold the majority of their wealth as a liability on a bank’s balance sheet.
What’s beautiful about the Bitcoin space is that there is such a wealth of amazing individuals and incredible content if you look in the right spots. I’m constantly blown away by how lucky humanity is to have access to conversations amongst the smartest people in the world that wouldn’t otherwise be accessible without the internet. Imagine explaining the modern day wonders we have like the ability to send messages instantaneously anywhere in the world, to use the little piece of glass in our pockets to hail a ride, order food, and listen to some of the greatest minds on the planet whenever we want. It is magical what technology is giving humanity. Of course there are going to be many hiccups along the way as people try to come to grips with these new tools. I’ve had this Hal Finney quote as my Twitter header for quite some time because I believe it is highly relevant to what we are seeing in today’s society.
For all the wonders technology can do for humanity it can also drive a whole new level of control. Markets need to be free and open for optimal price discovery. Too much central planning and markets will break down. Price discovery in a free market is like a hash function. It takes an input of data and spits out an output that only goes one way. With a normal hash the algorithm works so that it is unfeasible to reverse calculate the data. You can verify a hash by making sure the same output is achieved based on the input but you can’t take the output and figure out the input. In this same vein a free market will set the price of the good but you can’t figure out how all the labor, work, and travel to deliver said good was calculated. The function only goes one way. Since price discovery only goes one way it is hard to see how manipulated free markets can become when central planners start meddling in them. People get upset with the price increases that result but the blame is typically pushed on to the producers rather than the central planners who are causing such issues. Sound familiar? Like say the U.S government who is calling out “greedy fossil fuel companies” for raising the price of gas while at the same time advocating for the end of fossil fuel use. These problems only get worse when price controls are imposed and price discovery completely breaks down resulting in shortages. Until the creation of money is no longer heavily intermingled with politics these issues will continue to play out.
The chart above shows what exponential growth looks like. If we applied this to Bitcoin adoption I’d estimate we are probably at about the 30 year mark on this graph. Exponential growth is hard to fathom but that is what‘s coming with the Bitcoin network. A heavily used analogy for Bitcoin adoption is the .com bubble of the early 2000s. 22 years later and most internet companies went bankrupt but the ones that survived like Facebook, Apple, Amazon, Google and others have changed the lives of humanity in ways that seemed unimaginable not long ago. These companies have made the life of the average human being better and they have also given Nation-States the ability to increase their authoritarianism. As CBDCs and digital identities are rolled out it has never been more important to point out how Bitcoin fixes this. Bitcoin allows the individual to go down a hero’s journey where they can keep the value of their labor in their head. CBDCs and digital IDs offer nation-states a tool to enact monetary policy at the individual level, be at the center of every transaction, and turn off people’s money if they post something online that goes against the government’s agenda.
One Bitcoiner I enjoy following is Bruce Fenton who has been getting a lot of slack on Twitter recently for saying that self-custodying bitcoin is difficult. He is absolutely right. It is very difficult to self-custody your bitcoin in an ideal manner. Especially if you have large amounts of money stored in Bitcoin. That’s the beauty of this network though. Your wealth rests on complete ownership of how you create your setup. Everyone has different tradeoffs to consider and the majority will not take the time to remember 12 words to store the majority of their wealth in their head. Considering these tradeoffs is part of every Bitcoiner’s heroes journey. It might not be a bad idea to store a little bit of bitcoin in your memory for a rainy day. There is no limit to the amount of wallets you can have so it makes sense to split up your bitcoin into various UTXO setups. Everyone’s situation is unique and the fact that Bitcoiners have that option is what matters.
Bitcoin empowers and offers a better system. One where people take full responsibility to play the game where they know there is no central authority who can manipulate the rules. If you try and cheat Bitcoin it will come back to bite you. Preston Pysh said it best “Bitcoin is like the affinity stone.” It takes a great deal of faith to hold on to an asset that has had multiple 70–90% drawdowns before recovering to new all time highs. Not many can hang on to their bitcoin but those who do over long periods of time are greatly rewarded. The network effects of this thing are insane. There is a bitcoin website paying people 21000 satoshis to post a sticker (that is shipped to you) somewhere in your city. Think about that. If you are willing to use your time to spread the good word of Bitcoin you can earn sats because a human node cares enough to pay people to do this. The tech is exciting, but I don’t think many understand how passionate Bitcoiners are and their unwillingness to budge on the rules that bring Bitcoiners together.
Despite often being grouped with utter crap Bitcoin is the zero to one invention that changes everything. Bitcoin as a technology, new form of money, and an idea is bringing hope to humans around the world who have been disadvantaged because of the place they were born. Bitcoin is like the self help book that you didn’t know you needed. Most self-help books are super cheesy and offer no tangible advice other than “you can do it if you believe in yourself”. Which is true but how does one begin to believe in themself? Action. As far as I can tell the only way to make progress it to take action, fail, and learn from those mistakes. Bitcoin helps with this tremendously. I’ve consumed more podcasts, books, articles, and even written some of my own because of this magic internet money. I’ve driven my family mad because I won’t stop talking about it. Luckily, my Grandparents like listening to me but they typically follow up my rants with “Conor I’m so proud of how much your vocabulary has grown and how knowledgeable you are on this stuff but I didn’t understand half of what you just said.” Which turns out to be an amazing feedback loop because it makes me go back and try and synthesize my ideas into more coherent ones. When my Grandparents understand my rants is when I know I have developed a solid understanding of the thing I’m trying to articulate.
The future is bright. There will be growing pains along the way and more turmoil in the short term for those obsessed with measuring things in fiat. The way to fix that is too orient yourself around the new system. To spend more time with all the incredible minds in the Bitcoin space. To seek knowledge from those who are starting to realize that humanity is entering another renaissance. The barrier to entry has never been lower. All you need is an internet connection and a desire to learn. After spending thousands of hours listening to various Bitcoin podcasts I feel like I’m best friends so many in this space who I’ve never actually spoken with. Luckily, they don’t need to speak to me in order to keep putting out amazing content. They are doing it because they see a similar future that only Bitcoin can bring. The things that will come out of this Bitcoin renaissance are going to seem unimaginable in the same way that if you took someone from 100 years ago and played them a podcast with your iPhone they would be freaking out looking around for the person speaking.
If you are reading this piece you have likely heard of Bitcoin and might even be deeper down the rabbit hole than me. If you are not then don’t trust me; go verify for yourself. It’s easy to get bogged down with all the bleeding going on in fiat world. Bitcoin is the band-aid to fix it. Focus your energy there and you will be amazed at how quickly those wounds turn into scabs which turn into barely noticeable scars. Bitcoin is humanity’s best chance of separating money and state so the free market can flourish and eliminate the bleeding.
Sources:
“Hard Money Show With Natalie Brunell” YouTube, YouTube, 17 Nov. 2022, https://www.youtube.com/watch?v=W6CTHoTTMyo. Accessed 25 Nov. 2022.
Jeff & Peter. “Finding Bitcoin Signal with Jeff Booth.” YouTube, 23 Nov. 2022, https://youtu.be/3lqqD8JgKyg. Accessed 27 Nov. 2022.
Mises, Ludwig Von, and Bettina B. Greaves. Human Action: A Treatise on Economics. Liberty Fund, Incorporated, 2014.
The Atlas Society. Objectivism and Bitcoin. YouTube, 19 Oct. 2022, https://www.youtube.com/watch?v=uix5BrzMTBM&t=1s. Accessed 16 Nov. 2022.
“The Future Is Bitcoin with Michael Saylor | Moonshots & Mindsets.” YouTube, 3 Nov. 2022, https://youtu.be/v4na2pycrcc. Accessed 16 Nov. 2022.
Preston & Peter. Bitcoin Is the Answer with Preston Pysh. YouTube, YouTube, 16 Nov. 2022, https://www.youtube.com/watch?v=9b1boWwTvNw. Accessed 17 Nov. 2022.
Going to give this one more readthrough tomorrow then officially submit it! Feeling good about this piece.
11/27/22
Conor Jay Chepenik
