Without democracy, Bitcoin will fail

</figure><em>Dies ist ein Meinungsleitartikel von Frank Kashner, dem Gründer von UnChainDemocracy.org.</em>

“Politics” is often defined as “the activities pertaining to the government of a country or other territory, particularly the debate or conflict between individuals or parties having or seeking to gain power”.

Do we wish Bitcoin would gain power? Yes, although power for bitcoin differs from power for an individual or an economic or political entity. But we are still talking about power as expressed through code design and implementation, proof of (electrical) work, the Internet, stock exchanges, editorials, blogs, laws, courts, schools and politicians. The blocksize war I witnessed was ultimately a political power struggle that proponents of node decentralization won. This article and 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 who live in the US, another aspect of liberty is our political rights as described in the Bill of Rights and the Constitution. Therefore, even our horribly flawed democracy is worth defending and expanding.

But it seems that many Bitcoiners don’t see it that way. For example, Jimmy Song, whom I respect and have learned from, opined that perhaps 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 terrible.

Bitcoin forever caught in the currents of political power

A friend recently pointed out that our current political divide can be viewed as one between those focused on freedom and those focused on equality. Like two dots on a line, we can find consensus in the bitcoin community around similar visions of what makes bitcoin possible in a democracy. But we also need to look at the relationship between bitcoin and democracy and imagine the dark alternative: living in an autocracy capable of confiscating our property and violating our other rights.

In 1941, a time of great political strife, Woody Guthrie famously sang in his work Talking Columbia: “I don’t like dictators, not much, myself, but I think the whole country should be governed… with electricity!”

Electrification, a revolutionary technology at the time (in some ways not unlike Bitcoin today), was a technology opposed and supported by various business interests and their hired politicians. Even today, a quick search reveals large ones Resistance against electrification efforts.

Like electricity, Bitcoin is now and forever will be caught in the currents of financial and political power. It is in the nature of a Bitcoin scale change. Consider what we’ve already seen: China bans Bitcoin, Canadian truckers use BTC, El Salvador defies the IMF and makes Bitcoin legal tender, BTC emerges in Ukraine, the US Securities and Exchange Commission (SEC) rejects the application starting to turn GBTC into an ETF, Nigerians starting to use Bitcoin and currently “Operation Choke Point” as the SEC impedes banking access for Bitcoin companies.

These currents explain the existence of political freedom, a functioning democracy and the legal status of Bitcoin. For more evidence of Bitcoin’s intrinsic connection to democracy, see the Human Rights Foundation, which has an arm led by Alex Gladstein that uses Bitcoin to enhance political and economic freedoms, particularly in some of the world’s worst autocracies.

Bitcoin is more fragile than we think

A list of fundamental properties of Bitcoin includes decentralization, antifragility, anti-seizure protection, an incorruptible development system, proof-of-work security, and protection from the nodes that defend it. Still, I think we’re naive about his strength.

We, who live in Western democracies, can easily assume that the rule of law that protects our property and our liberties is in place. If we lived in China, North Korea, Afghanistan, Turkey or Russia, we might not be so confident.

While bitcoin is an attractive Trojan horse for some of the rich and powerful (the number is increasing, somehow), conflicting interests could create laws and policies that could drive bitcoin off the monetary gates of the empire. 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 of delaying and denying its widespread adoption, like claiming that “mining is destroying the environment” or claiming that “a bad actor like Sam Bankman-Fried is a political agent is”.

Consider how authoritarian governments that use threats of jail and violence deal with Bitcoin. They have no problem with confiscation even if they confiscate mining equipment (as happened in Venezuela).

And there are other issues with Bitcoin’s immutable nature: why are there so few core developers, and how does this affect Bitcoin’s future? Why are there so few nodes (around 16,000) relative to all bitcoin users? Why do government agencies throttle exchanges and promote misinformation about energy value and usage?

It is our democracy that allows pro-bitcoin advocates to defend themselves, lobby, broadcast, have corporations, and go to court. But our democracy, weak as it is, is increasingly threatened by corporate forces that would not favor regulation and autocratic power for themselves. I predict they will defend the US dollar based system. To prevail, Bitcoin and pro-democracy need each other.

Some broadcasters in the bitcoin arena or their guests explain that the management and political classes hold all the power. That’s simply not true – see, for example, William Domhoff’s Who Rules America?, Jane Mayer’s Dark Money, Nancy MacLean’s Democracy In Chains, or Anne Nelson’s Shadow Network. These are well-documented views of how those who would transform the United States into an authoritarian country hold considerable power and have pushed that agenda for the past 50 years.

Conclusion: Bitcoin needs democracy and democracy needs Bitcoin. Both systems are dynamic and constantly in flux, which complicates our task. I hope this perspective helps me and others persuade Bitcoin proponents to pay more constructive attention to our political system, and helps pro-democracy advocates to pay more attention to the economic freedom inherent in Bitcoin.

This is a guest post by Frank Kashner. The opinions expressed are solely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.