This is an opinion editorial by William E. Stebbins, Jr., a U.S. Army veteran who served as an operational planner and cavalry officer in Iraq.
With FedNow’s birth and a U.S. central bank digital currency (CBDC) seemingly on the near horizon, Bitcoin is at risk of decisive isolation if it cannot quickly implement a permissionless, widely-adopted and, therefore, unstoppable medium of exchange functIonality. Ultimately, its proven store-of-value qualities are inseparably linked to utility: items of value at some point must be usable. If the State is able to functIonally quarantIne Bitcoin in cyberspace, Bitcoin will lose the monetary war even as victory seemed within reach.
The State Will View Bitcon As An Insurgent
As a career military planner, strategist and Iraq counterinsurgency veteran, I am reminded of my experience studying, planning for, and fightIng counterinsurgency when I consider the Bitcoin phenomenon. As such, analyzed through the fitting paradigm of insurgent warfare, Bitcoin will inevitably be viewed as a formidable insurgent to the State-controlled fiat currency system and its adherents viewed as protestors against State-weaponized monetary abuse. Accordingly, viewing this clash of antithetical systems through rose-colored glasses instead of through insurgent goggles, will yield an inaccurate assessment of Bitcoin’s situation and will, therefore, misinform one’s expectatIons and preparatory actions.
Surveying the conditions that inspired Bitcoin’s creation and nourished its growth over the last 14 years, one notes striking parallels with historic insurgencies.
Phase One: Inception
Most insurgencies experience an initIal phase where the dominant power — the State — is oblivious to an emergent antagonist in its midst. In our nation’s history, there was a brief period of time when King George was blissfully unaware that his policies and the hubris of his ministers had ignited an insurgency in the colonies.
The Bitcoin insurgency was seemingly sparked in response to the disastrous 2007 housing market implosion and ensuing 2008 financial collapse. Its pseudonymous creator, Satoshi Nakamoto, unveiled the idea of a revolutionary monetary protocol that corrected the egregious shortcomings of the fiat monetary system — a system manipulated by unelected State planners and exploited by banking gatekeepers. Shortly thereafter, in 2009 as the Great Recession deepened, Nakamoto actIvated the code, bringing forth the first block of 50 bitcoin — the “genesis block.” Few took notice.
Phase Two: Accelerating Support
The next phase in insurgent warfare occurs when the ideas of the disenfranchised gain tractIon with the populace. In the second half of 2021 — when the price of bitcoin topped $65,000 — it was clear that Bitcoin’s popularity and value had accelerated. Fiscal conditIons that had initIally inspired Nakamoto persisted (even worsened), providing further kindling for the flames of popular support. Bitcoin evangelism increased, the orange message of the value of decentralized hard money continued to find receptIve ears. Still, the lumbering colossus of the State remained oblivious — Bitcoin was still sufficiently small in scale. As the State slept, the Bitcoin legions swelled.
Phase Three: State Awareness, Reaction And Hyperbitcoinization
We have now transitioned into a distinctly-new and profoundly-critical phase of the conflict. Bitcoin’s acceleraIng global popularity has now tripped the State’s radar. Political candidates are discussing it and many large investment firms are vying to offer spot bitcoin ETFs. El Salvador declared Bitcoin legal tender. Chinese miners appear to have resumed operations in various ways and locations despite Beijing’s 2021 ban. Most recently, Space Force Major and Massachusetts Institute Of Technology graduate Jason Lowery was “ordered” to cease and desist publishing and speaking about his recent book, “Softwar,” which analyzes Bitcoin from a military perspectIve. His conclusion was that Bitcoin adoptIon should be viewed as a U.S. strategic imperatIve.
In these and countless, increasing examples, it is clear that Bitcoin has now achieved the tipping point: it has captured State attention. King George is semi-aware that he has some manner of insurgency on his hands.
The State Fights Back
Bitcoin’s permissionless, uncontrollable essence is slowly being grasped by a State that is ever intent on increasing surveillance and control over its resident-serfs. Simultaneous with the exploding popularity of Bitcoin, offering as it does a means of opting out of the State’s monetary system, the State launched two sinister monetary structures.
The first, FedNow, is an instant payment (and surveillance) infrastructure. Advertised to the uninformed masses as offering unprecedented transactional convenience, it more importantly establishes the prerequisite monetary plumbing, if you will, within which the second enslaving innovation will flow: a CBDC.
A CBDC — the next evolutionary development to a cashless surveillance State — is the “digital dollar,” the State’s anxiously-sought-after checkmate on personal privacy, wealth and sovereignty. It’s the tool that will most effectively force people’s compliance. Programmable and providing seamless surveillance of financial activity, it will allow comprehensive financial neutering of any deemed “enemy of the State.” In other words, in the cashless world of the CBDC, the State will suddenly have the un-Constitutional power to preemptively (and unaccountably, without the bother of legislation) block any private transactions it wishes: those involving firearms, ammunition, meat, transportation, fossil fuels… and bitcoin.
In fact, it will likely go further than simply blocking bitcoin purchases. It will block the purchase of electronic wallets, nodes, internet access and electricity for miners. In other words, as the State begins to realize it can’t kill Bitcoin, the next logical strategic development will be to execute FedNow/CBDC transactIon blocking and selective internet denial to isolate Bitcoin in cyberspace.
Nakamoto’s Bitcoin Confronts Occam’s Razor
This brings us to the English philosopher, William of Occam (1270 to 1347) and his famous principle, “Occam’s razor,” which can be expressed and applied in a litany of ways.
One description of this principle posits that the more exceptions that exist for a rule, system or device, the more fragile, or insubstantial that rule, system or device really is. For example, a contractor may claim that their firm has developed the most effective, powerful weapon in modern history. As they demonstrate the weapon, a number of exceptions emerge: It cannot be employed at night, it malfunctions in the rain, it requires extensive maintenance, it cannot be exposed to dust, etc. In light of the many exceptions and caveats to its performance, it does not live up to its billing: it’s actually not the most powerful weapon in modern history. In fact, such a weapon would be profoundly unimpressive.
Applying The Razor To Bitcoin
Nakamoto’s amazing creation is regaled as an alternative monetary solution to the sick fiat system. It remedies the many diseases of fiat currency. One may compare it to a monetary superweapon vying for dominance on a ravaged fiat battlefield — but is it, indeed, a viable superweapon? Will Bitcoin live up to its billing as the war unfolds?
U.S. military doctrine describes an important concept called “decisive points.” A decisive point is a “geographic place, specific key event, critical factor, or function that, when acted upon, allows commanders to gain a marked advantage over an enemy or contribute materially to achieving success.”
In this third phase of the insurgency, where State anti-Bitcoin tactics are even now emerging and starting to clash with hyperbitcoinization, two interrelated, decisive points must be acted upon for Bitcoin to avoid State cyber-quarantine and the perils of Occam’s razor:
- The first decisive point is a function: Bitcoin must fully develop its medium-of-exchange functionality
- The second decisive point is a critical system: Access to the internet must be assured
Decisive Point One: Medium-Of-Exchange Functionality
This functionality consists of two imperatives:
- Bitcoin must have reentry mechanisms back into the fiat world. Until such time as sufficiently-extensive Bitcoin-only transactional rails are established, Bitcoiners will need to occasionally exchange satoshis for local currencies in the conduct of life. Over time, these mechanisms may grow less important, contingent on the second imperative.
- Bitcoin-only transactional rails must become sufficient. A decentralized, transactional architecture, ideally consisting of numerous, redundant and overlapping rail options, must be globally propagated so as to become objectively unstoppable. Similar to how FedNow serves as the plumbing infrastructure for a CBDC, these many rails must provide the transactional plumbing for Bitcoin.
Bitcoin’s rails, like Bitcoin itself, must be decentralized and permissionless. This enables Bitcoin to solve many of fiat’s problems. It was created in internet autonomy — without State permission — and keeps replicating in uncontrollable autonomy. This permissionlessness must also be replicated in its medium-of-exchange transactional rails, otherwise Bitcoin’s impeccable potential to store value will be neutralized. In other words, if a stored object of value is unable to be brought out of storage for application to life’s requirements, then the object’s actual value is but a mirage. Seen another way, a treasure of gold safely secured on an uncharted island that can never be accessed by its owner is worthless. At some point, the owner has to be able to access their gold and use it. Accordingly, Bitcoin has to be protected against cyber isolation.
Decisive Point Two: Assured Internet Access
The second decisive point which will “contribute materially to achieving success” is assured access to the internet. Bitcoin cannot achieve its medium-of-exchange functionality if its holders are denied internet access — cyberspace is the sanctuary in which Bitcoin resides; Bitcoiners must have unimpeded access to this realm. If the State can block bitcoin access, or block (or control) Bitcoin transaction rail access, it will have succeeded in neutralizing — at least for time — Bitcoin’s relevancy. It would achieve an effect tantamount to confiscatIng one’s private keys. The Bitcoiner’s wealth would remain cyber-isolated. Further, if sufficient fiat states followed the same cyberspace denial strategy with their citizens, bitcoin’s value would almost certainly plummet — a casualty of Occam’s razor.
As with historical insurgencies, everyone has their niche to contribute. In the current struggle, some are gifted at spreading the message — prophets and evangelists of Bitcoin — recruiting more to the ranks. Others fight the war in the courts and within the political landscape, holding off the otherwise-unchecked reactions and counterattacks of the State while the orange legions multiply.
Of equal importance in this critical phase are the cypherpunks and technical wizards upon whom we must rely to quickly build multiple, redundant, permissionless medium-of-exchange rails and to innovate solutions for assured internet access. If the latter fail in their critical mission, Nakamoto might well find defeat at the hands of Occam.
This is a guest post by William E. Stebbins, Jr.. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.