How did things get so fucked up?
It’s difficult to imagine the palpable feeling of excitement that must have greeted the 2008 release of Satoshi Nakamoto’s Bitcoin white paper. After years of failed experiments at developing a purely digital currency free from the manipulation of central bankers, Bitcoin seemed like the real deal, proposing a workable solution to the double-spending issue.
It’s equally difficult to look back and fathom how quickly this dream evaporated. Even worse is the knowledge that it was an inside job hatched by groups that used Satoshi’s exit from the stage to remodel Bitcoin into a hollow shell of its former self.
I hadn’t read Orwell’s Nineteen Eighty-Four since I was in high school, but I recently picked up a copy and found myself struck by the similarities between the state ruled by Big Brother and the current state of the crypto sector. I also found myself identifying with the novel’s protagonist Winston Smith, who comes to realize that the whole structure of his world is an enormous lie.
Like the nation of Oceania, crypto has organized itself into a strict three-level hierarchy, with the top rung occupied by Inner Party members. These are the early adopters of Bitcoin and other cryptocurrencies, many of whom amassed significant stores of tokens of various stripes (some through insider pre-mining), allowing them to hold positions of influence within the sector.
Below these are the Outer Party members, individuals who got into crypto a little later on but had sufficient discretionary income to acquire tokens at a slightly higher cost than the early adopters. And then there are the Proles, the great mass of individuals who lack the funds to buy in at today’s inflated valuations, or who simply find the entire crypto concept to be mystifying, intimidating or both.
Inner Party members tend to be cliquish and prone to mocking the Proles as fools who are apparently choosing to ‘stay poor.’ The recent phenomenon of adopting ‘laser eyes’ to self-identify as members of an elite group is only the most visible element of this exclusionary belief system.
Yet it was the Proles who Satoshi’s Bitcoin was primarily intended to benefit. Remember the early days of Bitcoin, when ‘banking the unbanked’ was one of its stated goals? That seems to have been replaced by ‘Lambo’ing the unLamboed,’ a pointless game of dick-measuring and keeping up with the Inner Party Joneses.
A rigid hierarchy isn’t the only Orwellian aspect of the current crypto environment. Bitcoin has a Ministry of Truth that has effectively ‘memory holed’ the white paper due to the document’s insistence that Bitcoin is a peer-to-peer electronic cash system.
The BTC token’s new primary purpose is a ‘store of value,’ a limitation that clearly wasn’t on Satoshi’s mind in 2008. Efforts to convince the public that this divergence was both unplanned and unwarranted typically result in legions of Thought Police pushing back on those who dare utter such blasphemy.
Party members embrace ‘doublethink,’ the ability to hold two mutually incompatible ideas simultaneously, pushing one to the fore as it suits their immediate need. Ever notice how Bitcoin’s legions of Ludwig von Mises devotees howl with derision every time a central bank employs quantitative easing, then morph into John Maynard Keynes every time Tether miraculously receives yet another influx of billions of dollars in new capital whenever BTC’s valuation shows the slightest sign of a downward correction?
Satoshi himself (or herself) has become Emmanuel Goldstein, a former insider now branded a heretic for reminding crypto’s current guardians of how far they’ve strayed from the path he outlined. The white paper is labeled an outdated relic, primarily because the technology described therein bears no resemblance to the artificially constrained blockchain that took root during Satoshi’s absence.
It’s as if the individuals to whom Satoshi entrusted his creation saw a prototype for the Shelby Cobra and decided the best way to improve it would be putting a lawnmower engine under the hood and reducing the fuel tank’s capacity to that of a Zippo lighter. It’ll look great sitting in your driveway, but it’ll struggle just to back out onto the street.
Simply put: seven transactions a second for a maximum one-megabyte block of data every 10 minutes does not make for a functional payment processing network. And that’s without paying exorbitant fees that make Bitcoin an uneconomical method of payment for anything but big-ticket items (the fees are even worse on Ethereum).
By the benchmarks stated above, I suppose I qualify as an Outer Party member, having gotten properly involved in Bitcoin midway through the last decade. I even tried mining for a spell, although running a node quickly became more bother than benefit. I explored rival cryptocurrencies as they emerged, but most proved either redundant or just plain useless.
I built caches of various tokens and the recent spike in the value of BTC, Ether and other tokens certainly hasn’t done my net worth any harm. But the end game of this promised financial revolution can’t simply be the enrichment of a small group who were lucky enough to get in on the ground floor and then pulled the ladder up behind them.
This is the first in a series of posts I plan to release to poke holes in the false narratives being peddled by the figures behind BTC, Ethereum and the other shitcoins that have sprung up to take advantage of the crypto hype.
In Orwell’s novel, Winston doesn’t know for whom he’s writing the diary entries that express his concerns over the current state of affairs. Like Winston, I doubt that anything I write will prove capable of steering Bitcoin back onto the path from which it’s strayed. But if it convinces one person not to swallow the bullshit being peddled by the Inner Party bigwigs, and thus prevents them from committing their hard-earned real-world cash to what is in essence a multi-level marketing scheme, it will have been worth it.