A Simple View of Bitcoin in Historical Perspective

Personally, I find the store-of-value interpretation convincing.

“Gold but updated for a digital civilization” strikes me as a perfectly reasonable way for Bitcoin to become worth at least as much as the gold market, and stay there. Critics say gold works because it is useful in other ways, and it’s desirable as jewelry, etc., but I think that’s wrong. Gold can be useful and it can be beautiful to wear but it’s market value exceeds what can be attributed to all of that. In other words, it has a premium as a store of value.

There is demand for store of value. Gold absorbed that demand for a long time because it was once the best technology for that purpose, plus the network effect of belief.

Holding blocks of gold is idiotic today, whereas a digital version is just obviously more desirable. I think this alone justifies a sustainably higher value for Bitcoin.

But add to that the political aspect, which is generally not discussed because Bitcoin proponents like to promote it’s “objectivity” and they want to be embraced by institutional finance, etc.

Nonetheless, among the productive and low-time-preference elite in any society, there is demand for a hard money system. You can’t force a democratic government to stay on the gold standard, but if there could exist a global monetary standard which is game-theoretically tamper-proof after it hits a certain level of value, the productive faction in society will “vote” for this. Currently, they’re getting fleeced by a deranged, bureaucratic system of generalized lying. Bitcoin is, ultimately, a self-enforcing truth system—a highly limited and specific one, but nonetheless.

I therefore see Bitcoin as partially a technological innovation that merely improves on gold—I find this logical and already demonstrated—but also as a global political movement composed of hard-working truth-preferrers “voting” to install it as a new global monetary standard.

The popular idea that Bitcoin is for criminals does not make sense. Far more criminal activity is conducted with USD; there have been many well documented cases of our big banks facilitating criminal activity through USD. Bitcoin is not desirable for criminals: It’s a public record of transactions, and “mixers” like Tornado Cash (which create obfuscation for transactions) have been destroyed brutally in the courts thus far.

Most of my wealth (not much, to be fair!) is stored in crypto, and about 70% that is in Bitcoin. Has been since about 3 years ago. I understand that’s risky, but in my view, after 15 years Bitcoin is derisked enough for me, personally. Perhaps I am biased temperamentally—it’s possible that I’m wrong due to my strong desire to be living through an epochal technological transition, but hey—I’m willing to bet that we are.

Bitcoin skeptics—such as community member Chris James in a recent post, which inspired the present reflection—should explain what type of “Ponzi scheme” increases in value for 15 years, including after massive temporary collapses of value. The data strongly reject the Ponzi interpretation because just about every Ponzi I’m familiar with has one big collapse and dies. The only way I can make sense out of Bitcoin’s actual time-series is to infer that it’s volatility in the early stages of what will later turn out to be a massive long-term transition.

The most underrated philosophical work on the nature of Bitcoin and crypto-currency more generally is certainly Nick Land’s unpublished monograph Crypto-Current: Bitcoin and Philosophy (free full-text). This text more than any other convinced me of the deep teleological inevitability of decentralized digital money.