Think Bitcoin™ Issue #29
Why governments cannot and will not end Bitcoin
Hey friends, welcome back to Think Bitcoin™ for issue #29. Special welcome to all the new subscribers. I’m glad you’re here. As always, if you have any questions or comments, feel free to reach out. You can also find me on Twitter (@TheWhyOfFI).
In this issue:
Headlines/Insights: Why governments can’t and won’t end Bitcoin
Content Round-Up: Bitcoin Conference 2022
As always, if you find this newsletter interesting or useful, please share it with others who might find it interesting or useful, too!
Headlines and Insights
Why Governments Can’t End Bitcoin
This would certainly seem to be the weekend to recap everything that happened at the Bitcoin Conference in Miami last week. But that’s not what I want to talk about. Earlier in the week I was listening to a podcast interview with Meltem Demirors, in which she made the comment (paraphrasing) “we meme’d Bitcoin into existence.” She stated this as evidence of Bitcoin’s power, influence, and cultural penetration. It got me thinking about the age-old question of whether the state, specifically the U.S. government, can effectively ban Bitcoin or neuter it by sufficiently restricting it via various legal machinations.
Ray Dalio has notably called for caution with respect to Bitcoin because he thinks governments will ban it. In January, he reiterated this position, saying "In history, they've outlawed gold, and they've outlawed silver. They could outlaw bitcoin." Mike Green, now at Simplify Asset Management, has made similar arguments. The TLDR of their respective positions is that if Bitcoin becomes a threat to the dollar, to U.S. hegemony, or to the ability of the U.S. to conduct foreign policy in the ways it wishes, it will come down on Bitcoin like a ton of bricks.
I think it’s increasingly clear at this point that a Bitcoin ban is not even on the table in the U.S. However, there are obviously those who would like to see it quashed through subtler legal means.
I want to posit that, even if initially successful, any such means would ultimately fail. And the reasons are as follows.
The state, in a distinctly 20th-century, pre-internet way, views the field of battle as one of law, one in which he who can write, harness, and weaponize the law will indubitably prevail. Long-term, however, it’s not a battle of laws. It’s a battle of memes. And, here, the state is disadvantaged, comparatively unskilled, and behind.
Memes are many things. But in this context memes are stories and narratives. Demirors said we meme’d Bitcoin into existence. And she’s right. Bitcoin is a narrative about the world.
The cognitive dissonance in D.C. emanates from the view that U.S. government, hegemony, and exceptionalism is not, ultimately, just a narrative about the world. Which is to say, everything is a meme is still an unevenly distributed and under-recognized truth, particularly at the legacy institution level. Marx said all history is the history of class struggle. But perhaps all history is just the history of narratives, the history of stories that have prevailed. A history of memes.
Democracy is a meme. Capitalism is a meme, as is socialism. Fiat currency is a meme. U.S. hegemony is a meme. The idea that lawmakers “protect” investors and look out for the little guy is a meme. The idea that Congress, as a deliberative body, is all-encompassingly competent, of sound judgment, and well-versed in the topics upon which it legislates, is a meme.
The U.S. government is a suite of memes, and it is held together by its ability to ensure that these memes are widely shared, widely believed, and widely considered self-evidently true by its citizenry.
Sure, the government passes laws that enforce (and, at times, coerce) the aforementioned suite of memes. But when more powerful memes arise, countervailing laws (and even entire regimes) can be and often are supplanted. This has happened everywhere throughout history.
Bitcoin is a meme created, developed, and promulgated by its ever-growing community of developers, users, and advocates, using the single greatest communication technology in the history of the planet: the internet. The Bitcoin meme argues that in a world of money printing, social credit scores, censorship, and institutional senescence, sound money that is censorship-resistant and can’t be manipulated is essential.
The government meme argues for trust in legacy institutions; trust that elected officials will and do act exclusively in the best interest of citizen and country; and trust that a couple hundred septuagenarians are best-suited to craft the social, political, and economic way forward.
Empirically, the last five to fifteen years (at least) have demonstrated pretty convincingly that the government meme is not as self-evidently true as it may have seemed in the past. I needn’t enumerate the many examples of the government’s general dysfunction, cognitive dissonance, conflict of interests, and tone-deafness over this time.
The meme of U.S. hegemony, U.S. moral superiority, categorical U.S. competence, etc. is a meme that is declining in its power to bind people together. Meanwhile, the meme of Bitcoin is ascendent.
Coming back to the fear some harbor about the U.S. government (and/or a preponderance of western governments) attempting to strangle Bitcoin with devilishly written legislation, pointed executive orders, or forceful (though verifiably false) narratives about ESG, any such attempt would ultimately be a self-defeating, almost suicidal one.
Simply put, the government can’t best Bitcoin on the field of memes, either substantively or through superior organization and execution. As we’ve already mentioned, the substance of the government meme loses credibility by the day, while Bitcoin accrues it. But, just as importantly, Bitcoin is perhaps the greatest grass-roots movement of the last half-century. Its community is highly-skilled at leveraging the internet, social media, and culture to organize, advocate, and promulgate the Bitcoin meme. Governmental bodies cannot compete in this realm.
Ray Dalio might rebut these claims in a few different ways. First, he might say that if Bitcoin gets so big that it meaningfully challenges or threatens the clear supremacy of the U.S. dollar, the government will act as aggressively as necessary to strip its power. To this I would say, sure, and in doing so, it would weaken its own credibility beyond repair or rehabilitation (to the extent that it hasn’t already done so), because such action contains an implicit admission, namely an admission that a money meme’d into existence, controlled by nobody, and organically adopted by millions of people is a threat to the reserve status of the strongest currency in the world. Such governmental action would be anti-democratic, counter-majoritarian, anti-free enterprise, and hostile to property rights, all ideals that the government purports to favor and is purportedly committed to safeguarding. In other words, it would be a move made out of fear and weakness; not a move from a place of strength. And all of this makes the government meme that much weaker, while counterproductively making the Bitcoin meme even stronger. Any attempt to kill Bitcoin only makes Bitcoin’s value more apparent. In this way, it’s anti-fragile.
Dalio would then say well, they’ve confiscated gold before, so why wouldn’t they do the same to Bitcoin? First off, the government didn’t confiscate gold. That would’ve been plainly and incontrovertibly unconstitutional. What they did in the early 1930s was force folks to turn in their gold for a set payment per ounce. We must consider the context, though. Franklin Roosevelt was President, with a commanding majority in Congress. Moreover, communication technology like the internet, which people could use to organize, coordinate, and advocate, obviously did not exist. Though gold ownership certainly has some degree of cultural depth to it, it’s nothing like Bitcoin, whose cultural heft and breadth places it squarely beyond extirpation. Bitcoin is part political party, part rights movement, and part religion. It’s rock and roll, it’s hip-hop, and it’s philosophy. It is a cultural revolution in a way gold never was and never will be, and it’s a total paradigm shift in the way culture can drive government.
Back to Demirors, yes, we meme’d Bitcoin into existence, and twelve years later it is scaling nation-state level power. This should make you optimistic about the future.
The government can win battles with laws. But it will lose the war, which is at the meme level. Perhaps it already has. And when you lose the narrative war, any attempt to hold the status quo together via sheer legal force smacks of authoritarian impulse. Because it’s what authoritarian regimes do to preserve power at all costs.
As Victor Hugo said, “one can resist the invasion of an army but one cannot resist the invasion of ideas.”
This is why Bitcoin will win.
This absolutely does not mean that we should be complacent on the legal front and not advocate vigorously for fair legal treatment. We should fight tirelessly for it. And organizations like Coin Center and the Blockchain Association are doing yeoman’s work in this regard. But I think we should do so knowing, as Sun Tzu said, “victorious warriors win first and then go to war, while defeated warriors go to war first and then seek to win.” We have already won the war of memes. Now it’s time to win everything else.
Content Round-Up
If you haven’t already, spend some time checking out the many great presentations at the Bitcoin Conference last week.
As always, thanks for reading! If you enjoyed it or found it useful, share this newsletter widely and freely!
“Civilization is in a race between education and catastrophe. Let us learn the truth and spread it as far and wide as our circumstances allow. For the truth is the greatest weapon we have.” -H.G. Wells
See you next week,
Logan
SUPPORT
Send bitcoin to my Strike
SOCIAL
DISCLAIMER: I am not investment advisor and this is not investment advice. This is not, nor is it intended to be, a recommendation to buy or sell any security or digital asset. Nothing in this newsletter should be interpreted as a solicitation, a recommendation, or advice to buy or sell any security or digital asset. Nothing in this newsletter should be considered legal advice of any kind. This newsletter exists for educational and informational purposes only. Do your own research before making any investment decisions.
© Copyright Logan Bolinger