WHAT WE’RE READING: One of the most iconic blog posts in Bitcoin history 

Mircea Popescu is a mostly forgotten figure in this space, but he was once a very impactful cultural figure early on before he slowly faded out of the wider public sphere to eventually “accidentally” drown off the coast of Costa Rica. He was quite an insane and eccentric, but he has left a lasting impact on this space. I would argue he is essentially the Godfather of what people these days consider “toxic maximalism,” although compared to people who claim that label today he would make them seem like overly sensitive and whiny children.

One of his most prolific posts in my mind was his consideration of the price of Bitcoin and the market dynamics that entails in the long term, from 2013. He was discussing the dynamics of supply and demand interacting with each other, and specifically the mentality of current bitcoin holders in contrast with average consumers that may or may not have an incentive to attempt to accumulate bitcoin in response to the deterioration of the fiat system.

He framed the posited friction between these two groups as an impasse, where current holder have no great incentive to part with their bitcoin, and people trying to get rid of their devaluing fiat have no real recourse if holders of bitcoin act in that way.

He proposed three possible solutions to that impasse.

“One of them is that consumers yield and submit, Bitcoin goes to somewhere in the thousand dollars per range and there’s a rush to move society away from the dysfunctional standard. Banks start taking Bitcoin deposits, Bitcoin hedge funds pop up everywhere, the FED chairman, ECB chairman and everyone else come to Timisoara whenever they want to make a move to obtain my blessing and so forth.”

This is the path we are seemingly on right now. Capitulation of the existing system, integration into the legacy financial system, the veneration of early adopters and Bitcoin as a solution to the systemic problems of fiat. This is what Bitcoiners currently cheer on in terms of our path forward, citing every tiny piece of news from a banking institution, an ETF, an investment fund, as proof that they are capitulating! We have won!

This is pure and utter delusion. Trump pandering to Bitcoiners seeking campaign financing does nothing to truly benefit Bitcoin, he is and will always be a fan of the dollar. His mentality is based around the idea of the money printer, and exporting our inflation globally, being a massively positive thing for American interests. The Democrats overwhelmingly are antagonistic towards the space, for similar reasons.

Even if such a future was to truly come to pass, in actuality and not just in name, it would be a very dire and depressing future for anyone who looks to Bitcoin as a tool for freedom and sovereignty. Using Bitcoin would provide that to almost no one. Hedge funds, banks, ETFs, would all be the keyholders for the vast majority of people. No one would truly have any degree of freedom, it would be the same financial system we exist in now where nothing can be done without seeking the permission of some overlord who truly has control of your funds. Regulations would not enable more competition in this sphere, the existing players would take advantage of their revolving doors to encourage capture and high walls around their privileged position in this role.

This path would essentially mean failure of Bitcoin as a tool for freedom, and the same game we see being played right now with slightly stricter rules for the privileged few who can get a seat at the table.

“Another one of them is that consumers revolt, governments intervene, we all spend the remainder of this decade fighting with each other. Bitcoin also goes to thousands of dollars per, but the energy, effort and resources which could have been expended on comfortably yielding and productively submitting are wasted in an ultimately doomed effort to play tough on a weak hand. Neutral and unengaged governments win, and as the dust settles the balance of macroeconomic power has shifted from the Western world to whatever, China, Iran, Brazil, what have you.”

This is the path of them fighting Bitcoin overtly. People actually start switching to Bitcoin en masse, and governments react in a reflexive manner to try to prevent this. Things domino from here as Bitcoin begins to become a more important aspect of global finance outside of the purview of the legacy financial system, and countries that fight and refuse to let it happen wind up just screwing themselves over as smaller and more adaptive jurisdictions who stay out of it or embrace this change wind up benefiting enormously.

In this world Western governments make using Bitcoin an enormously difficult task, but people persevere anyway. The rest of the world with a brain stays out of the way, or proactively embraces it, while the West spends all of its effort and resources futilely fighting the inevitable. The rest of the world experiences a financial renaissance, while the Western world stagnates, its citizens forced to fight uphill the entire time to retain any degree of economic success (or even just staying afloat).

As brutal as it sounds, this is the world I want to see. One where the West’s domination and coercive control over the rest of the world erodes. We have no special right to lord over the rest of the world in the manner we do, and this path forward would strip us slowly over time of the ability to continue doing so. Citizens of the West can embrace Bitcoin, and stand up for our individual freedoms and sovereignty, and in doing so cushion ourselves from the collapse of our corrupt institutions.

A victory in revolution doesn’t come free or easy. For Bitcoin to really do what many of us hope it can, it’s really necessary at the end of the day to walk a painful path. And that means people have to choose to walk it. Many people in this space think that governments will simply roll over and let Bitcoin win, but that is just a feint to move in and capture it.

We need to push to build around them, build in parallel, and force their hand. If they don’t actively fight it, then there is something else going on. That isn’t good for us.

“Yet another one of them is that consumers revolt, entrepreneurs intervene, before the end of 2015 there’s about a thousand to a million different Bitcoin forks, each with its ten million-ish monetary base worth about a dollar, on global average. The size of the inter-Bitcoins market, the complexity and confusion ensuing makes pretty much everything unmanageable for the “ordinary person”. Hedge funds and banks (the ones a little ahead of using Excel) that trade in this murky complexity make a killing and become the principal driver of economic growth worldwide. Not only is the consumer about as screwed as is currently the case, but to everyone’s benefit he has just been clearly proven yet again that revolt = being fucked in the ass harder, longer, with a thicker implement with sharper barbs on it. Also conveniently, the thing to revolt at has become much more vague and intangible. On the balance of probabilities this would seem the most likely outcome, strictly because history unerringly flows in that direction which most cruely rapes the “average person”.”

Popescu rated this as the most likely outcome. Constant fragmentation, Bitcoin shattering into an innumerable number of forks from the original. Each region, or group of people with a different idea, breaking off into their own different networks. Erosion of the network effect until it localizes with more sub-fragments than people can keep track of.

Everyone assumes that this is over, that this door was simply a phase we passed through during and in the immediate aftermath of the blocksize wars, and it is closed forever. That is delusional. Nation states are adopting Bitcoin, major financial institutions that essentially write government policy are stepping on stage and integrating it into their systems.

The world is a game of coercion and extortion politics, the US invades countries and slaughters hundreds of thousands of people simply to keep the flow of commodities moving in the direction it wants to. To imagine they and other interests wouldn’t fork Bitcoin for their own self interest at a global scale is naive. I would even go so far as to say that opening the first door, the “capitulation” and capture of Bitcoin quickly by these people would almost guarantee that this last door eventually opens.

This is a failure of the utmost degree. Fragmentation, no singular network effect that enforces a true scarcity of supply, and more importantly rules, on economic players globally. A brief respite and then immediate return to the game we know now. Complete and utter failure of any form of revolution.

All three of these doors are still sitting there, we haven’t walked through any of them yet. It’s anyone’s guess which one we eventually do. Bitcoiners could do with a little humility, and recognition of the fact that not only have we not even come close to winning, but failure is absolutely still on the table. In multiple ways. 

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