The Breakdown - The Power and Peril of the 'Bitcoin Fixes This' Meme

Episode Date: June 2, 2020

Cities around the country have been engulfed in protest in the wake of the murder of 46-year-old black man George Floyd. There is an intense battle for the narrative around the protests. Are they legitimate outcries against institutional racism and police brutality? Is the looting covertly being driven by white supremacists on the one hand or ANTIFA on the other?  In the Bitcoin community, some have plumbed the “Bitcoin Fixes This” meme to argue that the core underlying issue has to do with a monetary system that structurally creates inequality. Others have clapped back against pushing that meme in this moment.  In this episode of The Breakdown, NLW looks at: What bitcoiners are trying to say when they apply the “Bitcoin Fixes This” meme to this moment. Why the current system structurally exacerbates inequality. Why the meme fails to capture additional economic, political and power dimensions of what’s going on. Why the meme in this moment might feel so out of place as to inspire the opposite of its intended effect: turning people away from bitcoin rather than making them want to learn more. Why Satoshi’s “If you don’t get it, I don’t have time to explain it to you” quote is the most misused and abused of his sayings. Why complexity and nuance, not memes, are needed now.

Welcome back to The Breakdown, an everyday analysis breaking down the most important stories in Bitcoin, crypto, and beyond. This episode is sponsored by BitStamp and Cipher Trace. The Breakdown is produced and distributed by CoinDesk. And now, here's your host, NLW. Welcome back to The Breakdown. It is Monday, June 1st, and we are living through one of the most significant and sustained periods of protest, and civil disobedience and political uprising that this country has seen in more than a generation. For the last six nights, cities around America have been engulfed in at times violent protest,

at times peaceful protest. And in this chaos, the fog of war is thick. Right now, there is an unbelievable battle to control the narrative of these protests. This has huge significance. Is this the work of Antifa terrorists who are trying to undermine the state and who should be considered a terrorist organization, as our president has tweeted. Is it the work of external white racists who are using the chaos to try to sow discord to delegitimate protests by having and inspiring and enacting looting and criminal violence? Is it some combination of all of the above with peaceful protests turning into violent protests that are responding to the violence of police trying to contain the protests, that are also

seeing infiltration from other people, the fog of war is thick. This podcast is not an attempt to untangle those complicated strands in that fog of war. What it is is a look at one specific part of the conversation, frankly, a very, very tiny spot of the conversation, but one that has relevance for this Bitcoin community. Over the weekend, through some parts of the Bitcoin community, you saw tweets embodied by this one from Max Kaiser. He wrote, wrote, America is experiencing a multi-color rainbow slave result. 100 million Americans live on slave wages. Bitcoin fixes this.

Now, on the one hand, that was a popular tweet. It got 614 likes. On the other hand, there were many bitcoiners, such as Alexander Leishman, who is the CEO and CTO of River Financial, who retweeted it and said, I respectfully disagree. Bitcoin does not fix this. There were, in fact, many who preemptively said, I don't want to see the Bitcoin fixes this tweets right now. But where this conversation picked up a little bit more steam was when Jessica Hussman,

who works with ProPublica and was covering the Austin protest last night, tweeted out a photo of a guy with a cardboard sign that says Bitcoin will save us. She tweeted simply Christ, and it has been retweeted 625 times, liked 1.9,000 times, and inspired a bit more conversation. Niraj from Coin Center wrote, There's this mindset that looking ridiculous in front of millions of people is fine, as long as a few hundred who might be sympathetic see the message. It's not going to work.

Another commenter followed up, I feel this approach doesn't take into account the tens of thousands who will see it and be turned away for years because of it. I think it's interesting to explore not only in the context of what Bitcoin's narrative is and where it fits in the larger narrative of societal change, but also in the context of memes and information transmission and recruitment of new people, of new power. I think that this is ultimately all of this is about power to some extent, and it's important

to have and use these moments to examine and understand the way that power flows in the world around us. So with that kind of framing, let's get into this idea of, does Bitcoin fix this? Will Bitcoin save us? So let's start with the roots of this meme. It actually is something of a contentious meme, at least by origin. If you'll remember, Michael Gold's, who goes by Bitstein on Twitter, gave a very contentious speech in Texas last year at a Bitcoin conference that was all about memes. And it was a sort of a semi-farsical speech, but one of the things that was part of it was this idea of really, really focusing on nuance destroying three-word memes like Bitcoin fixes this over and over and over again, applying it even in places

where it didn't seem to totally fit because that got people talking about Bitcoin. It basically infiltrated mind share. And that wasn't appreciated by everyone. I think that the widespreadness of a lot of what he was talking about has validated some pieces of it from the standpoint, strictly speaking, of tactics. But this is, again, not a universally beloved meme. Now, it is highly relevant in the Bitcoiner context. And the way that Bitcoiners tend to use this, I believe, is as less as a kind of brute force, Bitcoin fixes everything, but as an entree to the conversation around which the problems that Bitcoin addresses are so fundamental to the endemic challenges of society, that a shift to a sound money, an undebasable money, a Fedless type of system for money,

would have wide-ranging impacts that go far beyond what you think. in some ways it's a rebuttal to the simplified payments narrative that Bitcoin is still trying to get its way out of. And so I think that that's the place that that meme finds its spot in the conversation aside from this, outside of this. So what then might be the reference point, the idea in this context? Well, a key piece of it is the idea that underlying these protests, underlying this police violence is a economic system that has specific pillars of power. And those pillars of power and the way that the economic system is organized have created or are inherently creating the conditions for this type of thing to occur.

Specifically, many Bitcoiners would argue that our Fiat money system and the inflationary economic policy that surrounds it is inherently and, implicitly a force for driving quality, wealth inequality more specifically. Hold aside whether you think Bitcoin is the right answer to this, and there are many, many people who would argue this vociferously, and frankly, the numbers seem to bear this out. The issue at hand is that when your economic policy is designed entirely to keep asset prices high, well, who has access to buy those assets? And if you don't have assets, what do you have and how is that impacted? And so effectively, what you have in America right now is a system where savings are incredibly de-incentivized. Interest rates being as low as they

are, mean that you don't get value from your savings. It means that you are forced into public markets or into other asset categories to get yield from your money over time. So savers are punished. That's one part of this. The flip side is that asset holders are rewards. interest rates being low means that people can move more money into asset prices means that the prices of those assets arise. When you create the scenario for debt to be cheap, people take on more debt and it increases the value of everything from the standpoint of asset price appreciation. Now, of course, that only works so long as asset prices keep rising. And what's more, it only works for the people who actually have the ability to hold assets? Well, the problem is that 50% of Americans

don't own stocks, any stock at all. And that number means that as these asset prices increase, the people who are able to get more of the assets, literally the rich get richer and the poor get poorer, but manifest as the actual economic policy of the day. Last week in an interview, Jerome Powell, the Fed, said that the policies of the Fed, quote, absolutely. don't add to inequality. He was called out by so many people. Sven Henrik, Northman, Trader on Twitter, says, that is such a bold-faced lie and willful denial. The Fed will never admit to this because doing so would reveal their entire policy contract to be an absolute shambles, despicable. By abdicating responsibility and refusing to acknowledge their role in ever-expanding

wealth inequality, the Fed is revealing itself to be an inherent dishonest organization. arrogant, clueless, belligerent, unaccountable, reckless. Keep in mind, that's not from a Bitcoin insider or anything like that. So there is a sense, broadly speaking, manifest in the numbers, that the role of central banks, at least this interventionary role, keeping interest rates artificially low to keep asset prices moving ever up, right? Stocks go up, number go up, is creating havoc on the other side. And it's creating this disparity between those who have the capacity to own assets and those who don't. BitStamp is the original global cryptocurrency exchange.

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There is another part of this story of who benefits from money printing that comes from the 18th century French banker and philosopher named Richard Cantion, who wrote an essay called an essay on economic theory. The basic thesis of which was that effectively, the closer you were to the locus of power, the more you benefited, And the further away you were, the more you were harmed. This would become known as Cantion effects, or the Cantion effect. Recently, Matthew Stoller wrote a great essay about this in the context of our modern system. This was in April, and it was right after we started to see the latest round of bailouts. And I'm just going to quote him because I think he does a great job explaining it. He says, this brings us to today's bailouts and the meaning of institutions. Large banks, private equity corporations, and foreign central banks get dollars through the capital

markets by trading bonds and stocks. It turns out that the Federal Reserve is very good at working in these markets and can move trillions of dollars relatively quickly. So that's why the real estate arm of the largest private equity funds in the world are skyrocketing today. They know that the Fed spigot turned on and that the spigot is instant and functional. However, the small business administration, unlike institutions in the 1930s and 40s, does not have the workforce or ability to make direct loans to businesses. They have to guarantee loans made by banks who are in turn supposed to make those loans. Or that's the theory, but in America, commercial lending institutions have hollowed out dramatically. Neither the banks nor SBA nor anyone else

have the people to originate loans. We can't do it. And our unemployment offices aren't much better. So on the one hand, we have the artificial control of interest rates to inflate asset prices, creating greater wealth inequality. And then on the other hand, we have the actual practical apparatus of distributing money that benefits a very specific type of institution. versus small businesses and individuals, well, then you have a scenario where if you locate a core root cause of this tension and anger and fear and frustration and sense of injustice that is spilling out onto the streets

in not only the assassination of George Floyd, but also the economic situation that puts people in poverty, then Bitcoin fixes this becomes shorthand for an alternative that is sitting there and is available. That's the shorthand that it's trying to get at. There is one other potential type of shorthand as well that was brought up to me by Max Fige, and I was tweeting about this last night, which has to do with the property of Bitcoin as censorship-resistant money. So this isn't about its monetary policy per se, but about the

inability of transactions to be censored, certainly as easily as something like U.S. dollar transactions run through the traditional infrastructure can be censored. Max wrote, I donated to a black socialist group today. I doubt they'll have Venmo access in a month. A key point of this is that Bitcoin fixes this isn't saying if every one of these people just had a little Bitcoin, it would solve all the problems then. It's about the idea of an argument that an underlying cause, a root cause of the injustice and inequality that produces the scenario that we're in is something that Bitcoin is designed to address, right? That is the shorthand for the Bitcoin fixes this meme. It's the idea that the structure of society is basically

rigged to drive inequality, and that that rigging originates at least in part by the very nature of money itself. Now, what does Bitcoin fixes this miss? Because the visceral reaction that you're seeing so many people have, I think, is dead on because they are struggling to see or struggling to focus on this part of the long-term change necessary when there are such more immediate things right in front of their eyes. Well, to me, this is about power. and power doesn't exist on a single dimension, such as just the economic dimension. It exists on an economic, a political, and a force dimension, a military force, dimension all at the same time. Let's look first at parts of economic power that don't have to do with Cantian effects

and which don't have to do with Fed policy of keeping interest rates artificially low or any other aspect of fiat money per se. At other times in the history of the country, when interest rates were high and savings was incentivized, you still saw structural barriers, structural inequality that had often to do, often to do with racism. You can't escape the history of racism in this country as it relates to the major institutions from our schools to our markets to the way that our cities are organized. It is just a fact of the history of this country. People are welcome to debate where that fact fits in now and how and the right ways to address it, but to ignore the legacy of this country that gets built in not to just people's attitudes,

although we could do a huge amount about that, but into things as simple as where people are organized in cities, what access to education those cities have, what access to higher education or further education those leading institutions create, into what types of economic outcome opportunities there are on the other side. So there's all of these dimensions to the economy that don't have to do just with the nature of the Fiat system that do need to be addressed when it comes to actually trying to unwind wealth inequality and injustice. So even if your main focus on these protests, the main underlying idea has to do with economic inequality, there's so much more than just the Fiat system. So if that's the economic dimension, what about

the political dimension. To the extent Bitcoin fixes this offers some political remediation, it's a suggestion to remove oneself from the system entirely. Now, there are debates about this, right? A lot of the debates I've seen around Killer Mike's much-lotted impromptu speech in Atlanta from a couple days ago have to do with people not believing in the political process that he is advocating, which we again saw former President Barack Obama right about today. in a piece that he released, talking about how much power for change around these types of issues is held at state and local offices. There are plenty of people who will argue that those institutions need to be remade entirely. If you believe that these institutions are corrupt beyond return

and that the best way to organize society is completely without those institutions, that is a political position you're able to have. And I guess Bitcoin fixes this may be a part of that scenario. But it's not the world that most people live in, the most people see as anywhere near realistic. And so I think that Bitcoin fixes this feels unresonant in the context of just how far away from any sort of knowledgeable reality the political apparatus of today is. Take that in contrast with how many people are finding their way to Bitcoin in the context of the specific economic questions it addresses because that wealth inequality that does come from the Fed policies, that does come from inflationary policies that incentivize assets over everything else,

that is a resonant idea that Bitcoin provides. So again, I'm not trying to suggest that the Bitcoin position of opting out of institutions or designing a society without institutions is a delegitimate, debatable point. I'm saying that when it comes to resonance and why people are reacting to Bitcoin fixes this as the meme, it's just so much farther away from anything that would be considered realistic. Lastly, there's the question of force and coercion. The origination of this was police brutality, and not just police brutality, but police execution, police assassination, both in a very specific instance, but also writ large and seen programmed at the highest levels and across the board, a pattern of this brutality, a pattern of this misuse of force and coercion.

Now, in this case, I think that Bitcoiners would argue something along the lines of the ability for the state to coerce people has to do with the force of the state, the role of force that the state can command, and that at the center of that is the ability to print money to supply weaponry. You've seen, and this is one of the threads of the conversation around the country right now, how well-equipped police forces are with basically ex-military equipment. And there's charts that show just how much ex-military equipment has come into police forces over the last 20 years in particular. If you are someone who's interested in a reduced role of the state and see money at

the center of state power, you can make those logical leaps. But they are that. They require leaps of logic. They require leaps of understanding. So again, we're in this position where it's... It's not that Bitcoin or the implications of a non-sovereign, non-state money don't touch these things. It's that they require so many leaps away from the urgent issue, that they become unresonant. And this is, I think, a really important piece of this conversation is the resonance versus not.

Because what we're talking about ultimately is memes on social media and what their impact is. is their impact to get more people to be interested in this system, to be interested in this alternative, or is their impact to make people feel like this alternative is so full of crackpots who don't get what's actually going on right now? They are not willing to learn more. To help make this point, imagine that someone was trying to push a meme or a narrative of any one dimension of a possible solution as the answer to all of it. Imagine that you saw just Guns fix this. Imagine that you just saw voting fixes this. Imagine that you just saw decentralized media that gets around the disinformation fixes this. Imagine that you saw prosecutions fix this.

The reality is actually that we've seen each of these arguments offered over the course of the protests, over the course of the last few days. And the important part is that they are competing for mental headspace around what the most urgent solutions are, when ultimately most thoughtful people come down to the idea that all of these things are required all at once. My fear in some ways is a perception of zealotry, because I believe zealotry in any community undermines openness to new ideas. And I think that the ideas that Bitcoin offers about not only the economic underpending of the structural problems we have, but also the potential implications the domino effects of addressing those structural economic problems have on other

dimensions of power, coercion, force, post-truth media, all of these things are so important and so relevant that we cut off our head despite our face when we have stupid conversations. And unfortunately, in the context of the most significant sustained protest in a generation, that its origin is truly located in a specific discrete event that is no. that we saw that was the violence of police against an individual black man. The risk is not that we look like we get it. The risk is that we look so unlike we get it that people don't even want to discover what it there is to get. I'm a fiend for early Satoshi material, along with so many of you. But the one that I like least, the way that it's applied in our community is the

classic, if you don't believe me or don't get it, I don't have time to try to convince. You're going to convince you, sorry. This is something that was said in the context of an extremely specific conversation, and in an extremely specific moment of someone's life, that gets applied to the idea that if somehow, it doesn't intuitively make sense to you, that the changing nature of an economic system would have implications across all of society, then we're too busy to try to convince you, sorry. I've seen that idea all too often be used as a convenient excuse not to take the time to actually help people understand this, to basically say you have to go do it on your own. That's fine if that's your position, but that's not the one that I'm going to take.

The good news is, as I started with this, one, I don't think the people who are sharing this meme, hold aside the sign guy, because who knows what's going on with him in Austin. None of the people who I saw sharing the Bitcoin fixes this meme were trying to undermine any of these other dimensions. They weren't trying to deny racism. They weren't trying to deny the importance of this political process. They weren't trying to deny police brutality or force. They were trying to make a connection between underpinning economic issues and economic injustice with the other types of injustice on display and the anger that people felt. I understand that. My point in having this conversation was to take advantage of the fact that a podcast where I can

just speak is a medium where I do get to add, where we do get to have a more nuanced conversation that hopefully can suss out what's important about this idea, while also getting out where its barriers are going to be in terms of acceptance. An idea that is the most insightful and brilliant in the world that doesn't resonate is not any idea at all. It doesn't have any power to actually change things. Last note, I think that in general, I would say that more Bitcoiners that I've seen write about this are writing in that complex terms, in those nuanced terms. Pomp wrote a great letter this morning that really went out of its way to try to examine the different

dimensions of power that are playing into the situation right now. Nick Carter, with his usual crisp style, says, Bitcoin doesn't fix this, but now that civil society and the state are going berserk, having an untamperable apolitical wealth storage and transfer system is a profound relief. It's a necessary piece of the anti-authorian toolkit. The point here is that I'm not actually trying to rag on this. I'm trying to add complexity to it. And in a world where everyone right now is competing to box us into uncomplex ideas,

to unn nuanced ideas that serve only to divide and to distract us, I want to use this space for more complexity and more nuance. Anyways, guys, thanks for listening. Let me know what you think about this conversation. And let me know what you're feeling about everything going on as a whole. It's a really hard time right now for so many people. and a confusing time for everyone. Until tomorrow, guys, be safe and absolutely more than ever now.

Take care of each other.