Everything happens. After dropping to $3,800 in March of 2020, Bitcoin is now around $35,000. It seems that more and more legacy institutions or big investors are announcing their entry into the space every day. Thousands of currencies are moving outside the exchanges. Governments around the world continue to print money, and the “deficit doesn’t matter” message is spreading along with that newly printed money.
Running in full swing. More people are starting to question the assumptions they’ve made about the world and are starting to see Bitcoin as a valuable asset to hold. The narrative is changing. As Bitcoin continues to gain attention, more and more people are exposed to its danger. Inevitably, a percentage of these people get sucked down the rabbit hole. Number go up (NGU) technology works as intended. The feedback loop continues.
Excess currency is inevitable. The growing user base continues to add liquidity. The protocol and surrounding infrastructure continues to improve, making Bitcoin easier to use. Altcoins continue to fade as the monetary and network influences of Bitcoin continue to grow stronger. Extensive user base and increased interest from companies are making it impossible for governments to ban Bitcoin. Castles are close by.
Before we get carried away, let’s throw a bucket of reality at our heads. Instead of getting sucked into the hype that bull markets tend to produce, let’s take a step back and acknowledge the reality. Bitcoin will not become, and more importantly, what we imagine with the help of the state.
As Bitcoin continues to grow in popularity, the question of whether or not governments can ban Bitcoin is being debated. Many responses to this question fall into one of two camps. The first camp concluded that yes, governments can and will ban bitcoin, and there is nothing we can do about it. The second camp believes that a government ban on Bitcoin is impossible. Constitutional rights, Supreme Court cases, populism, competition, and even corporate involvement have been cited as reasons why governments should not take or reject action. Most of those who fall into the first camp are degree holders while the second camp is mainly made up of HODLers.
To add some nuances to this topic, I’ll go to the side of the first camp. Yes, governments will eventually ban bitcoin. Tomorrow may not be. It may not be any time soon. It might not be blocked at all, if I’m honest, but the opposite should be our main assumption. For bitcoin to be censorship-resistant, there has to be censorship.
So far, the success of Bitcoin, as well as the proliferation of altcoins, is largely a result of Eric Voskuil. calls honeymoon phase. Bitcoin currently does not pose a sufficient threat for governments not to make a serious attempt to destroy it or change the way it is used. However, if this space continues to grow, and governments’ ability to finance themselves is threatened, the honeymoon will come to an end. If at any time a state had to decide between protecting its sovereignty or protecting individual property rights, it would choose the former.
The word decentralization has become despicable in a world full of altcoins. It’s easy to claim and hard to prove. Many industry participants use the term loosely, but what do we really mean when we claim decentralization? Why is decentralization important? The main objective of the decentralized cash network is to resist censorship. Everything else is just noise.
In the long run, resistance to censorship in Bitcoin is achieved by the following:
1. Users are willing to transact illegally in bitcoin, and pay a premium to do so.
2. Miners are willing to mine bitcoin illegally and can do so profitably.
If any of these necessities fail, so does bitcoin. Yes, you read correctly. Bitcoin’s long-term survival depends on people’s willingness to break the law.
My intention in pointing out Bitcoin’s security assumptions is not to turn us into hardened criminals, but instead to remind HODLers of what they already own. In the past few months, there have been a number of narratives running against bitcoin and bitcoin has been desperately trying to counter these narratives by taking to social media. If we are honest about what bitcoin is, rather than trying to succumb to regulators and institutions, we may be more effective in our rebuttals or make them completely unnecessary.
No need to defend the latest noise about bitcoin’s energy use. Every joule consumed by the Bitcoin network is a function of the free market. Placing bitcoin as a “green technology” in order to ease the concerns of the people in charge is simply a waste of energy. Another waste of energy is arguing with altcoin promoters over how much Bitcoin is superior. It has become quite clear that the market does not care about “network fundamentals”. The truth is that what separates Bitcoin from all other coins is that it actually has a chance of surviving as money on the black market when the honeymoon phase ends.
If bitcoin is banned globally, all bitcoin transactions will be considered black market. The most interesting scenario to consider is what happens to bitcoin if it becomes a split market. Certified bitcoin activity will occur inside the gated gardens of regulators, and any peer-to-peer transaction would be illegal. If miners and users decide to play by the rules, the network properties will be lost. Long-term changes will be made to suit the objectives of the regulators. However, if we choose to object, we have a fighting chance of protecting the properties that make bitcoin so valuable. We’ll also get a premium for doing this, as black market goods tend to get a premium.
If you feel left out while reading this post, you need to re-examine your assumptions. Bitcoin will succeed or fail based on its advantages and the economics behind the security model. I have confidence that Bitcoin will survive. There is nothing to be gained from friendly organization. Bitcoin skeptics like to repeat that “Bitcoin is not backed by anything.” Nonsense. Bitcoin is backed by us, and we need to be ready to defend it. Shouting on Twitter about how Bitcoin mining uses 76% renewable energy doesn’t help.
Ignore the prospect of mass adoption and the allure of “number soaring”. Ask yourself instead the following tough questions:
What would you do if bitcoin was banned? Will you continue to keep it? dealing with it? Mine it?
What will you do when regulators try to control Bitcoin?
I am ready to take a stand. Are you?
References: Many of the ideas written here have been influenced by the work of Eric Fosquel. I know he will find errors in distilling his concepts, so please review his original work libcoin or buy his book Here.
Disclaimer: Bitcoin Magazine It does not condone or encourage any illegal activity.
This is a guest post by Justin Siegal. The opinions expressed are their own and do not necessarily reflect the opinions of BTC Inc or Bitcoin Magazine.