An Awakening

Bitcoin was not born in a vacuum, nor as an alternative to some perfect money that humanity was already using. If we compare bitcoin against a hypothetical perfect money that has all the desirable properties of money, it would come off poorly in the comparison, since bitcoin is not perfect as money. But it makes little sense to compare it against a hypothetical perfect money that does not exist.

Bitcoin was born in 2009 as an alternative to the fiat system, which had been in place for 38 years at that point, since Nixon’s announcement that blew up the Bretton Woods agreement. It has better properties as money and fulfills the functions of money far better than the money we use daily. To compare bitcoin against fiat money, let us first recall the nature and main problems of the fiat system. As we saw in chapter three, they can be summarized in the following six major points:

• It is based on mass theft from the population.

• It fosters class inequality.

• It discourages civilization.

• It destroys nature.

• It enables wars.

• It leads toward totalitarianism.

Let us see how and to what extent bitcoin solves the main problems of the fiat system.

As for its nature, the difference is radical. Radical both in the sense of fundamental or essential, and in its etymological sense: “relating to the root”. The root of the fiat system is theft. The root of bitcoin is the donation to humanity of a creation: the software that implements peer-to-peer electronic cash. In bitcoin, nobody has the privilege of issuing currency at no cost, yet at the same time anyone can issue it, if they wish, on the same terms as everyone else. There is no theft whatsoever --- not a little, not a lot.

As for class inequality: as we have seen throughout the book, the Cantillon effect is the privilege enjoyed by those who are best politically connected to those who control the money printer. Those who are best connected also enrich themselves artificially at the expense of others. In bitcoin, since no money printer exists, we are all equal. Bitcoin does not care about race, skin color, sex, religion, or political connections. The Cantillon effect does not exist, nor does anything resembling it, because in bitcoin nobody has any privilege.

Bitcoin incentivizes civilization. A key property of bitcoin is its total supply of 21 million. No one will ever be able to create bitcoin beyond 21 million, due to its devaluation-resistant nature. This means that with bitcoin it is possible to save, since nobody can devalue one’s savings, unlike in the fiat system. The ability to save is essential because it gives human beings a greater capacity to provide for the future. As a consequence of this greater capacity, the future becomes more predictable, and therefore human beings lower their time preference. And every reduction in time preference is accompanied by a civilizing process, as we have seen, since there are fewer incentives for violence and crime and more for civilized behavior. Although this effect is clearly perceived with currencies experiencing 6 or 7% devaluation --- such as the dollar or the euro --- in currencies with devaluations exceeding 20%, typical of underdeveloped countries, the difference is much greater. In other words, the benefit of saving in bitcoin is proportionally greater the worse the fiat currency you use.

Bitcoin’s resistance to devaluation eliminates the urgency to immediately spend the fruits of one’s labor, incentivizing people to save rather than succumb to the pressure of impulsive consumption. According to a UN report,¹ the production of clothing and footwear generates 8% of greenhouse gas emissions. So much clothing does not seem necessary, since the same report indicates that every second a truck-load equivalent of clothing is buried, burned, or dumped in the ocean --- more than 30 million truckloads per year. If we lined up all those trucks full of clothing on an imaginary motorway along the equator, the line would circle the earth more than 7 times. The majority of those garments, moreover, contain synthetic fibers that will break down into microplastics with toxic chemicals that contaminate the soil, water, and air, causing an environmental problem. The consumption of low-quality goods that quickly end up in the rubbish is incentivized by the continuous erosion of fiat money’s purchasing power. In a bitcoin-based economy, the opposite would happen. Individuals and companies would tend to spend with a focus on real needs and durable goods rather than disposable products or fleeting fashions. The shift in people’s time preference would reduce the waste associated with the mass production of low-quality goods, avoiding the excessive exploitation of natural resources and minimizing the generation of rubbish.

As for wars, bitcoin discourages them on two fronts. On the one hand, it incentivizes a smaller State relative to the total population. A State that occupies a small sphere of society’s affairs is far less likely to go to war with other States than large, powerful ones that need an external enemy to divert attention from their ever-growing internal problems. On the other hand, in the event that two countries did go to war, it would not last long, since States would be unable to extract all of their population’s wealth through the creation of new money. One of the two States would go bankrupt and the war would end. The exact opposite of what happens under the fiat system, where the money printer finances war indefinitely.

The criminal nature of the fiat system (theft) and any one of its effects alone would be sufficient reason to choose bitcoin over the fiat system, since it produces the opposite effects.

In the rest of the chapter we will see how the fiat system and bitcoin differ on the slippery slope toward totalitarianism.

Privacy

As we have seen throughout the book, privacy is each person’s ability to decide what information about their personal life they reveal, to whom they reveal it, and when. It is not the ability to conceal activities that are outside the law. You probably would not want your salary to be public, even if your work is completely legal. Nor do you want your medical history available for anyone to see. Your vote in elections, your donation to Greenpeace, WikiLeaks, or your favorite NGO, your monthly spending on wine or clothing, and an endless number of personal life matters are things you probably would not want everyone to know.

Privacy is a fundamental right enshrined in the UN Universal Declaration of Human Rights, and few people would say they do not want privacy if asked their general opinion on the matter. Nevertheless, the State’s natural tendency is to attack it on all manner of pretexts, aided by the as-widespread-as-it-is-mistaken idea of “I have nothing to hide”.

You may think that Orwellistan is an extreme civilization and that we will never reach anything like it. It certainly is an extreme civilization, but we cannot take for granted that we will never get there. Especially if we do nothing as the State gradually strips us of privacy.

We are all living under martial law as far as our communications are concerned --- we just can’t see the tanks, but they are there.²

— Julian Assange

In the book Cypherpunks: Freedom and the Future of the Internet^↗, published more than a decade ago, Julian Assange warned us that mass surveillance is a reality, practiced by virtually every developed country. Current technology makes it possible for any Western democracy to end up in something resembling Orwellistan, and the probability is higher today than at any other point in history.

A few years later, in June 2013, Edward Snowden, a technology consultant working for the National Security Agency (NSA), confirmed what Assange had warned. He revealed to the newspapers The Guardian and The Washington Post a series of top-secret classified documents exposing US government mass surveillance programs. Programs such as PRISM, which allowed the NSA to access data from the servers of companies like Google, Yahoo, Apple, Facebook, and Microsoft, or Upstream, whose objective was to “tap into” telecommunications lines and internet links at various interconnection points. These leaks demonstrated that the NSA was collecting data on electronic communications (emails, calls, chats, videos, photos…) from both US and foreign citizens without specific court orders, in violation of their privacy rights.

Remarkably, that same year, a report from the White House itself concluded that there was no evidence that mass surveillance of telecommunications had stopped a single terrorism case.³ But it does not matter --- the State’s desire for control is still there, the technology for mass surveillance is still there, and our will to fight against it is greatly weakened since we still fail to understand the importance of privacy.

A very special feature of privacy is that it is useless to worry about it only when you think you need it. People who argue they do not need privacy because they have nothing to hide, in addition to not understanding what privacy is, overlook the fact that the legal framework can change. Some of your habits may not constitute an offence in the eyes of the current law. But this can change at the next election, and it will do you no good to start worrying about privacy after it has changed. Following the Nazi occupation of the Netherlands in 1940, the authorities ordered all Jews to register as such. Perhaps they thought they had nothing to hide since they were doing nothing wrong, and more than 150000 obeyed and registered. In the summer of 1942, deportations to Auschwitz began, and the Nazis did not need to find out who they were or where they lived^↗. If you wait until you can see the danger before you start worrying about privacy, it will already be too late.

Although we are generally not very aware of it, privacy is absolutely essential for restraining the State’s totalitarian tendencies. If you cannot financially support the organization of your choice without the State knowing about it, you are not entirely free to do so. Moreover, without privacy, you might decide not to do it out of fear of what might happen to you afterwards. This is because the lack of privacy also produces a very dangerous type of invisible censorship: self-censorship.

Unfortunately, mass surveillance is not only occurring secretly and illegally, as Assange warned and Snowden revealed. It is also happening in plain sight, with the population’s consent, through a multitude of “know your customer” laws, or KYC laws (Know Your Customer), spreading across all areas of society and especially throughout the financial system.

KYC Laws in the Financial System

KYC laws oblige banks, payment platforms, and other services to collect detailed personal data from their customers --- such as tax identification numbers, physical address, employment, sources of income, etc. --- turning the financial system into a State tool for surveillance and control. As a result of all this information, the requirements for moving your money out of the bank grow ever stricter over time. In the last century it was possible to make a bank transfer without the bank asking why you were making it. Today that is no longer possible. If the transfer exceeds a certain amount you have to provide explanations. And if they do not like the explanation (for example, if you are sending money to your favorite exchange), they may decide to block it. Of course the excuse will be that they are doing it for your own good, because they want to protect you from overly risky investments.

In parallel with the surveillance of all electronic transactions, the State wants to eliminate cash. In addition to prohibiting cash payments above a certain amount --- one that keeps decreasing --- the State also imposes limits on cash withdrawals from ATMs. And if you want to withdraw a larger amount at the branch, prepare to give all manner of explanations --- information that will, of course, end up with the State. When the police stop a criminal, they have the right to remain silent because anything they say could be used against them, but an ordinary law-abiding person who simply wants to access their own money has no right to remain silent. To withdraw their own money, they must speak and provide information.

Of course those who think “I do nothing wrong” will see nothing unusual in these quasi-totalitarian practices, but when cash cannot be used and the financial system is a tool of control, can you participate freely in a protest? The State might not like that protest and decide to freeze your accounts, making your life impossible. You may think that sounds exaggerated, you may think that something like this has neither happened in your country nor ever will. You know perfectly well that peaceful protest is a right in your country and therefore you conclude that it cannot happen. And it is true that it is a right in Western democracies, but it turns out that the State can decide to violate your right without consequence. There is no need to speculate about whether something like this is possible, because it has already happened recently. In February 2022, in Canada, the bank accounts of participants in the Freedom Convoy were frozen.

The 2022 Canadian Freedom Convoy was a series of protests initiated primarily by truckers against the vaccination requirement for crossing the border between Canada and the United States. The movement quickly evolved into a broader protest against health restrictions and Justin Trudeau’s government. Truckers formed convoys from various points across the country converging on Ottawa. Thousands of on-foot demonstrators also joined, and groups were created on social media to coordinate protests in other cities and countries. Although everything developed peacefully, Trudeau invoked the Emergencies Act in order to take extraordinary measures. Among other things, the government ordered banks and financial platforms to freeze the accounts of people associated with the protests --- all without a court order, of course --- which affected not only truckers but organizers, donors, and sympathizers as well.

So yes, the right to protest exists, but if the State needs to manufacture an emergency to strip you of your rights, it will. This was not the first use of the financial system as a weapon against the population, nor will it unfortunately be the last. As we saw in the chapter on intrinsic value, long before the Canadian truckers’ protest, in December 2010 the US government had ordered Visa, Mastercard, PayPal, Bank of America, and Western Union to block payments to WikiLeaks --- all without judicial authorization as well. In October 2011, Julian Assange held a press conference in London in which he announced that WikiLeaks had to suspend the publication of news in order to focus on fighting the financial blockade, which had destroyed 95% of the organization’s income. He also said that if the situation continued, they would not be able to carry on.⁴

These examples highlight a reality that remains hidden from most of the population: if you cannot access your money freely, then it is not your money. The State’s ability to know all your economic transactions and freeze your money at will is an extremely dangerous weapon, since it provides the State with virtually unlimited power. It is obviously not a good idea to give unlimited power to anyone, and even less so to those who already naturally tend toward totalitarianism.

The Modern State and the Sleeping Society

In the face of such erosion of privacy and freedom, the majority of the population remains asleep. Although some, especially among the young, sense that something is wrong with the system, they do not know what it is and frequently lash out at the wrong enemy. Their ignorance of the fiat system’s problems leads them to completely wrong conclusions and to taking action in a direction diametrically opposed to solving those problems. The State that supposedly looks after us and provides us with security is in fact carrying out a modern version of Juvenal’s “bread and circuses”⁵ to keep us distracted and removed from the real problem. Free education, free healthcare, subsidies, grants, and other benefits constitute the modern version of Roman bread. Football, social media, series, and reality shows form part of the new circus. The new bread and new circus keep the population content and anesthetized, reducing resistance to policies that restrict privacy and freedom. But, first of all --- what is the State?

I am the State.⁶

— Louis XIV

As Louis XIV (supposedly) said, if the State is an absolute monarchy, it can be easily identified with the figure of the King, since both the army and the laws and courts are under his command. But if the State is a democracy, then what constitutes the State, or who constitutes it? The State is a sovereign political entity that exercises authority over a defined territory and the people living in it through a set of governing bodies, laws, mechanisms of coercion, and the legitimate monopoly on violence. In a certain sense the State is an entelechy --- it exists because people believe it exists. But whether or not it is an entelechy, it certainly has no objectives. It is an immaterial tool and as such has no will of its own. It is people who have will and objectives, and although these differ for each person, the objective of those who hold power is very often closely linked to remaining in power. To remain in power, it is essential to continue spreading the idea of the State’s benevolence, for which those in power have two powerful weapons: semantics and the cognitive bias toward intentions.

Semantics

The management and manipulation of semantics is key, as we saw in chapter two when discussing the evolution of the meaning of the word inflation. Nobody speaks of the State of malaise (the malaise created by theft through taxes and inflation) or the State of coercion (if you don’t pay what I say, you go to jail). Instead, the expressions we frequently hear in the media are welfare state or rule of law. With those names, the battle is almost already won. Who doesn’t want welfare? Who doesn’t want their rights respected? So the worship of the State and public service is omnipresent in both public media and private media. This is because private media depend on the relevant state license and receive the appropriate state subsidies, meaning that, despite appearances, they are not entirely free.

Bias Toward Intentions

Within this mental framework, if the government wants a certain measure to be well received by the population, it is enough to declare a benevolent intention for taking that measure. When they cut your privacy they will not say they want to control everything. That would not be well received by the population. When they cut your privacy they will say it is necessary to fight one of the usual suspects: child pornography, terrorism, money laundering, or drug trafficking. “It’s the thought that counts” is an expression we commonly use. But let us pause for a moment: is it really the thought that counts?

Hell is full of good intentions.⁷

— Saint Bernard of Clairvaux

With this striking phrase, Saint Bernard of Clairvaux noted many centuries ago that having a good intention is not enough. Having a good intention when acting does not necessarily mean your acts are ethical. It could even be the case that they are completely immoral, however good the intention. But even though this is a universal truth, eight centuries later the bias persists and allows governments to take measures that produce the opposite effect to the supposed intention behind them.

KYC laws are a clear example of this, since their supposed intention is to increase our security by allowing better action against terrorism and money laundering, but what they actually achieve is the opposite: making us less secure. Databases containing sensitive information about millions of people represent a lucrative prize for hackers, who then sell that information to the highest bidder. Of course the highest bidder is the one with the fewest scruples about making money from stolen information. The person who wants the data to send advertising emails to many people cannot pay as much as someone willing to do worse things that generate greater income (targeted phishing scams or even physical attacks, such as violent robberies or kidnappings for ransom). The end result is that the population is far less safe than if that centralized information had never existed --- that is, if KYC laws did not exist. KYC laws should become DNKYC laws --- Do Not Know Your Customer --- that is, laws that prohibit the collection, let alone the storage, of data that are not strictly necessary to provide the service. But unfortunately this is not going to happen any time soon. They are not going to stop massively invading our privacy because the State’s desire to control the population has not gone away. The real objective is not security --- it is control.

How is it possible that we accept laws as dystopian as KYC laws? How is it possible that we use money that serves as a tool for silently robbing us? How can we be in general so ignorant and so asleep?

Without a doubt, this would not be possible without the much-praised public education system. Praised because the intention is that nobody should be left without an education --- which is a magnificent intention, of course. But the result is more sinister than the intention: State control of the education system is essential for creating docile citizens who are above all ignorant of the fiat system.

A very curious fact about the public education system: the history of money --- the tool that enables civilization --- is not studied either in primary school or in secondary school. Nobody studies how money evolved into the fiat system. Even less is the criminal nature of the fiat system and all the problems we have seen studied. Can you imagine this book being one of the recommended readings for teenagers in school? Can you imagine that before entering the job market they would know that the State is going to silently steal the fruits of their labor? Can you imagine that they would know they cannot access housing because the State robs them? Obviously the fraudster has no interest in explaining to their victim the trick by which they are robbing them. On the contrary, the fraudster’s interest is in presenting themselves as infinitely benevolent (welfare state) and fair (rule of law).

This tendency we all have to idolize the State is not something natural, nor the product of our logical reasoning. We are branded like cattle with the iron of the State. We do not see the brand because we do not carry it on our skin but in our minds, yet the brand is real. It is the brand that leads us to think that everything the law says is good and what is outside the law is bad, or that obeying authority is acting well and disobeying authority is acting badly. But this correlation between law and good progressively breaks down as the State grows and regulates its citizens’ lives ever more. Little by little, laws become more arbitrary and more restrictive. Those who hid Anne Frank were breaking the law, while those who executed her were obeying authority. “I was only following orders” was one of the most repeated phrases at the Nuremberg trials. Complying with the law and obeying authority are not synonymous with behaving ethically.

Unfortunately, we do not learn from the mistakes of our ancestors. Western societies are asleep and have the same cognitive biases that paved the way for the State’s march toward totalitarianism last century, with the difference that today there is far more technology available for mass surveillance and population control.

Conclusion

We are living through a crucial era for the future of humanity --- a moment in which societies will take one of two paths. The first path leads to Orwellistan, and today society is already on the fiat bus traveling along the highway that leads there. To reach Orwellistan, society does not need to do anything more --- it can remain asleep for the rest of the journey, because there is no need to get off at any stop. The State drives the fiat bus, and its final destination is Orwellistan.

The other path leads to Satoshistan --- a world of freedom, peace, and prosperity in which money and the State are separated. A world in which the set of rulers is minimal and their legitimacy derives from the acceptance of the governed; a world where both economic transactions and communications are private and all exchange is voluntary, without coercion; a world where one lives in freedom and peace. The world in which John Galt would want to live. But to take this path, one must get off the bus before it is too late. And to get off the bus, one must wake up, become aware of where the fiat bus is headed, and act.

In this virtual journey that the societies of all countries in the world are undertaking, bitcoin is one of the few tools available to those of us who want to get off the fiat bus and travel the second path --- and also the tool most feared by those who want society to remain asleep. For any person of good faith, there is no rational argument against bitcoin, since all the FUD is self-interested. The attempts to ban it (tool for criminals, Ponzi scheme, energy waste) or ridicule it (zero intrinsic value, not backed by anything, insufficient supply, unfair distribution, insufficient mining incentive, quantum computers) are, at best, intellectually dishonest. All a person of good faith needs to do is wake up. Everything else will follow as a natural consequence.

The reason for this book is to help readers wake up to the reality of the fiat world. The first decision that those who have managed to wake from the fiat nightmare will make is to begin saving the fruits of their labor in bitcoin: the only form of money that no one will ever be able to devalue. After becoming aware of the fiat system’s problems and eliminating any fears through the refutation of disinformation, the decision is clear. It is also relatively easy to make, since nobody wants the fruits of their labor to be stolen.

If you save in bitcoin you are already acting --- you have already gotten off the fiat bus. And with this action you are not only helping yourself, you are also helping others. You are even helping those who are still asleep on the bus heading toward Orwellistan, because for you to get off the fiat bus, it had to stop, and every stop delays its journey toward Orwellistan a little. By getting off the fiat bus, you are giving more time for more people to wake up and decide to get off. If, in addition to saving in bitcoin, after this orange pill you also want to actively help others get off the fiat bus, I encourage you to keep learning. Bitcoin is not something you can finish learning --- so: study, teach, repeat. If you learn, you will teach; and in teaching, you will learn. Help wake more people up. You will feel good in the process, promoting a better, freer, fairer, more peaceful, and more prosperous world. You will feel good helping others while at the same time helping yourself.