Serfs of The Ledger

• The Convenience Story Doesn’t Hold Up
• So What Does “Civilizational Building Block” Actually Mean?
• The Genesis of Intent: War vs Peace
• What Would You Build?

More often than not, when the subject of Bitcoin comes up, it’s discussed from one of three angles: protecting the value of your labour and time from the money printer, riding the price pumps and dumps of bull and bear markets, or as a tool for separating money from state. All of these matter, and I’m not trying to diminish any of them but there’s a much overlooked aspect that I believe is of equal importance, Bitcoin as a civilizational building block. Let me explain what I mean by that.

§The Convenience Story Doesn’t Hold Up

Go back to the origins of fiat money, heralded by the appearance of central banks, and something uncanny starts to show. We’re introduced to paper money as a convenience technology, a way of moving value around without lugging heavy, bulky gold. Paper was “safer” and lighter, or so the narrative goes. I’ve heard that story many times and never stopped to really interrogate the safety part, safety from bandits, sure, but mostly safety from seizure by the state.

In 1640 King Charles I, seized £130 000 worth of gold stored for safekeeping in the Tower of London that belonged to London merchants. This became the trigger event that pushed merchants toward private goldsmiths with strong vaults instead of the Crown’s. This innovation eventually became available to the public as well, as the gold receipts could now be deposited and used for commerce, thus simultaneously also making taxes easier to pay and budget deficits easier to fund. In other words, the efficiency (or safety) that paper money brought merchants also had equivalent benefits for the state in the same package. It was all convenient alright, but most for who? The individual or the state? As you might already know, once enough paper was circulating, the goldsmiths-bankers realized they could issue more paper than gold they had on hand and thus the fraud known as fractional reserve banking was born.

By the time we get to 1694, paper money once again evolved from being backed by an individual goldsmith to being backed by the state itself, institutions we now call central banks. The key thing to remember here is that, by this time, the problem was no longer convenience but a war financing problem. The nine years of war with France had resulted in the British government being cash strapped and the Bank of England was thus created as a solution to solve the war-debt problem in exchange for the currency issuing privilege that was granted to merchants for solving that problem. It’s obviously self-evident that convenience for Tom and Dick’s transactions wasn’t really part of the design or the goal.

In 1797, during war with France, the Bank of England temporarily suspended the convertibility of paper money to gold and this “temporary measure” was then codified into law in May of the same year when parliament passed the Bank Restriction Act of 1797. This temporary restriction lasted until 1821, with redemptions only resuming in 1821. Ironically, it was during this period of suspension (1821) that Britain then established the world’s first formal gold standard.

This “gold standard” was not the original state before paper money was introduced, you know the one driven by receipts from goldsmiths, it was institutionalized after the paper experiment, meaning that the state could promise redemption during peacetime to maintain confidence while retaining the power to suspend during times of war. Similarly to how governments today preach fiscal and monetary responsibility during times of “prosperity” but when things go south like they did in 2008, suddenly all of that goes out the window as the money printers go into overdrive.

Without dragging you down the monetary history rabbit hole, one thing is objectively clear; paper money was initially a genuine market response to friction in commerce that couldn’t be avoided with gold’s use; but that narrative became the trojan horse that was used by the banking cartel and the state to decouple paper money from gold and institute an invisible fiat system of perpetual wealth confiscation that centralized economic control in their hands. In short, fiat money as we know it today, is destructive to humanity because it’s a monetary instrument that was born first and foremost to make financing wars easier, hence why the century of central banking has also been the century of perpetual war.

§So What Does “Civilizational Building Block” Actually Mean?

This brings me back to my original point, that Bitcoin is a civilizational building block. What on earth does that mean? Is this just more gobbledygook to force the orange pill on people? Not at all, it’s simply an extension of the first principles baked into Bitcoin’s design.

One of the ways that money can be defined is as a technology that of communication and memory or a ledger that enables you to translate your expended time and energy into a portable, storable claim on the future labour of others. Civilization itself, which is the ability to cooperate beyond the immediate tribe and build complex systems/structures, requires a ledger that accurately records this energy exchange across time and space. When we compare Bitcoin and fiat through this lens, analyzing their original stated intents, we see two diametrically opposed worldviews. One is designed to empower the individual through proof of work and objective truth while the other is designed to subjugate the individual through coercive manipulation. In other words, what’s important to understand is that whichever monetary system better protects the individual’s ability to store value across time is the one better suited to civilization building, because civilization is fundamentally a long-time horizon project.

§The Genesis of Intent: War vs Peace

To truly understand a technology’s trajectory, one must examine the problem it was invented to solve. As we have already established, modern fiat paper money was birthed to allow King William III to finance a war against France without having to raise taxes. Thus, fiat’s foundational intent is the monetization of state power and violence. It’s a top-down tool designed to enable the state to project force while consuming resources it has not yet earned. No fiat currency in history was founded with the intent of protecting or establishing individual monetary sovereignty. Fiat in its present form primarily exists to solve the state’s balance sheet problem; whether it’s war debt, bank liquidity or deficit spending. Facilitating transactions between individuals is just a by-product that keeps the real game alive while distracting you from the gradual erosion of your wealth while being made to participate by stealth in this war driven economic system.

Bitcoin on the other hand was created to eliminate the need for trusted third parties, thus enabling peer to peer transactions to take place without the need for any financial intermediary. It was birthed during the 2008 financial crisis, which had been caused by the creation of fictitious wealth by the fiat cartel and crashed the global economy, triggering a massive wealth transfer from main street to Wall Street. Fiat was born to fund war, while Bitcoin was born to opt out of the corrupt financial system and facilitate permissionless, voluntary economic exchanges. Fiat has no intrinsic value and represents a liability in the system and the only reason anyone still uses it is because of legal tender laws; thus proving once again that its philosophical foundation is the threat of violence. Bitcoin is purely voluntary and no one is forced to use it.

A better civilization can never be built from the top down by institutions that have the power to dilute the wealth of the individual, at the barrel of a gun. A civilization built on fiat is a civilization built on dependency. Citizens depend on the state to manage the stability of their money, they depend on banks to access their money and they depend on politicos to preserve their purchasing power. This dependency creates a relationship of submission where the citizen is a subject of whatever monetary system he lives under, not its master. A civilization built on Bitcoin on the other hand is a civilization built on sovereignty for the individual. You hold your own keys, verify your own transactions and your purchasing power isn’t subject to the whims of politicos or a committee of central bankers. This sovereignty creates a relationship of responsibility, where you are the master of your own economic destiny. This is the difference between serfdom and freedom.

For example when Cyprus’s two largest banks became insolvent in March 2013, the EU/IMF/ECB troika put forward a proposal that not only froze deposits but seized a percentage of every bank account in the country. The initially agreed upon haircut was 6.75% for depositors under €100 000 and 9.9% for depositors with savings of over €100 000, before parliament rejected it. The bail-in that was eventually approved proved to be far worse for large depositors and affected €3.8 billion worth of deposits and affected around 20 000 depositors. What they thought was their money turned out to be a tool of monetary policy whose balance was reduced by decree without their approval. This is notwithstanding the fact that they had not been the direct cause of the financial crisis that led to the bail-ins in the first place. As always, the culprits behind the crisis got to walk away scot free while the bill was left with the savers. This is fundamentally how the fiat system works 100% of the time; privatized profits and socialized losses.

Another example would be that of Lebanese banks, which when faced with insolvency, imposed informal capital controls that barred depositors from accessing their US dollar savings that were estimated to be worth over US$100 billion! The banks simply stopped honouring withdrawal requests, with no viable legal way for depositors to challenge these capital controls; some resorted to violence and sit-ins. I can spend pages upon pages documenting example after example of the same story happening; where the country may be different and the circumstances unique but the response from the powers that be is identical.

From Canada, Turkey, Argentina to Venezuela, we have tons of recent examples of violations of the trust upon which the fiat monetary system is built on. In every one of these crises the person that had an asset outside of the reach of the state, had options that the person without one did not.

If you don’t truly own your own money, how is it useful as a civilizational building tool? How will it ever be useful to you as an individual to build for posterity if it’s half life is 50 years and every other investment tied to it can be arbitrarily seized or frozen? In the fiat world, you as the saver are always the patsy, whose economic opportunities are largely constrained by your geographical location. Bitcoin reverses this structure, and it’s precisely why a lot of people dismiss it. When all you have ever known is serfdom freedom looks dangerous and irresponsible.

That’s what makes the difference between someone like Satoshi who could conceive of such a project, and the guy who attended an Occupy Wall Street protest which yielded no fundamental change. One was able to diagnose the problem correctly and apply a solution that addressed the fundamentals of the problem. The other thought shouting at bank executives making millions a year would somehow shift an incentive structure that’s survived centuries by tapping into one of humanity’s oldest vices; greed. 

§What Would You Build?

If money were no object, what would you build? What would you be doing with your time? Instead of being a cog in the fiat machine, how would you be creating value right now? I don’t mean this in a purely economic sense, for example a mother’s presence during the formative years of her children is priceless and can never be quantified financially; even the idea that all value has to be only financial is a fiat way of thinking, but i won’t address that today. I will leave you with these thoughts; if the smallest unit of civilization is the individual then what do you intend to build with your stack? Are you just looking for a comfortable retirement or to build a legacy that will give your descendants and possibly even the world, a headstart? What’s the point of owning your money, if you cannot direct it towards causes and people that matter the most to you?