Independence Reimagined Chapter 1: Fiction and Reality

This is a part of the Bitcoin Infinity Academy course on Knut Svanholm's book Bitcoin: Sovereignty Through Mathematics. For more information, check out our Geyser page!

Fiction and Reality

Humans are unlike other animals. Our ability to cooperate on massive scales certainly seems to be a skill other apes or mammals lack. What is the unique mental tool that makes us capable of doing this? Our closest evolutionary relatives, chimps, baboons, and other monkeys, show similarities to humans when it comes to forming hierarchical societies, but none of their packs or tribes ever grow larger than a few hundred individuals. Why is that? It has something to do with our collective imagination. We’ve observed chimpanzees constructing altars for worship, dancing rain dances, and grooming their dead, but they are yet to be seen pilgriming by the millions from all continents to kiss a wall. They trade fruit and present offerings to their patriarchs and matriarchs, but they aren’t yet trading government bonds for fiat currency. We humans, on the other hand, have conquered the world with our ability to rally under a common flag. World religions, spiritual movements, nation-states, and even multinational corporations have provided human beings with the motivational tools necessary to take control of the earth and dominate all other forms of life, even though the concept of a nation, a religion, or a company are all just social constructs of human imagination at their core. We humans tend to perceive our collective imaginations to be just as real as the ground we walk on, the foods we eat, or the air we breathe.

This ability to lie to ourselves at scale is arguably our biggest weakness as well as our greatest strength. We’ve somehow managed to conquer the world while concurrently setting a trap for ourselves that we have already fallen into. Blindly following our leaders has rendered us under-equipped to detect when we’re being used. We’ve been domesticated. If the idea of domestication bothers you, you need to free yourself from your leash. This might be harder than you think and you’ll soon realize that you’re tied to more than one of them. So is everyone else. Not listening to religious lunatics might be easy, but not buying into the idea of the nation-state, or even democracy, is a stretch too far for most people. When you really think about it, though, borders, laws, institutions, and ultimately, money are just as intangible as Zeus, Thor, or Sauron. Only our common agreement of their existence makes them exist. Unlike trees, cows, or garbanzo beans, they could not exist outside of our minds. The fictitious nature of money, in particular, is vastly misunderstood. “Permit me to issue and control the money of a nation, and I care not who makes its laws,” Mayer Amschel Rothschild allegedly said. At the very top of each nation’s food chain sits the entity controlling our money, the lifeblood of every society.

So what can you do about this? And why would you want to do anything about it in the first place? You may have a perfectly fine life right now, with a steady income and many career opportunities. So why bother questioning everything? If we look at certain statistics presented by the likes of Hans Rosling and Steven Pinker, it becomes abundantly clear that the denizens of Mother Earth are doing better and better every year. While the claims of Rosling and Pinker may be somewhat truthful from certain points of view, they fail to address the long-term problems inherent in our fiat currency systems. They fail to address that if we continue business as usual, we’re all doomed, not because of climate change, nuclear war, or any other red herring, but because of the horrifying Orwellian dystopia that will be the inevitable outcome of our current pandemic monetary cancer. You may not be aware of it, but your country’s currency is on the exact same path as that of the Venezuelan Bolivar or the Turkish Lira. The only thing that differentiates them is the pace of the decline. The compound interest of a two percent inflation per year currency will sooner or later follow the same hockey-stick-to-hell curve as any other hyperinflating monopoly paper money. Not only this, but as physical cash becomes more rare, your financial affairs get more surveilled. Your banker overlords are monitoring you, mapping you out, and categorizing you according to your financial behaviors. To them, you’re just a piece on a board game that they wrote the rules for. As long as you stay in the conventional systems, there’s nothing you can do about it. Your vote won’t matter. You’re not in control of your destiny — not by a long shot. But you could be if you found another way. If you found a way to store the fruits of your labor in a sort of monetary freezer that made sure that the number representing the work carried out was representing the same amount of work or more when you defrosted it again. A cold storage of wealth. A piece of a specific pie. A piece of Bitcoin.

Is money real or just another human collective hallucination? Well, a gold coin is real in the sense that it exists and that it’s made up of gold atoms. Its value, on the other hand, isn’t real. It can’t be. Value is, contrary to what most people believe, an entirely subjective thing. There is no inherent value to any object. Value is a human creation that we imbue to objects or services. What makes a gold coin valuable to a person is that person’s belief that gold will stay valuable to a lot of other people. Value is determined by the importance an acting individual places on a good for the achievement of his desired ends. It is pure speculation, and so is everything else in economics. If you buy a bottle of water, you do so because you think that its contents will satisfy one of your basic needs (probably thirst) at some point in the future, namely when you open the bottle to drink it. What makes a gold coin valuable to a great number of people is the perceived scarcity of the metal. Making jewelry out of gold doesn’t give gold its value. Jewelry is made out of gold because jewelers believe they can profit from the metal’s perceived value. Value, while being subjective, can still be said to be derived from supply and demand. We think we know that gold is a rare metal, but is it? No single human can ever truly know, but there’s enough verifiable data for us to believe that the global supply of gold is somewhat limited. It is this believed scarcity of the supply of a good in conjunction with the belief that there will be a future demand for it that makes humans attach a value to a good or commodity. Because dollar bills were once redeemable for one dollar’s worth of gold at a bank, people still think that dollars are connected to gold somehow or, at the very least, that they’re somewhat scarce. Spoiler alert — they aren’t. Bitcoin, on the other hand, is verifiably scarce by anyone running a full node in the Bitcoin network. This feature alone makes Bitcoin a far better form of money than all of its predecessors.

Money, laws, nation-states, religions, and other constructs of the human imagination are not entirely subjective beliefs, nor are they objective facts. They’re not entirely subjective because their existence is not limited to the brain of a single individual. A better, more suitable description would be that they’re inter-subjective, meaning that they exist in the collective consciousness of large groups of individuals. Because of this, ideas like that of money or that of an almighty God, for that matter, do not die because of the death of a single believer in that particular idea. Ideas live on until they’re destroyed by force or until a better or more saleable idea comes along, rendering the old idea obsolete. Whatever spirit gods the natives of Cuba believed in, for instance, disappeared when the European conquerors murdered every tribe that inhabited the island. The idea of alchemy, on the other hand, became obsolete with the rise of chemistry, which rendered the idea of alchemy somewhat ridiculous in hindsight. This very text is only able to convey its message because of the inter-subjective idea of the English language, without which the words written would be little more than the undecipherable scribblings of a madman. Our current dominant monetary systems are inter-subjective ideas based around the “full faith and credit of” nation X’s central bank. They are very powerful short-term and can help infrastructure reforms at a fast pace, but they do so at the expense of future generations who have massive debts, authoritarian regimes, hyperinflation, and possibly civil wars to look forward to because of these flawed systems. Bitcoin doesn’t need an inter-subjective belief other than that miners will continue to act in their own best self-interest, therefore its promise of a finite supply is more of an objective fact than an inter-subjective fiction. Its functionality and finite supply are at all times verifiable by the network’s users. The only other inter-subjective belief needed in order for the system to thrive is the belief that people will continue to discover its superior monetary properties — properties that cannot be reproduced since Bitcoin is so much more than the sum of its parts. Its code, its developers, its noderunners, its surrounding software, and, first and foremost, its history makes it a truly unique beast.

If the system continues to function as it has for the last eleven years, hyperbitcoinization will happen. It is inevitable. The only uncertainty about the transition to a Bitcoin-denominated world is the timeframe. We cannot know how long it will take for the fiat currencies to die, but it probably won’t happen within the next couple of decades. After all, the idea that Bitcoin challenges is arguably the most successful inter-subjective idea that ever existed — the idea of a global reserve fiat currency. It is an idea that cements the planet’s current power structures and hierarchies and keeps populations in check. It won’t be easy to persuade people that everything they thought they knew about money, banks, jobs, income, taxes, laws, and even democracy was based on a lie and that this lie has now been exposed. In truth, just about the only thing that can persuade people to switch to Bitcoin is the number that goes up over time — the price of Bitcoin. A limited supply doesn’t automatically mean unlimited demand, and it is important to remember that Bitcoin is still being issued at a faster rate than gold and most fiat currencies right now. At the time of writing, the halving from 12.5 to 6.25 new Bitcoin mined per block is about five months away. Don’t forget that we’re still in Bitcoin’s early history and that a lot of volatility is still to be expected for any foreseeable future.

About the Bitcoin Infinity Academy

The Bitcoin Infinity Academy is an educational project built around Knut Svanholm’s books about Bitcoin and Austrian Economics. Each week, a whole chapter from one of the books is released for free on Nostr, accompanied by a video in which Knut and Luke de Wolf discuss that chapter’s ideas. You can join the discussions by signing up for one of the courses on our Geyser page. Signed books, monthly calls, and lots of other benefits are also available.