The Profound Reason Normies Fear Bitcoin and a Crypto Economy

You have to go out macro to see just how significant Bitcoin's invention 14 years ago is to civilization's progress.

Ours is a culture in which few can see the macro — macroeconomic — trend line well, if at all.

This is in part due to the fact our society rewards specificity of labor — the neurosurgeon makes more than the street sweeper, because anyone can sweep a street, but it takes skill, board certification, and education to operate on the brain — and it is also because we are enough removed from subsistence in the West that we don’t often think about first principles.

Nonetheless, whatever the reason or rationale, it’s a civilization that gets all the tiny details right and the larger destination wrong.

A Yahoo! News article the other day proclaimed, “A ‘hole’ 30 times Earth’s size has spread across the sun, blasting solar winds” that will hit our planet soon — and could, in theory, wipe out our entire civilization and species.

If this fact gets you to zoom out — to briefly worry about the species’ ongoing existence, rather than your own pocketbook or errand list or personal animosities — then you’ve glimpsed a moment of “macro thinking.”

This is how I think almost all the time, unless I choose to zoom in.

What happened broadly speaking is that in 1913, some of the strongest financial minds of the day met together at Jekyll Island — off the coast of Georgia — and colluded to create a regional currency monopoly.

That’s exactly what the Fed is… now, until the Nixon gold shock in 1971, in which President Nixon de-coupled the dollar from any possibility of gold redemption (ironically, to combat inflation; sound similar to today’s sociopolitical temperature?), it was a monopoly that most people were fine with using, and even enjoyed.

Legal monopoly status took the guesswork out of currency — if you were doing business in America, or with America, you would just use the dollar, more formally the Federal Reserve Note.

And since it could be redeemed immediately for its worth in gold in any major American city, it had real backing, and people trusted it.

Skip ahead to a generation after the Nixon gold shock in 1971.

The dollar is now purely a political vehicle, and a notional construction. A dollar is created when new debt is instantiated; it’s not some independent nor particularly rare unit of account independent of the parties holding it, instead its very existence depends on the solvency and competence of the financial house or “bank” which holds it on its books. Bizarre, yet this is the case: as the burgeoning March 2023 financial crisis underscores all too clearly.

It also has no proof of work component. Proof of work is ultimately what gives mined diamonds, or gold, silver, platinum, or other rare mineable objects like Bitcoin, their independent market value. You have to do work — in the case of Bitcoin mining, energy costs and computational power — for the “chance” to stumble across the correct block “solution” — at which point the network gives you a block reward for your computational victory.

Game theory keeps everyone mining, even though only one person “wins” every 10 minutes or so. Because you have a chance of striking digital gold, you take a gamble by handing over your computational power and energy resources to the Bitcoin network. It is an elegant solution to the century-old unfair mill that is the Federal Reserve.

With Fed dollars and European Central Bank euros — a rough 1999 copycat of the 1913 regional monopoly, but for the eurozone — there is simply no proof of work component. A billion or a trillion new units can be created with the stroke of a key on a 25 year old computer at one of the central banks.

This is fine in reasonable times, and bad in unreasonable times — because the governments and politicians do ultimately put pressure on the central banks, to create more dollars and euros, at the expense of existing holders of those currencies.

Only in bad times are the teeth — and toothmarks — of the central bank legal monopolies viscerally felt by the populace.

We’re all feeling it now, in the sense that costs at the store have increased, the cost of borrowing has also increased (mortgage and car loan rates are now higher), yet we have no stakeholder role in the creation of new dollars — when another round of dollars gets injected into the system, as they’re doing right now to stave off a banking system collapse — the average person doesn’t see any of that prosperity.

Instead, quite the opposite: if you have dollars stored in the system, they become less valuable, because they are now less rare in the economy. More dollars, suddenly chasing the same amount of goods, services, and real estate.

In such a crisis (the US has chosen to print its way through a proxy war with Russia, and a once in 100 year pandemic), proof of work is suddenly desired again.

Yet in the modern age, gold is not the ideal.

We are accustomed to numbers on a computer screen, and we like the convenience of swiping or tapping at the store to pay for our wares.

Gold has no payment network and doesn’t relate well to the digitized economy.

Bitcoin is a number on a computer screen — a balance — backed by past proof of work activity and nothing else.

This makes it ideal as everything else burns.

And this is what frightens the normie. If we were ALL going down with the ship, there would be a collective helplessness.

Instead, 100 or 200 million people who use cryptocurrency and hold some Bitcoin, may not be wiped out at all by the money printers in the post-pandemic era.

Yet those who haven’t learned this new system; they won’t fare well, if recent history is any indicator.

Being forced to learn a new thing terrifies the average person. Adoption of the metric system failed in the West because no one wanted to let go of the legacy measurement system. It is similar with this transition from non proof of worked political money to mineable computer money.

Anyway, the fear gets worse for the normie when they realize their government can’t truly stop this new asset format. Behind a simple VPN, access to all crypto wallets is a breeze. Without a structural retooling of the Internet — Chinese style firewalls and such — they can never get rid of the life raft completely.

Some will prosper, as this war losing bureaucracy burns under the weight of its own self-inflicted devaluation.

From the scramble of people trying to get my attention lately… the crypto world is about to become relevant all over again, at a scale we haven’t yet experienced.

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