To paraphrase “The Communist Manifesto,” it seems to many that all the ruling powers of the state — also known simply as “the elite” — have entered into some unholy alliance to exorcise the still-remaining spectre of independence and human freedoms, which they seem to believe haunts the modern world. These “powers” would include the World Economic Forum, the Bill and Melinda Gates Foundation, the Scientific Academia Network, all central bankers, the European Union, the City of London Corporation, the United Nations, the Kremlin, the Chinese Communist Party, the United States of America’s presumed “deep state,” Wall Street, mass media, the Islamic Jihaddist Emirates across the Middle East, the Socialist International, the Sao Paulo Forum in Latin America and the Jewish nationalist movement, Zionism.
All of these globalist powers are waging their own wars to see who will become the “one party to rule them all,” or to reach a one-world government agreement. By their increasingly-oppressive policies, all of them seem to have declared war on a common enemy: the individuals living within their boundaries, the so-called “citizens.” You may notice that all nations are also currently at war with one another economically. They are all attempting to starve each other through trade restrictions, and this occasionally erupts into violent warfare. This is a consequence of governments controlling the money supply. And money is, indeed, the core element of all human interactions.
Computer technology is on the verge of providing the ability for individuals and groups to communicate and interact with each other in a totally anonymous manner. Two persons may exchange messages, conduct business, and negotiate electronic contracts without ever knowing the true name or legal identity of the other. Interactions over networks will be untraceable, via extensive re-routing of encrypted packets and tamper-proof boxes which implement cryptographic protocols, with nearly perfect assurance against any tampering. Reputations will be of central importance, far more important in dealings than even the credit ratings of today. These developments will alter completely the nature of government regulation, the ability to tax and control economic interactions, the ability to keep information secret, and will even alter the nature of trust and reputation.
Privacy is necessary for an open society in the information age. Privacy is not secrecy. A private matter is something one doesn’t want the whole world to know, but a secret matter is something one doesn’t want anybody to know. Privacy is the power to selectively reveal oneself to the world.
If two parties have some sort of dealings, then each has a memory of their interaction. Each party can speak about their own memory of this; how could anyone prevent it? One could pass laws against it, but freedom of speech, even more than privacy, is fundamental to an open society; we seek not to restrict any speech at all. If many parties speak together in the same forum, each can speak to all the others and aggregate together knowledge about individuals and other parties. The power of electronic communications has enabled such group speech, and it will not go away merely because we might want it to.
The technology for this revolution — and it surely will be both a social and economic revolution — has existed in theory for the past decade. The methods are based upon public-key encryption, zero-knowledge interactive proof systems, and various software protocols for interaction, authentication, and verification.
“The state” will of course try to slow or halt the spread of this technology, citing national security concerns, use of the technology by drug dealers and tax evaders, and fears of societal disintegration. Many of these concerns will be valid; crypto-anarchy will indeed allow national secrets to be traded freely and will allow illicit and stolen materials to likewise be traded. An anonymous computerized market will even make possible abhorrent markets for assassinations and extortion. Various criminal and foreign elements will be active users of CryptoNet. But this will not halt the spread of freedom, as ”the state” tries to strip individuals of their properties.
To a human, any violation of property, starting with a human’s own body and extending to the goods he has produced with his labor, is an injustice. Therefore, no property equals no freedom in the social and political realms.Humans, like other social mammals, appear to have an entire circuit within their nervous system that detects and responds powerfully to injustice.
And this violation of individuals’ properties is called slavery. And the state is “the slavery corporation” par excellence; the subtle parasitic caste thanks to the monopoly of violence.
Monopolies can’t exist unless they are supported by governments that protect them from competition. Monopolies in security and defense services have the same type of effects as other monopolies — poor quality products with high prices.
Governments particularly enjoy monopolies on security services because it prevents citizens from being protected from the government. One of the most effective ways that corrupt governments steal from their people is through printing money after they establish a monopoly on money.
A side effect of money printing is the boom-and-bust cycle that results in massive bad investment and great destruction of human efforts. Government intervention into the economy has greatly held back humanity from solving problems in the same way that it hindered citizens in Soviet Russia under communism. Thus, the removal of government intervention into the economy will result in rapid advancements in technology and quality of life.
Keep this in mind: money does not need to be provided by governments. Rather, it is another example of a solution discovered by the interactions of free people (the market) that was monopolized by the government. Money is used as a medium of exchange, a store of value and a unit of account. These are specific attributes of what we mean by the word “money.”
Money is a useful tool that facilitates better decision making and enables fruitful trades that would not otherwise take place. A barter economy is an underdeveloped economy. Bitcoin is the only money that is government resistant and this is the critical feature that makes it a good choice for preserving wealth.
The state has created the legal tender (fiat) system, which is the most subtle and sophisticated form of slavery mankind has developed to date. In this scheme, the predator forces the victims to use his “money” for transactions.
Moreover, the money is an asset that can be easily produced by the predator. For example, paper and insecure electronic money are common choices. The deception varies, but it generally applies the justifications of monopoly slavery to the production of money. The attacker also claims that using violence to prevent the use of other money is not a crime.
Bitcoin will break the legal tender monopolies because it is not bulky to transport in large amounts. As a result, it is not dependent upon approval from the predator, through border checks or the banking monopoly, for transfer to and between victims.
The first effect of this will be to reduce the amount of legal tender kept in victims’ savings. Bitcoin, by providing a store of value that is difficult to steal and has no storage costs, provides a better alternative. And since it is likely to become money in the future, victims will be rewarded with significant gains for investing in bitcoin. This reduces the predator’s ability to steal from victims by printing more money as the overall market value of the predator’s money is reduced.
Secondly, bitcoin will compete with the predator’s money as a medium of exchange. Once a large quantity of victims become investors, it will be natural for them to use bitcoin itself for any immediate exchanges. However, at this stage, and for exchanges that involve contracts and debt, the debtor will still choose to pay in the less valuable legal tender.
Finally, bitcoin will enable private security that will not recognize the predator’s money as a required, or even legitimate, means of paying debts. If a contract specifies payment in bitcoin, any security provider, other than the predator, would recognize the contract as written.
Remember: money must be one thing, and one thing only. If a society uses many monies it has begun to revert to a barter economy and money does not exist. Currently monies end at national borders, but this is also a result of government intervention.
Bitcoiners disdain to conceal their views and aims. They openly declare that their ends can be attained only by the will of humans acting over all existing economical barriers. Let the ruling classes tremble at a financial evolution. We are dedicated to building anonymous systems. We are defending our privacy with cryptography, with anonymous mail forwarding systems, with digital signatures, and with electronic money.
Our code is free for all to use, worldwide. We don’t much care if you don’t approve of the software we write. We know that software can’t be destroyed and that a widely-dispersed system can’t be shut down. The individuals have a world to win.
Bitcoin nodes of the world, decentralize! You have nothing to lose but your fiat chains!
This is a guest post by Koty Auditore. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.
Throughout history, there has been a cyclical phenomenon characterized by Neill Howe and William Strauss as the four turnings.1 The basic premise of the theory is that civil unrest and major war is cyclical and occurs about every four generations. This is due to the fact that, by the time we reach the fourth generation post-war, society is simultaneously in a state of desiring change yet far enough removed from the atrocities of war that they end up repeating the mistakes of those four generations before them.
As it stands, we are in the fourth turning, the final saeculum before the cycle resets. What’s unique about the fourth turning is that it has historically been an era of destruction, often involving war and revolutions. Based on this theory, it is no wonder we are seeing social unrest. It doesn’t take much browsing of social media or news to see that people want change. People are starting to speak out about the issues within our society: wealth inequality, rising house prices, increasing cost of living, systemic malinvestment and the great concentration of monopolies.
However, as with anything, it can be difficult to decipher the root cause of the issues we face. The millennial generation feels disconnected as it will be the first generation in history to be poorer than its parents.2 The middle class is fed up as it slowly erodes away while asset prices become more unobtainable.3 This unrest is resulting in people voicing their opinions and looking for a way out of this mess. As it stands, capitalism and its lack of governance appears to take the brunt of the blame. As a result, in recent years, people have been more drawn to regimes such as communism or socialism to promote liberation and equality within society (40% of Americans have a favorable view of socialism, up from 36% in 20194). But, this begs the question, is a shift in regime really the best course of action? And is capitalism really to blame?
Before we can answer these questions, let’s first define the various economic systems:5
– Capitalism: “An economic and political system in which a country’s trade and industry are controlled by private owners for profit, rather than by the state.”
– Democracy: “A system of government by the whole population or all the eligible members of a state, typically through elected representatives.”
– Socialism: “A political and economic theory of social organization which advocates that the means of production, distribution, and exchange should be owned or regulated by the community as a whole.”
– Communism: “A political theory derived from Karl Marx, advocating class war and leading to a society in which all property is publicly owned and each person works and is paid according to their abilities and needs.”
From the outset, one could easily conclude that capitalism is incredibly flawed in relation to communism, socialism and democracy as it appears to be focused on private enterprise and profit. On the contrary, communism, socialism and democracy seemingly value the people, liberation and equality. However, if we remove democracy from the equation and take what we have learned from history, we realize that the communist and socialist facade of liberation, equality and a focus on the people could not be farther from the truth. Here are a few historical examples:6
– Mao Zedong, China, 1943–1976 (Socialism): 70,000,000 died by mass murder and government policies (largest death count in history).
– Joseph Stalin, Soviet Union, 1922–1952 (Communism): 28,000,000 died by war genocide and famine (second largest death count in history).
– Adolf Hitler, Germany, 1933–1945 (Socialism): 12,000,000 died by war and genocide (third largest death count in history).
– Kim Jong-il, North Korea, 1993–2011 (Socialism): 2,500,000–3,500,000 (10–19% of the population) died during 1990s famine in part caused by government policies.7
– Pol Pot, Cambodia, 1975–1979 (Communism): 1,700,000–1,900,000 (21–24% of the population) died by government policies and famine.8
– Provisional Military Administrative Council(Communism), Ethiopia, 1974–1987: 1,200,000 died from famine in part caused by government policies.9
It quickly becomes apparent that many of the major genocides, famines and deaths caused by war were all under communist and socialist regimes. Are these regimes really creating a happier and high quality of life economy?
Let’s look at the chart below (sorted by the happiness index, with the happiest nations at the top). There is clearly a correlation between democracies, happiness, freedom, quality of life and currency purchasing power.
What is it about communism and socialism that leads to such atrocities, and why do they tend to fail?
Supply and demand: One of the major pitfalls of communism and socialism is that creating a centrally planned economy with the goal of equality, influences the labor force and destroys the natural forces of competition. Inadvertently, this distorts supply and demand. What is forgotten is that through supply and demand, we gain valuable economic insight that allows our economy to error correct, grow and innovate.
Inadequate knowledge and a concentration of power: Within communist and socialist regimes, society tends to rely on the knowledge and experience of an individual or select group of individuals. The central planners believe they understand what is needed to move a country forward. The fallacy in this belief is that humans have many natural biases, such as the need to maintain and secure power, wealth and safety for themselves, their offspring and those closest to them. The result of these biases is that both communism and socialism are prone to authoritarian and totalitarian rule. Once the central planners start to accrue power, they don’t tend to let it go easily. Ultimately, this has led to some of the worst inequality, human rights abuses and social unrest in history. Instead of centralizing power, we should be taking advantage of the population’s collective knowledge.
Suppression of innovation: Communism is built on the belief that we should have a classless society. Although this may appear to be a step forward, diversity among our population prohibits this from playing out as intended. Our society is composed of family-oriented, entrepreneurial, sport-focused and business-minded individuals and we must allow them to explore interests that resonate with them. People are motivated by the belief that they will benefit from the fruits of their labor and this is what creates the perfect breeding ground for creativity and innovation to flourish. When we centrally plan, remove private property rights, and dictate individuals’ careers based on their skills and knowledge, we disincentivize individuals to think outside the box in an entrepreneurial and innovative manner.
Furthermore, innovation doesn’t tend to come from large centralized powers but rather it emerges on the fringe. It is through the free flow of information that creativity and innovation thrive. When we restrict competition and silence people, we end up severely inhibiting innovation and creativity, as this prevents factual, non-mainstream data from percolating to those who can use this information meaningfully. Humanity should promote creativity and innovation as this is how we will solve poverty, climate change, pollution and more.
For these reasons, in the long run, communist and socialist regimes have tended to break down and have led to some of humanity’s worst atrocities. However, no economic system is entirely flawed; otherwise, we wouldn’t see communism and socialism initially implemented. On paper, communism and socialism have many benefits, as both aim to promote security and equality. Socialism, in particular, has given the world universal healthcare, education and welfare. While communism, when effectively implemented, assures that you will have employment when you finish school and eliminates food insecurity. Every economic system has its pros and cons. Thus, we must implement what works, while admitting to ourselves what doesn’t and adapting accordingly.
Where Do Democracy And Capitalism Fall In All Of This?
It can be easy to pin capitalism as the cause for the issues we face due to the fact that all of these issues revolve around the monetary system, and is it not money that drives wealth inequality and capitalist monopolies? However, if we objectively dig a little deeper, capitalism has unfairly been the scapegoat for everything the government doesn’t want to be held accountable for. The reality is that the victims of so-called capitalism are, in fact, the people who have lost capitalism due to increasing governance, regulation and control. In other words, the more control government is given, the more these issues are exacerbated.
The Misdirection Narrative
The notion that our societal and economic issues stem from the government may initially be difficult to believe. The mainstream narrative consistently frames capitalism for the corruption, greed among private corporations, and detrimental monopolies within our economy. However, this is all just a narrative pushed as a form of misdirection. This narrative gives the general population something to blame for the issues we are facing.
Why is this anti-capitalist narrative pushed? The government doesn’t like to relinquish control. You don’t have to spend much time looking through history books to conclude that governments have a lust for control and rarely, if ever, give it up. Therefore, it is not in the government’s best interest to attribute the issues within our economy to its own decision-making. It would only further destroy its population’s faith in government. To better understand this, let’s delve into the various issues we are facing.
Rising House Prices And Cost Of Living
Many tend to attribute increased cost of living to the big corporations raising prices and the escalating house prices to the benefactors of capitalism buying up property. However, the reality is that these are issues with our monetary system. The problem is that the government controls the monetary system via the Federal Reserve and the U.S. Treasury. This gives them some significant benefits, such as regulating who can and can’t use the currency, hidden taxation via inflation and financial repression, and the ability to self-fund without having to offer value (such as it would in a free market capitalist economy). We see this abuse of the monetary system in plain sight. In the last 18 months, 37%14 of all dollars in existence have been created, and the Federal Reserve has purchased 76.4%15 of federal debt. They no longer need to rely on income generated through taxation but rather to just purchase their own government debt.
Ultimately, this allows the government to act in its own self-interest, directing capital to where it feels necessary, which seems to be toward growth at the expense of the economy. It does this via inflation, which is the suppression of interest rates and the injection of capital into our economy to stimulate growth, spending and consumption. The by-product of this tactic is an increase in the money supply, which leads to a rise in consumer prices, cost of living, house and asset prices, and inequality.
Monopolies, in a general sense, are not detrimental to society. They become harmful when they stifle growth and innovation by suppressing competitors in an attempt to maintain their monopolistic position. In a free market, a monopoly is in its position because it adds value to society. Individuals have chosen to purchase their products and services, which allows them to grow and expand. When they stop offering value and/or a superior product or service comes to market, these monopolies are naturally replaced with the newest technology and services.
Unfortunately, this is not the case in our current system. Due to the lobbying environment among most democratic nations, monopolies have the ability to donate large sums of money to politicians and those in power to sway regulation to their benefit. This regulation aids these monopolies by increasing entry barriers and thus reducing competition. Harmful monopolies are not an issue of capitalism, but rather an issue of giving the government too much control and allowing private corporations to influence regulation.
As people become overly comfortable that the Federal Reserve will intervene during times of stress, we see a rise in excess borrowing and speculative leverage in an attempt to maximize returns. This excess borrowing has two main negative side effects:
1. Excess borrowing creates a surplus of capital in the system. In an attempt to find a home, this capital finds its way into higher risk malinvestments, which leads to amplified fragility in our economy. What would generally be considered a benign market event instead triggers much greater volatility and systemic problems.
2. A zombie company is one that is unable to support itself financially.16 This signifies that the product or service the business offers either does not have enough demand or that the business has been fiscally irresponsible and unable to service its debt. This business should, therefore, restructure or dissolve. With the Federal Reserve backstopping the economy and making it cheaper and easier to access capital, you increase the number of zombie companies in the economy. We should allow the natural life cycle to play out rather than propping up unsustainable companies. When a new business has to compete with an ever-increasing number of zombie companies, it becomes ever more challenging for that business to succeed and prosper. Instead of focusing on innovation, the business must use a portion of its resources to compete. As of July 2020, 19% of listed companies in the U.S. are zombie companies, and this number is rising.17
It should now be evident that the issues we face within our economy today are not to do with capitalism but rather the opposite. They are a by-product of government intervention and control.
What Needs To Change?
No economic system is perfect. Therefore, it is important to avoid getting bogged down analyzing which system is best. Instead, we should focus on what’s within our control to create an economy that prioritizes its people, promotes innovation and encourages creativity. To do so, we must first look at what must change in our current part-democratic, part-capitalistic system:
Monetary system: As should now be apparent, to reduce the centralization of power, the negative by-products of inflation and systemic malinvestment, we must separate the monetary system and the government. Doing so removes the government’s controlling capabilities, ensuring they act as a service provider with the population’s interests at heart. If the government is not acting in the best interest of the population, it will not receive capital in the form of taxes and will be unable to fund itself. Additionally, removing the monetary system from the clutches of government would allow a monetary system chosen by the people to emerge, one that is not corrupted by those in power and allows the true deflationary state of the world to surface.18 As Aaron Segal concisely states, “deflation is a measure of success in creating economic value as innovation creates more for less.”19
Transparency: Nations fail when there is a lack of trust in government, resulting in coups and revolutions. The fastest way to break trust within a nation is to remove transparency. One of the major flaws we face today is a lack of transparency. If we promote transparency within our economic system, we can rebuild trust amongst the population and the government. This will help drive the economy forward by reducing our wasted productive energy spent fighting amongst ourselves.
A Potential Solution
It can be difficult to separate democracy and capitalism, as they have generally been intertwined throughout history. One could go as far as to say that we have never seen a true capitalism-based economy. This makes it challenging to pinpoint the benefits democracy has brought to the table and likewise for capitalism. However, if we want to promote innovation, productivity, sustainable growth and freedom moving forward, it is in our best interest to adapt as an economy and take on benefits from the various regimes:
Socialist welfare/healthcare/education: We live in a world of inequality. Individuals enter this world disadvantaged, and we have unforeseeable events that take a toll on our lives. Whether this is on a monetary, health or educational level, it is a fact of life. Thus, we must have access to resources that allow us to feel a part of society and obtain the necessary assistance to grow and thrive. With this in mind, the best option would be to adopt the socialist welfare, healthcare and education system, ensuring everyone has access to these core amenities.
Decentralized democratic decision-making: Democracy is essential to ensuring that the general population has a say in political decision-making. However, we must ensure that this doesn’t result in a concentration of power, lack of transparency or the potential for bad actors. To promote transparency and take advantage of the collective knowledge, we should focus on the decentralization and dispersion of centralized government power down to the lower state, municipal and individual levels. This would ensure that more people would have a say in how our country is run and that regulation is upheld.
Capitalist free market: The capitalistic free market is an incredible source of creativity and innovation. It rewards individuals for putting themselves on the line and bringing their ideas to life. Additionally, free market capitalism promotes natural supply and demand, allowing us to extract crucial economic information, error correct more effectively and thrive as a nation.
How can Bitcoin play a role in all this? Bitcoin offers a way to bridge democracy and free market capitalism by providing a true decentralized currency that is:
– Permissionless: No one is excluded from using bitcoin. There is no gatekeeper deciding who can and can’t use it.
– Open-Source: Bitcoin’s source code is open-source, allowing anyone the ability to read, propose a modification, copy or share.
– Pseudonymous: Since no ID is required to own and use bitcoin, this ensures privacy for individuals.
– Fungible: All coins are treated as equal and should be equally spendable.
– Immutable: Confirmed blocks/transactions are set in stone and, therefore, cannot be changed at a future date.
– Fixed Supply: With a fixed supply of 21 million coins, bitcoin is proving to be one of the best stores of value due to its inability to be devalued through supply expansion. This is key to providing accurate supply and demand data.
Bitcoin has the potential to remove the monetary system from the clutches of the government, allowing us to operate a true capitalistic free market. This would enable us to obtain accurate supply and demand information, allowing our economy to grow, innovate efficiently and error correct. Bitcoin would also give the general population security, knowing that their hard-earned savings will not fall victim to inflation.
Additionally, Bitcoin gives us a great example of the power of decentralization. If we can take what we know from Bitcoin’s decentralized blockchain, we can greatly increase transparency within our economy. Two areas which may benefit the most are:
Government: By implementing a decentralized blockchain within the government, we can increase transparency and remove the potential for self-interested bad actors. Furthermore, promoting decentralized transparency would allow everybody access to accurate, immutable consensus data, decision-making and economic information. That way, individuals and the government could better use this information to innovate and progress.
Decentralized Autonomous Organizations (DAOs): Just like other economic systems, free market capitalism still has the potential for bad actors. By using blockchain technology, we can build the next generation of organizations using the DAO framework based on open-source code. Furthermore, without a typical management structure or board of directors, we are able to operate decentralized organizations. This gives investors a real say in the direction of the organization and gives the public transparency regarding the organization’s goals and motives.
It should now be clear that many of the reasons individuals are pushing for communism and socialism are not due to flaws in capitalism but rather increasing governance, regulation and control. Looking back throughout history, if we give way to these propositions, the consequences may be detrimental — the fallacy to consolidate and centralize power has led to some of mankind’s darkest days.
Instead, we should step back and look at capitalism and the other economic systems from a more holistic viewpoint. Let’s take the welfare/healthcare/educational support system from socialism, implement democratic decision-making, and give more power back to the people to let free market capitalism run its course. By doing so, we may be able to resolve many of the issues we currently face.
Lastly, instead of pointing fingers at capitalism, we should be educating people about the benefits that it has brought to our economy in the form of increased innovation, private property, privacy and human rights.20 Furthermore, we should be trying to better integrate new technology such as Bitcoin into our ever-evolving economy.
Humanity is in the middle of a turning point where it is shedding much of the old inefficient technology and practices and making room for the new era. With this in mind, we should be focusing on what matters. Let’s come together and build the economy we want to see tomorrow instead of directing our energy toward each other in the form of aggression and criticism. As Thomas Jefferson once said, “I predict future happiness for Americans, if they can prevent the government from wasting the labors of the people under the pretense of taking care of them.”
This is a guest post by Sebastian Bunney. Opinions expressed are entirely their own and do not necessarily reflect those of BTC, Inc. or Bitcoin Magazine.
1 Howe, Neill, and William Strauss. “The Fourth Turning.” Crown Publishing Group, 1996.
2 Lowrey, Annie. “Millennials Don’t Stand a Chance.” The Atlantic, 2020,
Right now Bitcoin is experiencing a gigantic drop in hashrate due to the Chinese Communist Party (CCP) shutting down mining in the country. Already being dubbed “The Great Hashrate Migration,” a huge amount of mining equipment is being unplugged and shipped to friendlier jurisdictions around the world. Some Chinese miners have taken to booze as expectations are that nearly all mining operations will be shut down. The largest difficulty adjustment in Bitcoin’s history is likely to occur as a result of the disruption.
The motivations for such a move are opaque. Rumors abound that the CCP is preparing a rollout of their own central bank digital currency around the 2022 Winter Olympics. Mining can be a crafty method of capital flight, sending bitcoin straight into an offshore cold wallet which is a nuisance for the Party. Corrupt cadres could be siphoning energy into their own operations or paid off by local miners. Maybe a younger, digital-native clique in the Party got a little too much bravado and crypto-wealth for Xi Jinping’s tastes. Others have suggested the CCP takes climate change very seriously and is taking a leap forward for the good of the planet. Whatever the reasoning, the CCP decided mining is a threat to their power in some way. The result is that massive amounts of Bitcoin infrastructure currently residing in China is getting the hell out of there as rapidly as possible.
China is the perennial Bitcoin hot topic and a common roll on the FUD dice. Peter Thiel made news earlier this year with an unsettling sound bite that bitcoin could be a “Chinese financial weapon,” stating:
“From China’s point of view they don’t like the US having [the dollar as the world] reserve currency because it gives us a lot of leverage … The euro you can think of as, in part, a Chinese weapon against the dollar [as an additional reserve currency] … Even though I’m sort of a pro-crypto, pro-bitcoin maximalist I do wonder whether at this point bitcoin should also be thought of as, in part, a Chinese financial weapon against the U.S. It threatens fiat money, but it especially threatens the U.S. dollar … China is long bitcoin and perhaps from a geopolitical perspective the US should be asking some tougher questions about exactly how that works.”
Americans are notoriously bad at understanding China — its history, culture, political system and motivations — and perhaps Thiel is no exception despite his level of credibility. But if China is long bitcoin, they either had an epic Elon Musk-style public turn-around or a brilliantly planned leveraged short to get cheaper sats on the other side. Because if the CCP considered bitcoin a financial weapon against the U.S., they just unilaterally disarmed themselves.
It’s also possible that Thiel wasn’t totally wrong but that a shift in attitude occurred inside the Politburo creating a sense of urgency to implement strict controls on Bitcoin in China. As recently as April officials with the People’s Bank of China were stating, “the main role we see for crypto assets going forward … is investment alternative.” The CCP made several half-hearted attempts at restrictions on Bitcoin and crypto-trading over the last decade. When news of this mining ban spread it was initially underestimated by many long-time Bitcoiners until on-the-ground reports confirmed that this time the CCP was dead serious and acting swiftly. This turn of events begs the question: what changed the Party line?
Bitcoin is a monkey wrench thrown into history that Marx, Lenin and Mao couldn’t fathom.
For much of the 20th century the “scientific” next stage of history after capitalism was generally presumed to be socialism, even among top ranks in the capitalist world. Marxist theory of history as class struggle: progressing from feudalism to capitalism, then capitalism to socialism and finally from socialism to communism when — according to the science — the state withers away, classes are abolished and humans become the new Communist Übermensch, free from alienation and want. That narrative did and still does carry weight as almost a predestined arc of history towards progress. Eschatology for the non-believing materialist.
Socialism with Chinese characteristics, the living successor to Maoism and ideological framework of the CCP, is a rat’s nest of revisionist contradictions. Political words have a way of losing meaning as displayed by the colorfully evil Democratic People’s Republic of Korea. Phrases are thrown around like authoritarian-capitalism or degenerated-workers-state or state-capitalism to describe China’s current system. Yet in their own constitution — and by Marxist standards — China is a socialist country led by a vanguard Communist Party and the dictatorship of the proletariat.
The easiest explanation of the mining crackdown in China is that allowing continued use and growth of Bitcoin is contrary to the core mission of the CCP: keeping power by any means necessary. Whatever economic liberalization and market-based reforms are put in place, the Party is sovereign because they won the civil war. The People’s Liberation Army is the armed wing of the CCP, not the State. The Party’s raison d’etre is protecting the Revolution from threats foreign and domestic, as well as guiding the development of socialism with Chinese characteristics through the stages of history to its predestined conclusion: fully automated luxury space communism … with Chinese characteristics.
In his preface for the new edition of The Sovereign Individual, Peter Thiel wrote:
“… the great conflict over our megapolitical future is only just beginning. On the dimension of technology, the conflict has two poles: AI and crypto … It is no coincidence that AI is the favorite technology of the Communist Party of China. Strong cryptography, at the other pole, holds out the prospect of a decentralized and individualized world. If AI is communist, crypto is libertarian.”
That somewhat contradicts his more recent “China is long bitcoin” comments but maybe he’s right about this one. As discussed in Part I, the revolutionary act of Bitcoin is the invention of a new type of property rights — which do not require a State to enforce — on a peer-to-peer, decentralized accounting ledger. The open source monetary network Satoshi released into the world threw a firebomb into a century’s worth of Marxist theory and practice.
Bitcoin is for enemies, but anti-communism is written into its code. The Marxist ideal and Bitcoin are simply incompatible, since private property is abolished under communism. Every individual on the planet can now hold valuable property in their mind with a memorized passphrase. No one can take that property without the owner deciding to give it up, and even the threat of violence is limited in effectiveness when the owner takes greater precautions.
The entire Marxist theoretical framework developed from the 19th century onward depends on the assumption that property rights are solely determined and enforced by the State. This is why the left holds a special ire for the police and military as working class traitors upholding the capitalist system. It’s why the capitalist bourgeois state must be overthrown in a revolution and replaced with the dictatorship of the proletariat, which does not necessarily mean authoritarianism but is the Marxist way of saying “workers state”. At least in the Leninist variety, it’s also why an organized Party of professional revolutionaries is absolutely necessary in order to take state power and with it sovereignty to repress the prior regime with terror and violence.
Socialism is not primarily the self-absorbed baizuo socialists of the U.S. or Europe. China is a country of 1.4 billion people led by the Marxist-Leninist CCP. Their influence is gaining momentum and looked to as a model in the developing and developed world alike. Bitcoin and the new power it brings to the individual does not exactly fit into their holy book. As Bitcoin truly enters the geopolitical realm, the CCP and Marxist ideology will be important long-term adversaries not allies.
The only surprise is that it took this long for China to get serious.
During the last day of Bitcoin 2021 in Miami, mischief makers threw trash bags full of Venezuelan bolivars into a large dumpster outside the conference center and the wind scattered them across the ground. As Strike CEO Jack Mallers ended the conference with the emotional El Salvador announcement and attendees began to leave, thousands of 50 bolivar notes were under their feet, courtesy of Nicolás Maduro, the Bolivarian Revolution and socialism of the 21st entury.
China is not the only place where socialism maintains a considerable amount of influence. In Latin America the political shift known as the Pink Tide brought leftists to power in almost every country south of the U.S. border at some point since the new millennium began and continues to this day. Happening concurrently with El Salvador’s move to make bitcoin legal tender last month, Peru held a contentious presidential election that — at least temporarily — has resulted in a narrow victory for the leftist candidate Pedro Castillo. Like former president Evo Morales of Bolivia, Castillo is an indigenous union organizer and a major part of his support comes from the significant indigenous population (25% in Peru, between 40-70% in Bolivia). Right now large numbers of people who are struggling the most in Latin America — those in need of hope — look to socialism and the ubiquitous image of Che Guevara.
One of the most interesting things about El Salvador’s jump into Bitcoin is President Nayib Bukele’s political background. He is a creature of the Left. Bukele was a member of the Farabundo Martí National Liberation Front (FMLN) — the legitimized political party of former communist guerrillas in the Salvadoran civil war — until he was expelled from the party for breaking discipline and then subsequently elected president in a wave of popular support. He ran on an anti-corruption campaign against his former party and the right-wing ARENA, both of whom have former leaders in prison or exile for their crimes.
The first nation-state to make bitcoin legal tender is run by a president that disassociated from the dominant leftist party, won the presidency and after the most recent legislative election has super-majority control over Salvadoran politics and overwhelming popular support. This is a consequential set up for Bitcoin’s true entrance into geopolitics. Political power in the developing world has alternated from neoliberal to socialist and back again for decades, often accompanied by large-scale violence. Developing countries have plenty of battle scars to show for it. Because of El Salvador’s decision, a new option could be emerging that provides an alternative source of hope to the broken politics of the 20th century. No longer are ultra-conservative authoritarians like Jair Bolsonaro of Brazil or neoliberal marionettes like Juan Guaidó of Venezuela the only available opposition to the popularity of socialism in Latin America. Now, there’s a new choice: the bitcoin standard.
The influence of a Marxist theoretical framework reaches from Beijing to Caracas to Brooklyn, and will be with us for the foreseeable future. Few socialists have noticed yet — or perhaps they believe the idea is absurd on its face— but Bitcoin strikes a dagger into the heart of their pseudo-scientific worldview. Though that may be starting to change. It’s possible that China’s move to ban bitcoin mining and implementing a harder line against crypto is the CCP taking notice of this fact as “number go up”. As Bitcoin enters the memespace of global ideological conflict, socialism is a major opponent on the horizon. An opponent that is strong among the oppressed, popular among the academy, organized on a worldwide scale and has no qualms about sending you to a gulag.
This is a guest post by Demi Pop. Opinions expressed are entirely their own and do not necessarily reflect those of BTC, Inc. or Bitcoin Magazine.
@johnnymidlife You’re LIAR! I never said that. I’m pro-trump because he is the best president America had in my lifetime. He represents capitalism in a fight against Communism.
But his re-election will lead to civil unrest, because most people want socialism. $BTC will rise regardless.