The Breakdown - Bitcoin and Freedom

Episode Date: October 29, 2023

A reading of Preston Pysh's "Bitcoin is Anti-Totalitarianism" https://bitcoinmagazine.com/legal/bitcoin-anti-totalitarianism Enjoying this content? SUBSCRIBE to the Podcast: https://pod.link/1438693620 Watch on YouTube: https://www.youtube.com/nathanielwhittemorecrypto Subscribe to the newsletter: https://breakdown.beehiiv.com/ Join the discussion: https://discord.gg/VrKRrfKCz8 Follow on Twitter: NLW: https://twitter.com/nlw Breakdown: https://twitter.com/BreakdownNLW

Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. What's going on, guys? It is Sunday, October 29th, and that means it's time for Long Read Sunday. Before we get into that, however, if you are enjoying the breakdown, please go subscribe to it, give it a rating, give it a review, or if you want to dive deeper into the conversation, come join us on the Breakers Discord. You can find a link in the show notes or go to bit.ly slash breakdown pod. friends, happy Sunday. You know, some weeks when I look for LRS stories, I really have to stretch it a little bit. I have to find something that I'm going to have a lot of commentary on or maybe connect with a different piece, and that's fine. Obviously, I like the analysis. Some weeks, however,

there is something that so clearly stands out as the obvious thing to read that it just screams at me and practically drives its way into this show. This week, as you might have guessed, we have one of those. The piece is by Preston Pish and is called Bitcoin is anti-totalitarianism. I, or rather the 11 Labs AI-generated version of me, is going to read this piece, and then the real non-AI-Me will come back with some analysis at the end. In the face of ongoing challenges to our cherished freedoms, it is imperative to critically examine the forces at play that threaten the very fabric of democracy. The ideals of freedom in open markets are at risk of being undermined by influential political forces seeking to impose oppressive order and control in the name of security.

This article delves into the pressing need to fix our manipulated markets, protect Bitcoin and its inherent anti-totalitarian qualities, and inform U.S. policymakers that democratic values are what's at stake. Section. The erosion of free markets and capitalism. People who think we currently have capitalism and free and open markets haven't been paying attention. The American economic landscape, once a paragon of capitalism, has undergone a seismic shift, particularly since the 2008 financial crisis when lawmakers selectively bailed out the bankers at the expense of the broader economy. The central banking system's pervasive influence has led to a distortion of free markets, with quantitative easing, QE being employed as a tool to manipulate the bond market,

artificially lowering the cost of capital and thus distorting the prices of everything. This manipulation has had far-reaching consequences, including the gutting of the middle class and the concentration of wealth in the hands of a few. In the wake of the Silicon Valley Bank failure this March, the deployment of tools such as the bank term funding program, BTFP, has further exacerbated these distortions, providing de facto yield curve control for banks, while leaving ordinary citizens to grapple with soaring interest rates and inflation. This divergence from naturally occurring economic markets and the suppression of a free and open cost of capital has pushed us closer to an economic model reminiscent of,

you name it, communism regime, threatening the foundational principles of capitalism and democracy. Section The newest assault on financial freedom and Bitcoin In a recent letter from Senator Elizabeth Warren and numerous congressional members, they leverage international crises to further their own political agenda and curtail financial freedoms, armed with a freshly published Wall Street Journal article that falsely suggests Hamas raised a significant sum of crypto funding to attack Israel. The truth couldn't be more obscured. The irony of the claim is that the public Bitcoin blockchain provides evidence that anyone can dispute, which is exactly what happened the day following the senator's letter to the president.

On October 18th, blockchain analysis firm Chainalysis clarified that while some terrorist organizations, including Hamas, do leverage cryptocurrencies for funding, the scale is extremely small relative to traditional fiat banking means. They emphasized that the transparency of blockchain technology makes it a less suitable medium for illicit activities, including terrorism financing. Additionally, Chainalysis pointed out that government agencies and private sector organizations can collaborate using blockchain analysis solutions to trace and disrupt the flow of funds to these terrorist groups. They also highlighted the importance of understanding the role of service providers in these financial networks and cautioned against overestimating the scale of terrorism financing in

cryptocurrency, based on flawed analyses and misinterpretations. Delving deeper into the facts revealed by chain analysis, it becomes increasingly evident how Senator Warren's letter dramatically skewed the situation. The detailed analysis zeroes in on a specific address that conducted over 1,300 deposits and 1,200 withdrawals within a mere 7.5 months, with a total inflowranes of roughly $82 million in cryptocurrency. However, a mere fraction of this amount, approximately $450,000, can be linked back to a wallet associated with terrorist activities. This represents a mere 0.3461% of the purported $130 million claimed in the letter, a staggering discrepancy that lays bare the deceptive nature of the narrative being pushed to the White House. Not only has

Business Insider reported on October 21st that Hamas operates with an annual budget of $300 million, but a significant portion of its funding also stems from taxing imports into Gaza, as well as international connections with Iran, a country to which the U.S. government recently, and rather ambiguously, may have released $6 billion in fiat currency 2 in September, just a month prior to the attack on Israel. Unlike Bitcoin, which offers a publicly accessible audit trail, citizens are left in the dark about this substantial financial transaction. The narrative on what was actually released depends heavily on the news outlet or political interest one consults, often resulting in biased and self-serving points of view, the irony.

This stark contrast between politically manipulated numbers and the transparent reality a public blockchain provides underscores the urgent need for thorough, factual analysis and the adoption of publicly verifiable monetary units like Bitcoin. Section. Why is this so concerning? Kne-jerk policy reactions based on false information and poor reporting can have devastating long-term impacts to the U.S.'s competitive economic position, and more importantly, the liberties and freedoms and freedoms of the citizens. In what appears to be a coordinated policy response, one day after Senator Warren's letter,

the U.S. Financial Crimes Enforcement Network, FinCEN, came out with a proposal for special measures regarding convertible virtual currency mixing and labeled it a primary money laundering concern. Based on all the information contained in the FinCEN proposal, it opens the door for expansive policy to infringe on the rights of individuals. For example, the increased surveillance and potential loss of privacy could subject individuals running Bitcoin full nodes to unprecedented scrutiny. They might find themselves burdened with regulations. regulatory requirements that are not only onerous but also infringe upon their personal privacy, and the privacy of users transacting through their nodes. The uncertainty and legal risks

associated with running a full node under these proposed measures could discourage individuals from auditing their property, thus increasing their risk and reliance on bad actors. Bitcoin holders that ran their own node and took custody of their property in 2022 were not impacted by fraudulent centralized gatekeepers, like Sam Bankman-Fried, and third-party custodians that acted maliciously. Additionally, a policy attack on node operators creates less financial freedom for U.S. citizens and an incentive for businesses in this new sector of finance to move offshore. Developers might be discouraged from creating and implementing privacy-enhancing features,

limiting the potential and the very essence of American citizens and builders within this country. Section. What is the essence of a Bitcoin node and why is it important? In the gold market, how would you know if someone gave you a pure bar of gold? Well, you can own an XRF, X-ray fluorescence device that emits energy waves into the metal to determine the elemental composition based on the frequency of energy that comes back to the device. In short, a purity audit ensures that you have purchased actual gold. Why is this device so important? Because if you buy a million dollars of gold, you want to make sure it's the real stuff, right?

In Bitcoin, that purity test is conducted by running a full node. This test can be outsourced to a third party, or it can be conducted by the individual. This point is vital. If a person is not allowed to run their own node in audit delivery, it would be the same as saying a person accepting delivery of a billion and gold is banned from conducting their own personal audit. Since Bitcoin is a digital commodity, this right to audit delivery is essential to protect their liberties against foul play. Suggesting such a device be banned is a vote for autocratic control by government handlers at the expense of the individual's rights to protect themselves from thieves. While we are on this important subject, Bitcoin is the only blockchain that has a code base small enough to allow for everyday

citizens to afford and operate their own node and provide independent audits on their property, ensuring its legitimacy and overall security. In short, Bitcoin is different. Bitcoin promotes individual freedoms, sovereignty, and liberties at the individual level, an idea consistent with our Declaration of Independence, endowed by their creator with certain unalienable rights, that to secure these rights, governments are instituted among men, deriving their just powers from the consent of the governed. Section, a call to action. So what do totalitarian governments embrace? They embrace control. Such a control is often established through small and incremental changes that mask a deeper trend and direction that citizens don't notice. This progression ultimately leads to absolute control.

Now, what is the paramount lever to pull if a government was interested in absolute control? That's right, the money. Because money is the energy that fuels every action and desire of the individual citizen. Therefore, let me be very clear, you will not beat a totalitarian government by becoming more totalitarian. America was founded on the principle of individual rights and freedoms. Those freedoms in turn created the strongest economy and most powerful nation on the planet. It is those very freedoms that are at risk with knee-jerk policy decisions to remove your individual rights in the name of security. In the face of the unstoppable tide that is Bitcoin and decentralized finance,

it is paramount that we, as a society, and particularly as citizens of the United States, recognize the critical crossroads we find ourselves. The trajectory of Bitcoin's innovation and adoption will continue, with or without the active participation or understanding of any single nation. The question that remains is whether we will be leaders or laggards in this inevitable financial evolution. Our cherished ideals of liberty and open markets are at stake. We must urgently commit ourselves to a deep and nuanced understanding of Bitcoin's potential to secure financial freedom in an increasingly digital future. By actively choosing to educate ourselves, our communities,

and engaging in meaningful dialogue with our elected representatives, we are taking essential steps towards protecting our position as a global financial leader. This is not just about maintaining economic dominance. It is about safeguarding the very liberties and freedoms that define us. The false sense of security provided by manipulated markets and snap policy decisions has eroded the foundation of capitalism, a system that, in its true form, no longer exists. We must recognize this distortion, challenge it, and champion the cause of financial freedom through Bitcoin.

Supporting organizations dedicated to digital rights and financial freedom becomes not just a choice, but a duty. By contributing our time, resources, and voices, we are making a stand against the forces that seek to centralize control and diminish our economic sovereignty. On an individual level, embracing the tools that ensure our financial freedom, such as setting up Bitcoin wallets, running full nodes, and educating ourselves on the secure use of Bitcoin is a powerful act of promoting freedom. We are fortifying the network, protecting our assets, and affirming our commitment to a future where financial freedom is accessible to all. The challenge is formidable,

but the stakes are too high to remain passive. United States has a choice. Adapt and embrace the decentralized future of money, securing our liberties and financial leadership, or risk being left behind, tethered to outdated systems and eroding freedoms. The power of informed, engaged, and proactive citizens is our greatest asset in this pivotal moment. Together, we can shape a future that upholds the principles of freedom, innovation, and financial sovereignty. Those who would give up essential liberty to purchase a little temporary safety deserve neither liberty nor safety, Benjamin Franklin. All right, back to non-AI and non-reading NLW here just for a few words of wrap-up. There are two things that stand out to me

as relevant about this piece. The first is, of course, the context of the week that it came into. We've spent the last two weeks screaming and hollering, that the story that Elizabeth Warren's most recent letter was written around, that got 100 members of Congress to sign, that Wall Street Journal piece you'll remember that said $94 million went to Hamas from crypto sources, is just absolutely flat out wrong. At the time of recording, at least, we haven't seen any sort of retraction from the journal, and this is the type of thing that we have to deal with all the time. It's obviously more poignant to have the piece released in that context than at that time. The second reason, though, that I think this is so valuable at this moment, is that it is at

these times, the very beginnings, the transition periods between bare markets and bull markets, where we have a chance to remember what connected us to Bitcoin in the first place and why it matters. anyone should care aside from number go up. When number does start to go up, and it will, as we've seen this week, a lot of people will walk in the doors not necessarily caring about that. That's okay. Many, many people did. It is a very common trajectory in crypto, to come for a number go up, but stay for some other reason, some more profound reason. Preston in this piece has done a great job of reorienting around those fundamentals in ways that I think will be very valuable for the next cohort of Bitcoiners who are just about to be minted. Thanks one more time to Preston for this great

peace, and until tomorrow, be safe and take care of each other. Peace.