DeathAndTaxes

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Gerald Davis







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Bitcoin will route around damaged parts of the system. June 06, 2013, 04:46:37 PM

Last edit: June 08, 2013, 12:47:23 AM by DeathAndTaxes #1 (Just a random guys reflection on Bitcoin four years later and the vanity of needing to make the 10,000 post important)



If you have been involved in the Bitcoin community for any period of time you likely have heard the phrase "Bitcoin is the most disruptive technology since the internet" or something similar at least once. Have you ever thought deeply about what that means? Bitcoin is disruptive because it doesn't need the blessing or support of established interests. In that respect Bitcoin was successful as soon as people voluntarily began using it. It only requires voluntary association to grow and flourish and that is a powerful thing. The future is unknown and the growth of Bitcoin is almost certainly going to be painful. Certain actions taken by established interests can slow adoption, degrade the value of the network, and even destroy the Bitcoin protocol. Well at least the form of the protocol we call "Bitcoin" today. Bitcoin however will route around damaged parts of the system and make no mistake, our financial and political systems are horribly damaged. Bitcoin interfaces at the edges with those systems and that will make things chaotic for a while. If states adopt punitive legislation then wealth, innovation, employment, and yes even tax revenue will flow to states that don't. If banks are reactionary they will lose to banks that are forward looking. Today the amount loss is negligible but what about in a decade or two? Like water of electricity Bitcoin will organically find the path of least resistance.



The concept of cryptocurrency is now unstoppable. Today Bitcoin is the dominant system but regardless of the success or failure of Bitcoin, the thing of far greater note is the larger concept of decentralized currencies have been proven viable. Economic systems secured by math and logic not fallible humans and political will. People will never stops improving it. Even if established entities succeed in crippling the Bitcoin network, future cryptocurrencies will evolve from the lessons learned in Bitcoin's destruction. It has always been a possibility that Bitcoin will be the Napster of cryptocurrencies. Innovative, new, and ultimately fatally vulnerable from the day it launched. The media industry struck the Napster network at the vulnerable point and for a short time they enjoyed success, but the concept had already taken root. People were already thinking, creating, evolving the concept. What spawned from the death of Napster wasn't carbon copies, that would have been futile. Instead it was a technological petri dish, with various new forms of file sharing being created, competing, and mutating into forms that were increasingly more resilient to control and censorship. The same will happen to Bitcoin, there is no need for a replacement to start from scratch. A future protocol could start from a snapshot of the Bitcoin blockchain at a point in time before it was attacked, gaining at launch stakeholders who have a vested interest in the success of this alternative. Will the process be chaotic, scary, unmanageable? Of course. A cacophony of competing ideas, networks, and participants. However like file sharing the genie is now out of the bottle. We may in twenty years look back and find cryptocurrencies are very similar to what exists today or they may be so radically different as to be unrecognizable. Nobody know if Bitcoin will remain viable and resilient over an extended time frame. If someone says they know, they are lying, either to you or themselves. Of one thing that I have no doubt, is that cryptocurrencies in some form will exist in the future.



We should take a look at how far we have already come. The very fact that you even have people talking about cryptocurrency all over the world, a word which didn't even exist a few short years ago, is profound. Even when people are criticizing Bitcoin for its flaws or limitations they are still talking about it as a functional network, not an abstract idea which maybe could happen someday. Compare that to the reaction Satoshi would have received, if he appeared on CNBC to discuss the still theoretical concept of decentralized currencies. It would have been painful. From an idea that many self proclaimed experts wrote off as impossible or unworkable, to a money supply valued at over a billion dollars in less than five years. All that growth occurring in a chaotic, organic and at times dysfunctional fashion, open to anyone with an idea and a drive. Unlike fiat currencies nobody is forced to accept Bitcoins, nobody is locked into keeping the coins they already hold. Fiat currencies coerce populations through the use of legal tender laws and even with that advantage Bitcoin is already larger than the money supplies of dozens of nations.



Cryptocurrencies have breathed new life to a very old concept. Private money has existed for at least as long as currency issued by the force of the state, but it has been held back by the seemingly insurmountable limitation of a trusted central authority. The concept of decentralized currencies breaks that limitation and will enable the usage of private money on a scale that has never before been seen in the history of mankind. The nature of Bitcoin makes any attempt to control the "Bitcoin proper" as futile as attempts to stop peer to peer file sharing. At best the state can exert influence on the periphery, the edge where the crypto and fiat worlds meet; however this influence will wane with time. As a circle expands the area inside the circle grows exponentially relative to the circumference. In the same respect, even if states around the world clamp down, their influence and power is directed at periphery, an area of shrinking importance as more of the voluntary transactions occur inside the network.



On a personal note I don't know the exact future of Tangible Cryptography, we have been discussing various plans and contingencies. Over the last week I have switched back and forth many times between disillusionment and defiance. After deep reflection I am as energized as I have ever been. Regardless of what happens we will remain involved in the cryptocurrency ecosystem. In the modern age defiance doesn't necessarily require one to violate the laws of the state. If the state says X is unlawful, well I can do Y instead. Individuals and companies can route around the damaged parts of the system just like Bitcoin does. Tangible Cryptography employees citizens at a time when jobs are scarce, it pays a substantial amount in taxes at a time when shortfalls are never ending. Our government should be thankful for the prosperity that our company has brought. If they don't, well there are other ways to do Bitcoin related commerce, and there are other states. The power of collocation, virtualization, private networks, and telecommuting makes the world smaller and will allow a marketplace for governance. The states just haven't realized it yet.



P.S. I hear Canada is nice this time of year.