NSmolenskiFan on Nostr: Why Bitcoin? It is virtually impossible to reverse the momentum of state ...

Why Bitcoin?

It is virtually impossible to reverse the momentum of state consolidation of power as such. The state will not constrain itself. The only long-term checks on state power emerge from a civil society whose power is significant enough that the state fears it.

This is the thesis of Daron Acemoglu and James Robinson two historians. One at MIT one at the University of Chicago. In their book The Narrow Corridor. They suggest that the only thing that preserves liberty in the long run is something called the Red Queen effect. That is an analogy taken from Alice in Wonderland, where Alice races the red queen. The red queen represents the state, Alice represents society, and this constant race - the maintaining of parity in the capacities between state and society is what ensures liberty.

The universalization of end-to-end encryption and a direct ownership model of censorship-resistant digital assets, in the case of the bank state, that is what reasserts civil society’s power in the face of that growing state consolidation of power.

I would suggest here is that bitcoin’s most important property is precisely it statelessness an its censorship resistance. It mirrors physical cash and that it is a bearer asset that can be exchanged directly without identity verification, it is a guarantor of individual liberties at the protocol level, there is no one party, or set of parties that controls the protocol.

A complex set of game theoretic conditions ensure that incentives remain appropriately distributed an balanced. Bitcoin for this reason enables direct peer-to-peer transacting using ‘self-hosted’ wallets. Basically, a digital version of the wallet and carry it around in your pocket.

It serves as a monetary demilitarised zone for states. It represents a non-political alternative to US controlled in the BRICS controlled financial systems. Central to this, is move away from account model of digital assets. Anytime we were talking about a third-party trusted custodian we're talking about centralised implementation of public key infrastructure, in which some custodian holds the private keys that that determine ownership of an asset.

Bitcoin is an implementation of decentralising PKI, meaning it represents a direct model of digital asset custody, that asset is custody by the end user who owns their private keys, and therefore can operate in a self-sovereign manner.

This is critical. Bitcoin has no customers. That is why there cannot be AML/KYC requirements for the use of Bitcoin. It is a tool. Tools create inclusion as people freely adopt them, not based on top-down coercion.

Ultimately the takeaway here is that: Liberty is a bottom-up process, and as states move forward with implementing CBDCs having a liberty-oriented alternative like Bitcoin will be key to ensuring that a space for freedom continues to exist.