The Breakdown - The Theory and Practice of Bitcoin Politics

Episode Date: July 15, 2024

In this LRS, NLW reads two op-eds about Bitcoin in politics. The first is about why Bitcoin doesn't care about politicians. The second is about how bitcoin could actually be used in the political process. Read: https://bitcoinmagazine.com/culture/liberty-doesnt-ask-for-permission https://bitcoinmagazine.com/politics/bitcoin-as-a-notarization-layer-for-political-agreements 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, July 14th, 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. Hello, friends, we have a Bitcoiny LRS this weekend. We're actually staying on some of the themes that started with July 4th, and have really followed through given how political the conversation around Bitcoin has recently become. We're going to kick off with a piece from Shinobi, the point of which

is sort of, I would say, to remind us that no matter which politician says they like Bitcoin now, Bitcoin was never about integrating with the existing system. It was always about forging its own path. The piece is called Liberty doesn't ask for permission. Bitcoin was founded on the idea of self-sovereignty, self-determination, and freedom. Bitcoiners should not forget this. Let's turn it over to AI me right now to read the piece from Shinobi, and then we will be back. Today is America's Independence Day, a celebration of our freedom from the British Empire and the tyranny of a bureaucracy removed by thousands of miles of ocean ruling over our lives. The revolutionary war that won us that freedom is not something that happened overnight, or

something that just sparked due to one event or circumstance in the short term, it was the result of over a century of an overbearing government influence on the colonists that resided in North America. In the same way, Bitcoin was not a thing born out of the singular event of the great financial crisis. Just like colonists for over a century dealing with increasing taxes, overbearing regulations, and general exploitation birthed the United States. Decades of parasitic economic and financial actions birthed Bitcoin. While America and the struggles that led to its creation were rooted in bureaucracy disconnected by physical distance, Bitcoin was born from troubles rooted in a more existential disconnection rather than one of physical space. In the same way the King and his advisors in

England had a disconnected and impersonal view of the human beings on the other side of the Atlantic, today's bureaucrats have a disconnected and mechanical view of the human beings they rule over despite the lack of physical distance. Politicians, regulators, bureaucrats, financial executives, none of them see the people they rule over or make decisions drastically altering the course of their lives or circumstances as actual people. They see numbers, they see statistics, they see stereotypes and generalizations, they see impersonal figures and patterns that someone seems to fit at a glance, and decide based on that. They have no empathy, they have no understanding of an individual's personal circumstances or situation in life, or the problems they deal with because of automaton like

decision-making in the halls of Congress or the SEC building or a bank. So why do we look to these people for approval or a road to success or some glimmer of hope that they will achieve that under Imagine if a decade after achieving its independence, America had turned back to England for help in achieving its success. Does that seem rational to you? Does that seem like a fruitful road to achieving success and prosperity? The answer should be a resounding no. They don't care about you, or me, or any of us. So why do so many bitcoiners look to these parasites and narcissists for salvation? It is an indication of completely losing the plot the purpose of what Bitcoin was made for. In a way, it is very similar to the current state of America as a nation, lost and disconnected from the purpose and

ideals it was initially founded on. Liberty, self-determination, justice. These people are not here to help us. They are not here to turn Bitcoin into a beacon of individual liberty and freedom. They are here to exploit, to subvert, to maintain the position they hold in the world where they can remain callously disconnected from the rest of us in a position of security and luxury for themselves. America was founded specifically because of the realization that England would not give them self-determination or liberty. The founding fathers realized that, and so they set out to achieve it on their own terms by building something new, something innovative that the world had never seen before. Bitcoin is no different, but rather than holding fast to those principles and ideals, Bitcoiners

seem content to go running back to England for permission to self-determination. This is a mistake. Bitcoin was created to be that new, independent, innovative thing the world has never seen before. It was built to stand on its own as a foundation of sovereignty and self-determination. Not something that we beg for permission to have, to build upon, to use. We need to hold to that, not go begging politicians and regulators for an easy road to success, that in reality is simply a failure wrapped in a blanket of cope. Bitcoin is here. It was put here without asking for permission, without begging the king to allow it to be, and here it will stay. Whether it succeeds or fails doesn't come down to politicians or regulators or Wall Street money, it comes down to us.

Happy Fourth of July to those who still seek self-determination instead of permission. All right, back to non-AI-NLW here. I think the point of this one is fairly clear. clear, and so I'll mostly let Shinobi's words speak for themselves. However, now I want to read another piece, this one also an op-ed from Bitcoin magazine, who of course scored Donald Trump as a speaker at their conference coming up in a couple weeks, that takes this whole conversation around Bitcoin in politics and turns it into a non-theoretical, highly practical manifestation. This piece is by Michelle Liberti and is called Bitcoin as a notarization layer for political agreements. A look at Bitcoin's potential role in geopolitics and international diplomacy in a

hyper-bitquinized world. Section introduction, Bitcoin will revolutionize politics, not replace it. Even if hyper-bitcoinization were to become a reality with Bitcoin at the center of the monetary system that emerges from the ruins of the current fiat system, the state would remain the dominus of international relations. It would rise from the ruins of its predecessors, like a phoenix from its ashes. As Max Weber wrote over 100 years ago in his famous essay, Economy and Society, the state will continue to utilize legal coercion and violence as its specific and distinctive means of action. This is due to its essence of being an aspiring monopolist of force internally and Rex Superiorum non-recognosance externally. Thanks to Bitcoin, the state will undergo new and

diverse transformations which are currently difficult to envision. It will undoubtedly face significant challenges and reductions compared to its present state, encompassing changes in geographical reach, resources, competencies, and ambitions. Nevertheless, even with the desires of anarcho-capitalists and the staunchest libertarians, the state will not completely vanish as a societal organizational structure. While the voluntary, transactional, and cooperative aspects of human interactions may dominate in a hyper-bitcoinsized world, they will not be the exclusive components. There will always be individuals who choose to resort to force to assert their beliefs, simply because it is a feasible and convenient option. Furthermore, a certain level of violence

is inherent to our nature as beings with animal instincts, and as long as humans inhabit this planet, violence will exist. Consequently, as long as violence persists, there will be efforts to organize, legitimize, and regulate it. This leads to the inevitable historical necessity of the state as a regulator and concentrator of power among individuals, whether originating from a social pact among equals, imposed from above through annexation or invasion, or emerging from an anarchic man is a wolf-to-man scenario where the strongest dominates and seizes control, the state has evolved through various forms over time, from tribal societies to nation-states to empires, and has been upheld by diverse political systems such as monocracy, oligarchy, democracy, and more.

The new state in a global Bitcoin system will be stripped of extensive monetary power, significantly limiting its ability to accumulate debts and manipulate currency. Consequently, it will need to downsize in both scale and scope, reverting to its core functions, legislating, adjudicating, ensuring security, and providing defense. In an ideal scenario, it would resemble a minimalist state, such as the one favored by minarchists, voluntarily embraced by its citizens, and founded on mutual consent. This envisioned state could be a small entity, akin to a city-state among many others, or a compact nation-state centered around religious, linguistic, ethnic, and moral

identities that surely won't fade away with the advent of a Bitcoin world. This future trajectory suggests a global landscape reminiscent of past political examples, such as medieval Italy with its city states, or ancient China with its pre-imperial states, or 6th century BC Greece with its polis, or even the American west of the 19th century. Hopefully, with a much lower degree, of political violence compared to the former examples thanks to a significantly higher average material well-being, a result of enormous technological progress that provides an abundance of goods,

discouraging predatory human impulses driven by resource scarcity, and an unparalleled level of commercial and informational interconnectedness compared to historical precedence. Technological progress has facilitated and will continue to facilitate communication as a solution to the prisoner's dilemma and widespread trade as a beneficial alternative to war. That being said, we should not expect perpetual peace

as Kant envisioned. Interstate war will probably be rarer and a last resort in such an environment, but it will not be entirely excluded from the realm of possibilities. Some communities would still attempt to use coercive means to achieve their goals at the expense of their neighbors ending up in war. However, this infrequent occurrence will likely result in shedding less blood and resources than today, given the reduced capacity economic power of the new state, as well as the prevailing interests in peaceful trade and the fresh historical memory of the horrors of warfare and warfare states in our era. Hello, friends.

Before we get back to the rest of the show, I want to implore you to join me at Permissionless. Permissionless is the conference for crypto-natives by crypto-natives, and the reason it's so important this year is that despite regulators' best attempts to push industry founders, devs, and executives out of the U.S., the United States remains the beating heart of crypto. Today, the tide is turning. Policymakers have pivoted from fighting crypto to embracing it. Literally now we are in a major political parties platform, which will lead ultimately to the creation of new financial products, new applications, and ultimately new adoption.

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Section Diplomacy and Blockchain In this hypothetical context, with multitudes of small sovereign states, intense trade, and relative international anarchy, there will be a proliferation of diplomatic activities, a flourishing of bilateral and multilateral alliances, and this is where the Bitcoin network will come again into play. What better place for states to ratify and archive agreements and treaties than on Bitcoin's layer one. Diplomatic negotiations indeed share many similarities with commercial ones. In one case, they revolve around bargaining between states and treaties. In the other, they revolve around contracts.

Just as contracts are not concluded in the absence of trust among merchants, treaties are not ratified without trust among states. Therefore, a certain degree of trust is not only essential in private economic dealings, but also in political diplomatic relations. In a world that is much more politically decentralized and splintered than the current one, where every monetary transaction will be based on trust in the Bitcoin blockchain or its higher abstractions, and where the security and inviolability of the code will be guaranteed by a massive amount of energy in the largest network of computers ever seen, it would be quite reasonable for newly formed states to choose it as the place to store their legally binding relationships. But how? One could rely on the

ordinal theory of Bitcoin to develop a dedicated standard for digital signatures, originating from wallets, pubkeys belonging to sovereign states, and build from this an official protocol for the ratification, registration, and amendment of international treaties on the layer one of Bitcoin that is universally recognized through a consensus criterion by the network nodes and as a customary law among sovereign states. Section Y specifically the Bitcoin layer one. In addition to its symbolic value as the cornerstone of the future international monetary system, the Bitcoin native blockchain offers many practical advantages as a platform to record international treaties. These include its inherent characteristics such as publicity and traceability, monitorability, immutability,

ordinality, the timestamp mechanism to obtain a specific date for each transaction, and last but not least, neutrality as a public good usable by anyone, owned by no one, and therefore not subject to influence. Looking ahead, an additional benefit could be its costliness due to the increase in transaction fees. This would give more weight and value compared to today to what is agreed upon between parties and recorded on it, similar to positional goods. By considering the possibility of constructing tree structures of smart treaties on the higher layers of Bitcoin dependent, on events, transactions occurring on the main blockchain or other layers, we can see how the flexibility of this tool can expand the options and functionalities of current diplomatic treaties.

This expansion can make them highly detailed and interactive, thus effective and adaptable to a highly fragmented and complex international political system. Section Conclusions In conclusion, using Bitcoin blockchain as a decentralized ledger for inscribing and archiving international treaties and agreements could offer numerous advantages in terms of publicity, traceability, immutability, neutrality, costliness, and programmability. This technology could revolutionize how international agreements are written, managed, updated, and monitored, ensuring greater security, transparency, and trust among the parties involved.

These improvements, in turn, should promote collaborative behaviors as game theory teaches, and thus reduce the risk of interstate conflicts, maximizing the benefits for all members of the future international relations system. All right, and once again, we are back to non-AI-NLW, here. So what I think is really interesting about this is, like I said at the top, the fact that it takes this whole conversation and moves it into the realm of the practical, how Bitcoin could be applied in the future. And certainly, it is a future vision. It is not about what Bitcoin's going to be used for tomorrow. But we have to imagine the world of the future to get to it. And so I

think even thought exercises like this are valuable. What's more, I think the fact that this feels so plausible compared to how it might have even six months ago says a lot about how much has transpired when it comes to Bitcoin's place in the world over just the last year. It has been a combination of factors. We've had, on the one hand, BlackRock, throwing up the wall on the slide, coming out of FTX and saying that, no, not only was this asset not going away, but they, the world's biggest asset manager, were planting their flag and their stake in it. That led, of course, to legal decisions which forced the SEC's hand, and led to the inevitability

of a Bitcoin spot ETF approval. That led to entirely new categories of traditional financial actors getting involved, and along the way it became a major presidential election season issue. Of course, underpinning all of this, always, has been the steadfast conviction of the Bitcoin community. Bitcoin is unlike basically any other asset on earth because there is an ever-growing group of people who simply will not sell it at any price, meaning there is always a buyer at some price, and an utter wall of conviction that creates a foundation like no other asset on earth. All of these other things have been important. Big institutional involvement, big political discourse involvement, but it sits atop that foundation,

and we shouldn't forget it. Anyways, friends, fun little LRS this week. Hope you're having a great summer weekend and appreciate you hanging out for a little bit. Until next time, be safe and take care of each other. Peace.