Without Democracy, Bitcoin Will Fail
Despite its apolitical nature, Bitcoin needs our democracy to thrive just as much as our democracy needs Bitcoin to improve.
This is an opinion editorial by Frank Kashner, founder of UnChainDemocracy.org.
“Politics” are often defined as “the activities associated with the governance of a country or other area, especially the debate or conflict among individuals or parties having or hoping to achieve power.”
Do we wish for Bitcoin to achieve power? Yes, though power for Bitcoin is different from power for one person or an economic or political entity. But we are still talking about power, as expressed through the design and implementation of code, proof of (electrical power) work, the internet, exchanges, editorials, blogs, laws, courts, schools and politicians. The Blocksize War, which I lived through, was ultimately a political-power conflict, won by those in favor of node decentralization. This article and this magazine are themselves political actors in the contest for future monetary and political power.
Ultimately, monetary freedom, Bitcoin, is just one aspect of freedom. For those living in the U.S., another aspect of freedom is our political rights as outlined in the Bill of Rights and Constitution. As such, even our terribly-flawed democracy is worth defending and extending.
But it seems that many Bitcoiners don’t see it that way. For instance, Jimmy Song, who I respect and have learned from, has opined that, maybe, our democracy is so flawed that it deserves to be abandoned. But I suggest that Bitcoin and democracy need each other and that the alternative, autocracy, would be horrible.
Bitcoin, Forever Caught In The Currents Of Political Power
A friend recently pointed out that our current political divide can be seen as one between those focused on freedom and those focused on equality. Like two points on a line, we in the Bitcoin community can find unity around similar visions of what Bitcoin in a democracy makes possible. But we also need to look at the relationship between Bitcoin and democracy and imagine the dark alternative: living in an autocracy that is able to seize our property and violate our other rights.
In 1941, a time of great political conflict, in his work “Talking Columbia,” Woody Guthrie famously sang, “Don't like dictators, not much, myself, But I think the whole country ought to be run… By electricity!”
Electrification, a then-revolutionary technology (not unlike Bitcoin today in some ways), was a technology opposed and supported by various business interests and their hired politicians. Even today, a quick search reveals major opposition to electrification efforts.
Like electricity, Bitcoin is now and will be forever caught in the currents of financial and political power. It is the very nature of a change of Bitcoin’s magnitude. Consider what we have already seen: China bans Bitcoin, Canadian truckers use BTC, El Salvador defies the IMF and makes bitcoin legal tender, BTC emerging in Ukraine, the U.S. Securities and Exchange Commission (SEC) denies the application to make GBTC into an ETF, Nigerians start to use Bitcoin, and currently, “Operation Choke Point” as the SEC impedes bank access for Bitcoin companies.
These currents account for the presence of political freedom, a functioning democracy, as well as the legal status of Bitcoin. For further evidence of Bitcoin’s intrinsic ties to democracy, look to The Human Rights Foundation, which has an arm led by Alex Gladstein that uses Bitcoin to enhance political and economic freedom, specifically in some of the worst autocracies in the world.
Bitcoin Is More Fragile Than We Think
A list of Bitcoin’s fundamental properties includes decentralization, antifragility, protection against confiscation, an incorruptible development system, proof-of-work security and protection from the nodes that defend it. Yet, I think we are naive about its strength.
It is easy for us who live in the democracies of the West to assume that the rule of law, which protects our property and freedom, is a given. If we lived in China, North Korea, Afghanistan, Turkey or Russia, we might not be so sanguine.
While Bitcoin makes an attractive Trojan horse (number go up, sort of) to some of the rich and powerful, opposing interests could create legislation and policy that could eject Bitcoin from the empire’s monetary gates. Yes, we could still function “underground,” but think about what that would look like.
Today, Bitcoin is tiny, and those in power have subtle ways to delay and deny its widespread adoption, like claiming that “mining is destroying the environment” or claiming that “a bad actor like Sam Bankman-Fried is a political operative.”
Consider how authoritarian governments that use threats of prison and violence treat Bitcoin. They have no problem with confiscation, even if they seize mining machines (as happened in Venezuela).
And there are other issues with what we consider to be Bitcoin’s immutable properties: Why are there so few Core developers, and what are the implications of this for Bitcoin’s future? Why are there so few nodes (about 16,000) relative to total Bitcoin users? Why are government agencies throttling exchanges and promoting misinformation about energy value and usage?
It is our democracy that allows Bitcoin advocates to advocate, lobby, broadcast, have businesses and go to court. But our democracy, weak though it is, is under escalating threat by corporate forces who would prefer no regulation and autocratic power for themselves. I predict that they will defend the U.S.-dollar-based system. To prevail, Bitcoin and democracy advocates need each other.
Some broadcasters in the Bitcoin arena or their guests declare that it is the managerial and political classes that have all the power. This is simply not true — see, for example, “Who Rules America?” by William Domhoff, “Dark Money” by Jane Mayer, “Democracy In Chains” by Nancy MacLean or “Shadow Network” by Anne Nelson. These are well-documented looks at how those who would turn the United States into an authoritarian country have significant power and have advanced that agenda over the last 50 years.
In conclusion, Bitcoin needs democracy and democracy needs Bitcoin. Both systems are dynamic and constantly in flux, which makes our task complicated. I hope this perspective helps me and others convince Bitcoin advocates to pay more constructive attention to our political system, and helps democracy advocates to pay more attention to the economic freedom inherent in Bitcoin.
This is a guest post by Frank Kashner. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.