Without Democracy, Bitcoin Will Fail

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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.

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