What to expect in the coming year. Bitcoin Tech Talk #217
2020 is coming to a close, leaving behind its wake economic, cultural and political devastation. Governments are more authoritarian than ever, the hopes and dreams of millions of small business owners and non-essential workers are up in smoke and the US political system is in the biggest crisis since Watergate. What’s even more disappointing is just how compliant people have been through the whole thing, mostly taking the tyranny without so much as a whimper.
Yet despite all these things I am profoundly optimistic about the world and where it’s going. It’s certainly not because I believe in our political, educational or medical leaders. They are, if anything, the source of the misery we experience. The reason for my hope is Bitcoin.
Traditionally, any large crisis like this, be it war, depression or something else, has resulted in serious inflation and subsequently diluted the savings of those that were prudent enough to save. The unfortunate consequence would be that the politically connected and already rich would get even richer while those not so connected would inevitably get poorer. What will change the equation this time around is that there will be a group with savings that won’t be diluted and won’t be as affected by government market intervention.
Sure, there will still be plenty of people who will have their savings diluted and plenty of unfairness to go around, but it won’t be as unfair or as gross a miscarriage of injustice than previous crises have been because of the ability to opt out with Bitcoin. And that’s where the hope comes in. This is an opportunity for the public to really learn about what it really means to save, and the Bitcoiners will be the vanguard of a new way, a new system.
This will manifest itself in “number go up” but the cultural impact will be far more nuanced than in previous bubbles. The last couple bubbles were characterized by greed and envy, where new investors went toward ICOs and altcoins because they felt like they missed the boat. This time looks to be different because there’s a lot more fear out there. Bitcoin isn’t nearly as speculative as it was before and it will be seen as a safe haven against that fear.
In other words, we finally have an outlet for the public that wants to save against an uncertain and increasingly unfair world. And training the public to desire Bitcoin in this way, as a savings technology and a way to opt out of the unfair, rigged system brightens the prospects for the future.
Pete Rizzo and Aaron van Wirdum have written the best Bitcoin-related piece that I’ve seen this year. The piece is about the history of p2sh, the controversy around the various approaches and the people that made it happen. There were many enlightening parts about it, but the most interesting to me was Gavin Andresen’s authoritarian tendencies which would come to blows a few years later. Definitely well worth reading for anyone that wants to know about the history of Bitcoin. I also have a podcast with the two of them dropping Thursday.
Gloria Zhao is the first fellow at Brink, where she’ll be working on the mempool. Pretty impressive for someone that’s so young, and it shows that dedication, hard work and good mentors can take you pretty far in Bitcoin. Congrats to her and I hope more people can find their way towards contributing to Core on a similar basis. The mempool handling code she’ll work on is a critical piece of the Bitcoin infrastructure, so I consider HRF and Square’s grants well spent.
Breez has a great summary of what’s going on with the Lightning network and the things to come. This is an excellent year-end summary of all that has happened on Lightning and more importantly, more that is to come. The most important of the features listed is the ability for end-to-end messaging without a central party. They’re understandably more focused on monetary uses of the network, but personally, the non-monetary uses are much more interesting to me.
Economics, Engineering, Etc.
Allen Farrington has a deep thought piece on what money really is. It’s the first of what the author promises as three articles, the second about the current monetary system and the third about Bitcoin. Personally, this is a mind-blowing article that explores the utility of money, capital and uncertainty from first principles. The link from store of value and store of human time is explained clearly and rationally. I can’t wait for the next two articles in the series and totally recommend this article to reason about money from first principles.
Gigi has an interesting article on pseudonymous identities in the age of Bitcoin. The idea that pseudonymous identities can and will be more powerful than real names is nothing new. For example, not many people know who Eric Blair is, but they certainly know his famous pseudonym, George Orwell. The interesting thing about our current situation is the potential to manage many identities, which we already do to some degree. Adding money to the mix with Bitcoin is what will give these identities more gravitas, which this article points out the benefits to.
Niall Ferguson has an article on how Bitcoin is emerging to beat gold, among other things. The article reads as a call to embrace freedom in a time of government lockdowns. Bitcoin will do well because people want more freedom after this disaster of a year is the main argument, and I don’t disagree. That said, the reasons for buying Bitcoin have and continue to be because of its scarce supply.
Blockchain Capital has released a demographic trend update for Bitcoin. All the demographic trends are on the rise for Bitcoin, with more people knowing about it, planning to buy it and so on across all age groups. Perhaps the most interesting of these numbers is that about 50% of those aged 18-44 plan to buy Bitcoin in the next 5 years and about the same amount expect Bitcoin to last longer than the Euro. Pretty crazy that so many people seem to be equating the lifespan of both given the Euro is much bigger and somewhat older.
Sylvain Saurel has an article on the mentality that most people have when hearing about Bitcoin. This is a good one to remind ourselves that most people don’t really understand the water that they’re swimming in. Specifically, most people tend to view the current situation as having lasted longer than it has. Worth reading before trying to spread the good word on Bitcoin.
Finally, the StableCoin act has some people up in arms. Preston Byrne has a good analysis. The long and short of it is that the government wants its share of of taxes and bribes from the stablecoin market in particular because there’s someone to tax. I’m sure they want the sweet lobbying money and are aiming to get jobs with such companies afterwards. I see this is more threatening to altcoins than Bitcoin as they all have someone at the center that will need a license, be regulated and taxed. This is why Libra is now rebranding to Diem with a modified white-paper.
I did a show with Tone Vays for the all-time high. That’s a 7-hour stream, so you might want to run it at 2x. I also did a normal news show, a rare Sunday one about Stablecoins and Wall St. FOMO here.
My new book is out! The book is about Bitcoin from a moral perspective and is aimed at Christians. I wrote it with 7 co-authors and is available on Kindle and Paperback. This book explores the moral implications of the current monetary system, its history and how Bitcoin fixes a whole lot of things.
Fiat delenda est.