Across the world, people are losing trust in the institutions that underpin society. Any thinking person can see the institutions of governance, finance and money are corrupt, incompetent and yet unavoidable.
As a result, the world is in a continued state of crisis, gyrating from one emergency to another with ever increasing speed and volatility. Progress and growth are stagnant. Hate, nihilism and pessimism are culturally dominant.
Edan Yago is the founder of Sorvyn. This article is excerpted from The Node, CoinDesk's daily roundup of the most pivotal stories in blockchain and crypto news. You can subscribe to get the full newsletter here.
The failings of our institutions are many but the root cause is the same: monopoly power.
We all know that monopolies are bad for everyone except the company concentrating power. Yet, when it comes to the greatest monopoly of all, the state, we somehow forget commonsense. Why? Because we assume there is no alternative. Of course a singular entity must oversee the law, and control violence within its borders.
Until very recently this assumption was warranted, but on Jan. 3, 2009, Satoshi released Bitcoin and showed us an alternative. He showed it is possible to build a system of rules without an administrator. He showed that this can be applied to the most fundamental institution of property and law: the institution of money.
Bitcoin showed that all users can be superusers and that admins are not necessary at all.
See also: Why Satoshi Chose Halloween to Release the Bitcoin White Paper | Opinion
What Bitcoin demonstrated in the domain of money, tokens have since demonstrated for other types of digital property. More recently, decentralized finance (DeFi) is calling into question the need for admins in financial services. Web3 (or 5, if you prefer) is likewise an effort to eliminate the need for internet services to be monopolies as well.
We are part of the most historically radical revolution in human affairs and few seem to grasp the full magnitude of what is happening. The endpoint of this revolution is that we will finally rid ourselves of the most dangerous and destructive monopoly of them all – the monopoly that backstops all other monopolies – the monopoly of the state.
Since most people do not comprehend the final destination, we are taking many wrong turns along the way. “I’m in it for the tech” or “blockchain not Bitcoin” say those who see just another Silicon Valley-style tech disruption. They are distracted and obsessed with features instead of principles, inviting the admins back into power, to eke out faster transactions or greater throughput.
One of the most brilliant aspects of Bitcoin’s design was that it is a tool for liberty, dressed up as a get-rich-quick scheme. Much of “crypto” has perversely turned this on its head, pumping out get-rich-quick schemes dressed up as tools for economic freedom.
Apart from crypto, “bitcoiners” also frequently fail to properly identify the historic moment. From a reliance on centralized services, to the commonly held hope for institutional adoption, most traders and many HODLers are more interested in "number go up" than on "authorities brought down."
For all the conviction of token Bitcoin maximalism, it too misses the point. Its central tenet is that no other tokens, besides BTC, should exist. This is monopolist thinking applied to Bitcoin. The result is a myopic focus on money as the root of all evil. A belief that we can fix all problems, if we simply fix the money.
Money, if it is the root of all evil, is antithetical to Bitcoin. There's been thousands of years of anti-market thinking, stretching back at least as far as Jesus smashed the merchants and money-changers. The corruption of money is a serious problem, but even the most casual reflection on human history makes clear that it is not the only problem, or even the most serious.
Some of the most cruel and totalitarian regimes existed on a gold standard. Sound money didn’t prevent the slave trade, the proscriptions of Augusts or the innumerable massacres that occurred in between. Human history is the story of gang violence and mob bosses. Fixing money is a heroic start to fixing the corruption of monopoly power, but shouldn’t be confused for a universal miracle cure.
In a boastful moment, the Roman General Pompeius Magnus, declared “I have only to stamp my foot, and legions will spring up all over Italy”. This is how humanity's mob bosses have for centuries run the world, through their ability to call forth physical power, loyal to them.
Then along came Satoshi, the boss of no one, who clicked his mouse and legions of miners sprang up all over the world, loyal to encode rules and function, not men. Satoshi showed us that a decentralized consensus mechanism can call forth and coordinate power in the real world.
Take this to its logical conclusion and it becomes clear that we can, and will, replace mob bosses and central admins with leaderless consensus rules. We might not rid ourselves completely of violence, power and policing but we no longer need a state monopoly in charge to prevent a slide into chaos.
We, the legions loyal to Satoshi’s ideas, will construct new institutions of governance that are based on voluntary participation and free market incentives. These institutions, blockchains, decentralized autonomous organization (DAOs) and P2P networks, will be the opposite of monopolies; they will compete for users and members.
We will be masters of code, rather than the other way round. We will construct a world where, just like BTC, all property will be cryptographically proven, enforced and immutable. To do so, we will build systems that incentivize and coordinate decentralized “police.”
The world will replace the state with Nakamoto consensus, not because it is the right thing to do but because it is the lucrative thing to do. Half the world’s gross domestic product (GDP) is controlled by governments. Once we realize we can do to government what we are doing to money, the game theory will play out on its own. The next Bitcoin-sized asymmetric bet, after sound money and sound finance, is sound governance. Get in early.
Like Prometheus, Satoshi gave fire and left. Its flame lights the way to the next phase of human civilization. We will cast aside the central powers that monopolize sovereignty. With them gone, none will be our masters but ourselves.
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