Nostr Web Client

Libertarians and Degenerates

With the rise of the Internet and access to public/private key cryptography and encryption, the idea of a private and secure digital money emerged among some libertarians, Austrian economists and cypherpunks.

However, every iteration of a new digital currency seemed to bump up against the problem of trust and truthful accounting of ownership.

In early 2010, during my study of the fallout from the financial crisis, I joined a community of fellow libertarians and degenerates on a new financial website called Zerohedge.

A couple of pseudonymous characters who called themselves Tyler Durden and Marla, in reference to the movie “Fight Club”, were writing and aggregating blog posts covering detailed financial analysis, the ills of modern finance, and the merits of gold. The site’s ethos is maybe best summed up by the tagline on the top of its page: “On a long enough timeline the survival rate for everyone drops to zero”.

The comment section of this hedonistic cesspool was on fire with anonymous characters battling opinions in a wonderful exposé of unrestricted free speech that only the Internet can facilitate.

It was there I first discovered Bitcoin.

I think it was the censorship and monetary deplatforming of Wikileaks that really got me curious. When they came out and said they accepted donations in bitcoin, a seed was sown.

Unfortunately, the pro-gold and anti-Bitcoin attitude of the degenerates in the comment section of Zerohedge initially put me off doing my own research into what the hell was going on with this Magic Internet Money. Bitcoin was constantly ridiculed and labeled a ponzi scheme. Still, I could not help but notice one very prolific Bitcoin supporter talking big with incredible conviction day in and day out, despite all the ridicule and downvotes. Bless you fonestar, hope you still got your coins!

Gunnar Stødle 2y ago

Secured By Human Nature

Eventually I downloaded the Bitcoin white paper. In order to get an idea of why Bitcoin was created and what Bitcoin is, this is a great place to start.

One of the biggest problems in governing base money supply and credit is human nature. Over time fear, greed and power seem to inevitably corrupt every living being. These human traits must be accounted for and incorporated into any system dealing with governance of society.

Coming to consensus on the truth is a major problem of human cooperation.

The design and operation of the Bitcoin network take human nature and action into consideration. Bitcoin uses greed, power and fear in its core design to secure the network.

I can not go into all the technical and philosophical details of Bitcoin — nobody could, but I would say it’s a marvelous invention that enables a new form of trust-minimized, censorship-resistant money with a hard cap of 21 million bitcoin.

One of the main innovations in the design of Bitcoin is proof-of-work combined with the difficulty adjustment.

The fact that you can easily validate an enormous amount of work, in milliseconds on a shared secure ledger with a guarantied issuance schedule, is mindblowing.

Every two weeks the difficulty is adjusted to account for the hash rate of miners joining or leaving the network. New blocks of transactions are added to the Bitcoin blockchain approximately every 10 minutes, no matter how much hashing power is at work.

“The computational power of the network is proportional to difficulty; and it appears that difficulty is proportional to bitcoin price. It follows that unless bitcoins become substantially more valuable than they are today, the Bitcoin network will never be substantially more resistant to attack than it is today. For Bitcoin to succeed and become secure, bitcoins must become vastly more expensive.”

— Hal Finney, 2011

Well, bitcoins are vastly more expensive today. This price increase is critical to incentivize more honest miners to join the network or scale up.

In addition to proof-of-work, mining difficulty and price, the security and resilience of the network also rely on users running their own full node verifying that every block of transactions follow the consensus rules of the system. To do this everyone must have a copy of the latest state of the ledger.

Perceived scaling limitations have given rise to fierce conflict between early adopters, businesses, users and developers with different views on how to solve these scaling problems without losing censorship resistance and the whole value proposition of Bitcoin due to centralization.

These forks in the road have led Bitcoin Core developers and users to solidify their consensus on the rules and ambitions of the system to make the Bitcoin protocol as secure and decentralized as possible. Focus is now on developing second and third layer protocols for scaling of the system.

I see this as a sensible technical approach to protocol development. It’s much like how the internet protocol stack evolved, and very good news for the future of Bitcoin.

Reply to this note

Please Login to reply.

Discussion

Gunnar Stødle 2y ago

Game Changer

The Bitcoin network has now been adding new blocks every 10 minutes 24/7 for eleven and a half years. You can secure hundreds of millions dollars of value in a multisignature setup for the cost of a few hardware wallets and some software. This is a game changer.

Bitcoin has established itself as the base money of the cryptocurrency space, and will in time become the base money of the Internet.

Much like Linux and the Apache web server software, the free and open nature of the Bitcoin system draws in developers to work on it for their own benefit. A whole new world is emerging where nerds, engineers, and economic freedom fighters control the back-end and base money of a new digital financial system.

Bitcoin conferences and meet-ups pop up everywhere, like LAN parties in the 1990s, full of dedicated developers and users playing around, sharing their knowledge, doing what they love and building the future.

The closed nature, inefficiency and capture of state monopolies on money will lose them this fight. Their big hierarchical power structures won’t stand a chance against the decentralized flat and free nature of open source development.

Gunnar Stødle 2y ago

A New Measuring Stick For Value

In this new multi polar currency world USD will no longer be the preferred measuring stick for value. Unpredictable USD inflation and deflation cannot compete with the predictability of bitcoin in this regard.

While the USD system uses cartels, violence, lies and deception to force people to use it, Bitcoin uses an open source and voluntary opt-in system. It tells the truth and anyone can verify it. No sleight of hand and sleight of mouth is needed to make it work.

Bitcoin’s inelastic supply and hard cap of 21 000 000 make it the first absolutely scarce commodity the world has ever seen. Unlike gold, an increase in mining power would not increase supply above the exponential decay set in the protocol rules.

The consensus rules are protected by the fear, greed, and power of the participants and are very hard if not impossible to change.

Every 4 years the new supply of bitcoin is halved. This is believed to be one of the most important driving forces of Bitcoin’s boom and bust cycle of adoption.

A lot of new innovations are happening in and around Bitcoin.

One of the more promising additions is the second layer network technology called the Lightning Network which can facilitate scaling of retail transactions, and a host of new services built on top of Bitcoin via payment channels.

Gunnar Stødle 2y ago

The Truth Machine

As you may begin to understand, the leveling of the playing field by the introduction of the Internet and the culture of free open source software development has now given us digital scarcity, and a basis of truth for society to rally around and build upon.

“What it is is an invention, and I think it should be referred to as an invention rather than all the other things. It’s a, you know, what it really is[…] It’s a truth machine.[…] It’s a way to eradicate all fraud or lying by human beings.”

— Dan Tapiero, Macro Investor

Gold will always have demand and a role to play as a vehicle for final settlement of debt and long term store of value, but I believe that in much the same way as gold is king in the analog world, Bitcoin will be king in the digital world of money.

Bitcoin is the base money of the internet and a source of truth and consensus we as a society so desperately need in order to build a better world.