Bitcoin: Separation of Money and State – Kevin McCordic
You cannot have society without money.
The only reason we have anything of value in our lives is because of specialization and trade. This allows for increased total production of the collective and generates more output, holding inputs like time and energy constant. The only way specialization and trade can occur is if there is a sound way to measure who has produced what for society; this is where money becomes important. It is the unit of account for how much value you have added to society. It is fundamental to every aspect of our lives today.
Now, the reason why people are so enthusiastic about Bitcoin is because for the first time in human history, we have a way to represent money that is uncompromisable. This benefit cannot be overstated. When you can fix and perfect that layer, you can start to build a society that is properly incentivized. Every year that we participate in the economy, invent, innovate, and continue to push the limits of our world, the system becomes more complex. And this increase has an exponential trend. The increase in complexity has allowed for many of the benefits we see of the modern world, but will start to hit a fundamental limit if the proper tools are not used to build it. We have such powerful technology that the work we do is highly leveraged compared to any previous time in history. The internet makes it possible to scale content indefinitely, reach millions of people within minutes, and use algorithms to form the way people think and react to information. It has never been more essential to treat the direction we are going in as significantly more important than the speed at which we move forward.
Centralization in systems is inherently riskier than decentralization. The people in leadership positions cannot help but have personal bias in their decisions and actions. It is a fundamental part of human nature. As a consequence of this, we see corruption in corporations and government, whether it is deliberate or subconscious. Combine this with the reach and leverage of new technologies and it follows that there are extreme repercussions to maintaining centralized systems.
Take Facebook, for example. “The Great Hack”, a Netflix documentary, shows how Cambridge Analytica used the data of Facebook users to literally win national leadership positions for their clients in various different countries across the world, without fail. Even if Facebook did not comply with the actions of Cambridge Analytica, this was possible because of the immense amount of data that is stored centrally in their servers. One rogue actor operating in the economy was enough to have history altering consequences for the rest of the world. Centralized data storage is inherently riskier than decentralized data storage.
We have already seen the power that lies in using algorithms to persuade people to vote for one candidate or another just by showing constant videos tailored specifically to that individual. Or to buy a product. Or anything else that those with the power to decide what comes onto your feed decide you should do. Now, if we are seeing corporations and governments doing this with social media and things that aren’t very important, what do you think they’re going to do with money? Some form of this exists in China with their social credit system. Imagine you cannot take the express bus home because you showed up to work late that day, and you need to be punished and suffer in order to conform to what the government decides. Or you cannot buy a home in a certain area because of some past crime your parents committed. Or, you decided to release content that your government did not like, and you are completely cut off from the world economy and left out to survive on your own. This power, combined with the inescapable tendency towards corruption and personal bias that is encoded into all of us creates a very dangerous world to live in with virtually no personal freedom. Our current understanding of game theory and psychology make this the logical conclusion of a centralized world with highly leveraged, powerful tools. Even given a completely benevolent leader chosen to make decisions on behalf of the people, a centralized system is intrinsically riskier with a much higher blow up probability than one that is decentralized with individual freedom.
This was never a problem in the past because there was no way to enforce the will of the authority. It was impossible. Today, the technology actually exists to create this dystopian version of the world.
If we were told we are going to cut off a few million people from the global financial system, we’d have some questions. Why are we doing this? How are they going to get food? Can they survive? Essentially the power exists today to push the limits of how severely you can constrict a nation with a trade embargo. This tactic was used by Napolean to conquer most of western Europe and has been a war strategy as long as it has been possible to actually carry out. When we sanction things like that we are trying to incentivize (or force) other countries into doing what we want them to do. It may make sense for the leadership of the world to do this in order to maintain world super power status, and may make sense game theoretically, but has drastic negative consequences below the leadership level for the people.
This risk is why it is imperative to separate money and state. We can have money that is non-government issued and superior to the fiat money we use today. Naval Ravikant cleanly depicts this narrative by stating, “Bitcoin is a tool for freeing humanity from oligarchs and tyrants, dressed up as a get-rich-quick scheme”. It takes the trust of the state out of the equation for ensuring everyone’s individual freedom.
Published at Mon, 07 Oct 2019 19:10:58 +0000
{flickr|100|campaign}
