@ 343PG

By Bitcoin Actuary & Tyler Parks; written in October 2022.

https://podcasts.apple.com/us/podcast/a-sceptics-guide-to-crypto-the-church-of-bitcoin/id1169101860

transcript: https://www.ft.com/content/4573b225-8eaf-4de1-97e9-f9b71cdc50bd

We present here an examination of the FT’s Tech Tonic podcast series “A Sceptic’s guide to Crypto”; in particular the fourth episode - “The church of Bitcoin”. We include a transcript of this episode below with our own commentary added, in order to best pick up on the points raised.

Jemima Kelly (JK) — Hi. I’m Jemima Kelly, your guide on this journey through the fantastical kingdom of crypto land. And I have a question for you — “What’s the difference between believing in crypto and joining a cult?”

[Snippets from later in the episode]

“Crypto seems to me like the monetary equivalent of the heaven’s gate space craft that was supposed to transport all those followers to the kingdom of heaven.

“When people engage in crypto, it is not the way they engage in any other hobby. The beliefs in crypto are quite extreme and very absurd”

[Nic Carter] — “At this point it’s bordering on denying reality.”

JK — This is techtonic from the Financial Times, and in this series, I’ve been asking why people believe in a future for cryptocurrencies, and the blockchain. For many people, crypto is simply all about making money; getting rich quick by betting on the crypto markets, or shilling the tokens they say will power their latest blockchain flavored invention.

But.. it didn’t quite start that way, and for many people crypto, and in particular Bitcoin is about much more than that.

Here we are — the word Bitcoin! It’s only taken 10 total mentions of Crypto and Blockchain in this episode so far to get us there. If this appears an over zealous observation, please note that we have travelled through episodes on Luna / the recent market crash, NFTs and Web3 in this series so far, before any real consideration of Bitcoin.

This is the one of the main attack vectors of the likes of Jemima Kelly and Stephen Diehl in their content — “Crypto, Crypto, Crypto.” The problem is they conflate “Crypto / Blockchain” with Bitcoin proper, when comparing them is at best misguided and at worst predatory. In doing so they infer no difference between Bitcoin and any other altcoin and deny that Bitcoin has any meaningful scarcity. This view (and a recent FT article on it also written by Jemima Kelly) is refuted well by Steven Livera in the link below.

https://bitcoinmagazine.com/culture/bitcoin-separate-from-crypto

Were we to analyze the whole series, we’d actually have more in common with Jemima Kelly and team than might first appear. Some examples -

• We’re in agreement that gambling and speculation can be a problem.
• We’re pretty sceptical of efforts spearheaded by companies like a16z to decentralise the web; i.e. of “Web3”
• NFTs are of questionable value

You see Bitcoin is an ideology; a quasi religion that cast the development of this cryptocurrency as a history changing event. You might remember Bitcoin super gambler Michael Saylor in episode 1, telling us that Bitcoin is an instrument of economic empowerment for the world, a tool for freedom and truth and justice.

Some audio clips of “super gambler” Michael Saylor were played in Episode 1, lumped in with the recent story of Terra Luna and the “Crypto crash”. Around two and a half minutes of snippets of Saylor being interviewed were included in a rather slanted presentation of his “blind devotion to Bitcoin”. This is called the sceptic’s guide, after all! However, anyone who has sought out a more detailed interview with Michael Saylor (there are plenty out there) would know there’s slightly more to it than that. He repeatedly demonstrates an ability to derive Bitcoin’s value proposition from first principles.

That’s the thing about Bitcoin. It’s a belief system, with its own commandments and taboos.

So, what do Bitcoin evangelists believe in? And why do they believe it? This is episode 4 — The church of Bitcoin.

To understand just how big a part mythology, and almost religious fervour, play in Bitcoin, let me start by telling you its origin story. It starts on the 31st October 2008. Halloween. The world is in the grips of a crippling economic crisis. People are rethinking the whole economic and financial system, and the greedy bankers are the lowest of the low.

This flippant comment about the greedy bankers being the lowest of the low is just about the closest we get to an acknowledgement of there being a wider macro economic environment in the entire series, save for comments from Nic Carter later. Which is odd given how many bitcoiners take a keen interest in macroeconomics and Bitcoin’s place in the wider world.

And then, someone calling themselves Satoshi Nakamoto sends out an email.

[Satoshi email narrated] “I’ve been working on a new electronic cash system that’s fully peer to peer, with no trusted third party”

JK — The email lands with subscribers of the cryptography mailing list, an email group made up of a few dozen researchers and enthusiasts who are interested in some of the geekier aspects of the world of cryptography. The message was brief and matter of fact — a short description and link to a pdf file. The file outlined an electronic cash system that Satoshi Nakamoto called.. Bitcoin

[voiceover] “A purely peer to peer version of electronic cash which would allow online payments to be sent directly from one party to another, without the burdens of going through a financial institution”

This wasn’t the first attempt at creating a decentralised digital currency, and initially, the idea didn’t get much traction. But over the next two years, Satoshi Nakamoto kept developing Bitcoin, releasing updates to the protocol, replying to emails on the mailing list and posting on message boards. Usually, there were questions about bugs or potential problems with how the system worked, fixes to the coding, that kind of thing. Occasionally there would be discussions over the value of creating Bitcoin in the first place.

[voiceover] “You will not find a solution to political problems in cryptography”

“Yes, but we can win a major battle in the arms race and gain a new territory of freedom for several years.”

“The real trick will get people to actually value the bitcoins so that they become currency”

“I would be surprised if ten years from now we’re not using electronic currency in some way. If enough people think the same way, that becomes a self fulfilling prophecy.”

But later, as Bitcoin began to catch on, Satoshi had to worry about how to present the concept of Bitcoin to the wider world.

“Sorry to be a wet blanket, writing a description for this thing for general audiences is bloody hard. There’s nothing to relate it to.”

Satoshi even had to worry about marketing issues, like how to make Bitcoin look like a legitimate currency

“How does everyone feel about the B symbol with the two lines through the outside. Can we live with that as our logo?”

As opposed to the Satoshi Nakamoto quotes which are referenced here, we think the following is more noteworthy -

“The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve.”

Throughout all of this, the real identity of Satoshi Nakamoto remained a total mystery. Noone knew who it was. Was it a pseudonym? Was Satoshi even a man, as the name suggested? Or could it be a woman, maybe a group of people. And then in December 2010, barely two years after that first email, Satoshi Nakamoto stopped posting. The inventor of Bitcoin vanished into thin air. What makes the story even more intriguing is that by the time Satoshi disappeared, this mysterious inventor had amassed a fortune in Bitcoin. And to this day not a single one of those Bitcoins has ever been spent.

Nic Carter — it’s like a Jesus style myth, where Satoshi sacrificed himself or herself by leaving the project and spurning the immense wealth that Sathoshi had accumulated, right — about a million coins, so what is that — 20 billion dollars.

JK — Nic Carter there. He’s a prominent crypto investor. He says the story of Satoshi disappearing and not cashing in his wealth has taken on an almost religious aura that makes Bitcoin not just another cryptocurrency, but special. A sort of chosen one.

NC — There’s a notion of like, and very explicitly within the Bitcoin community — of Satoshi literally sacrificing himself for our sins, basically, creating this new independent system that’s free of the sin of fiat, and creating a new pure system that you’re welcome to join. There’s also, if you want to go further back you could say it’s a Prometheum story, right, where Satoshi did this daring act, stole fire from the gods, stole monetary policy from the Fed, and then was punished for it for all eternity. In this case Satoshi’s punishment was not being able to benefit from all the Bitcoins they created, for whatever reason, so the mythology there is very significant.

We don’t think this notion is particularly prominent at all, but there could be some out there buying into Bitcoin because of this narrative. Let’s bring things down to earth though and remember that Bitcoin is open source code, not some mystical fable.

If newcomers want to know why most Bitcoiners buy and hold Bitcoin, please start with the Bullish case for Bitcoin article by Vijay Boyapati

https://vijayboyapati.medium.com/the-bullish-case-for-bitcoin-6ecc8bdecc1

or perhaps the Bitcoin Standard by Safedean Ammous.

https://www.amazon.com/Bitcoin-Standard-Decentralized-Alternative-Central/dp/1119473861/

In short, Bitcoin has superior properties as a form of money. Unfortunately the merits of its monetary properties (such as being portable, fungible, divisible, scarce, recognisable, censor resistant) are not considered in this series.

JK — We’ll come back to Nic a little later, but first, let me introduce you to another person, who at one point truly bought into that whole Bitcoin ideology -

Aviv Milner — When I was at school studying Math, I had already an interest in Economics, I had an interest in Philosophy, and Political Science. At the time, Bitcoin was kind of having its second or third big public explosion.

It’s not mentioned here that in spite of its volatility, each of these “public explosions” has seen the price of bitcoin reach a higher high than the last. It’s almost as if long term adoption is increasing.

JK — Several years after Satoshis original email, Aviv Milner was a student living in Vancouver in Canada.

AM — I was very prime for that pitch, because it was a pitch that essentially said “we can use computer science and math to solve economic, political & philosophical problems. And we can solve almost all the problems. And that was really exciting to me.

JK — Aviv discovered an online community of Bitcoin enthusiasts who believed that Bitcoin had the power to change the world. As well as getting stuck into the tech behind Bitcoin, Aviv started delving into its ideology, too. He came across a document written in 1993 by a computer programmer called Eric Hughes. The document was called the cypherpunk manifesto.

AM — cypherpunk is this kind of rebellious, anti-government philosophy. It starts by saying that privacy is necessary for an open society in the electronic age. It goes on about why privacy is so important, and we must resist government oppression and tyranny, and why money must also be private. That’s the root of — even Satoshi Nakamoto who invented Bitcoin — was this tool, to regain personal liberty and freedom, to transact as one sees fit. To transact privately and anonymously. To send money anywhere in the world. And the idea that decentralisation is key, such that the system itself could not be corrupted and could not censor any one person.

It’s commendable that FT took the time to illustrate bitcoin’s origin story including the cypherpunk manifesto, even if they’re hesitant to embrace it. It’s worth reading.

Aviv started chatting to other Bitcoiners on the online forum Reddit. He went to Bitcoin conferences, and he started buying Bitcoin, as he genuinely believed it could be the future of currency.

It’s worth noting the word currency only appears once in the Bitcoin white paper — and only then as a reference to existing physical currency. By definition Bitcoin only becomes a currency when in general use or accepted as such in particular countries. Accusations that Bitcoin has somehow failed once and for all as a currency (due to its volatility or lack of use in payments) are wide of the mark though (see Vijay Boyapati article as linked earlier).

AM — I was pushing people to spend their Bitcoin, pushing people to learn about Bitcoin, it’s super reliable, it’s awesome, the value only goes up, you know this is going to be great for commerce.

The reference to value only going up is a red flag here.

JK — For Aviv, mass adoption seemed, well entirely sensible. So much so that he tried to get local businesses in Vancouver to start accepting local payments in Bitcoin.

AM — at the time it seemed obvious, because small businesses pay credit card fees and point of sale fees, so you can build an app for them that will accept Bitcoin, so surely users will love it and the stores will love it. So we found a few stores that were willing to do this, to have this Bitcoin point of sale app.

JK — But Bitcoin started to become a victim of its own success. In 2017, after a huge run up in prices, Bitcoin’s network started to get congested. The cost of making payments was exploding, and transactions that were supposed to take 10 minutes were sometimes taking several days to complete.

AM — And the result was that nobody used it. Nobody wanted to actually go in the store, like an average grocery store, and pay with Bitcoin, and I remember laughing really hard, thinking like, none of this was as we were told, like it was a faulty product that the user didn’t want and the merchant didn’t want. The concept failed on all levels.

“None of this was as told” - by whom? As Saifedean Ammous has commented, using Bitcoin on chain for such payments is akin to flying Concorde down the street to pick up a pint of milk. Aviv Milner is talking about 2017, though, and there were many “big blocker” bitcoiners who saw a future for Bitcoin in this manner. For those who are curious to read more about the battle between the big and small blockers (the big blockers believing Bitcoin’s block size needed to keep expanding to cater for more and more transactions) please read the excellent “The Blocksize War” by Jonathan Bier.

https://www.amazon.com/Blocksize-War-controls-Bitcoins-protocol/dp/B08YQMC2WM/

In addition, to consider why it’s a little outlandish to expect Bitcoin to conduct millions of transactions a day on chain we’d recommend reading Nik Bhatia’s book, layered money —

https://www.amazon.com/Layered-Money-Dollars-Bitcoin-Currencies/dp/B091D3KR8G/

JK — which is why today, Aviv is no longer a Bitcoin believer. These days, he’s gone full on Bitcoin skeptic, and that total 180 in the world of Bitcoin just doesn’t happen. Aviv is the only person I’ve ever come across to be so invested in Bitcoin, both financially and emotionally, and then just to have abandoned the whole thing.

AM — 13 years into this experiment, so far, if I’m being honest, the use case we have is we made Las Vegas virtually, and children can now play in it. To me, that’s kind of the biggest use case that I see — money laundering is one thing, tax evasion is another, but I can’t really see examples where some person, any person, says “man, thank god for Blockchain, it’s really made my day better, I can really solve these problems” — there’s not a lot of problems unless you want to speculate.

For those who don’t see Bitcoin as scarce, it is an obvious criticism that it solves no real problems. For those who do, it solves one of the greatest problems mankind has faced — how to store and transmit the fruits of your labour through time and space.

JK — Aviv was discouraged by Bitcoin’s failures, but there are still many Bitcoin believers out there who aren’t. It doesn’t matter how many times Bitcoin crashes, or fails to find a use, they have already decided that whatever the question, Satoshi Nakamoto’s great invention, Bitcoin, is the answer.

The use for most users with Bitcoin is as a superior form of money. This is why many hold it and don’t just speculate on it.

The fact that the podcast doesn’t even once reference the lightning network, having pointed out Bitcoin’s limitations for on chain payments, is a good example of the ignorance / intellectual dishonesty (choose one as you wish) generally on display.

https://www.clevelandfed.org/en/newsroom-and-events/publications/working-papers/2022-working-papers/wp-2219-the-lightning-network-turning-bitcoin-into-money.aspx

It’s worth noting of course that despite this Bitcoin doesn’t depend on the success of the lightning network to succeed. There may be other layer 2 or layer 3 options that succeed in the long run. That’s the beauty of competition and open source networks.

Siddharth Venkataramakrishnan — So Bitcoiners basically believe that Bitcoin is the future of money

JK — Siddharth Venkataramakrishnan writes about banking and Fintech for the FT.

SV — All other currencies — whether you are looking at fiat currencies, or other crypto currencies, like Ether, or Dogecoin, are all either at best scams, or at worst actually detrimental — they are part of a collapsing monetary system which has been collapsing for years, since the end of the gold standard some might say. Traditional currencies or fiat currencies are going to go into a death spiral of inflation, and that’s going to lead to their replacement by Bitcoin. At some point it’s going to be just the single currency for global commerce, trade, & payments.

Note how this is all presented as a blind belief, rather than that it could be based on anything happening in the wider world right now.

JK — So why do Bitcoiners think it would be a good thing to have Bitcoin become the future of money?

SV — So you have Bitcon emerging after the cyberpunk ideology of the late 80s, the 90s. This movement over censorship, against government controls over digital culture, sort of broadly anarchic, libertarian ideology, and there’s the idea that Bitcoin is censorship resistant, that it’s a form of currency which is not handed out by the government, that can be used to purchase things which governments don’t always want you to. And obviously, the argument which is increasingly made is around authoritarian states where we have seen crypto sometimes used to circumnavigate controls put down by governments.

JK — So belief in Bitcoin has two basic elements to it. The first is that the global financial system is broken and Bitcoin is the only thing that can fix it. The second is even more fundamental than that — governments shouldn’t be in control of money and we need an alternative that’s not controlled by any one entity.

So are these beliefs, whether you agree with them or not, simply part of a coherent and rational political ideology, or, is there more to it than that. Is Bitcoin a cult?

SV — So it’s complicated because it definitely does have cultic properties. You don’t have a single leader in crypto any more because Satoshi decided to step out of the limelight, what you have instead, and this is quite similar to Qanon today, is you have a lot of high priests, or priests of varying values — The influencers who cooperate with each other sometimes, sometimes fight with each other, and it’s all about at the end of the day driving a message that adoptions coming — believe in my personal version of the gospel, subscribe to my channel etc. There is a morality to it as well, I think there is a lot of that idea that if you are investing in crypto, or Bitcoin, then you are doing something that is actually morally good. And you are rewarded for making the right choice, you know, with the whole idea of mining implying hard work out in a mine, rather than letting a computer do it for you. I think there’s an assumption that what you’re doing is a good deed. You know money is good, therefore being rich makes me a good person, therefore if you are involved in Bitcoin or crypto, if you are involved in Bitcoin adoption you are deserving of money.

Siddharth Venkataramakrishnan comes closest to providing a steel man argument but loses footing with comparisons to the supernatural. We’d take issue with the word influencer used in reference to Bitcoin — no one is on the payroll. There is some truth to the morality point made here, but crucially even if there can be a moral element to bitcoin for some, chiefly it’s known as money for enemies. Nothing altruistic need necessarily come into it, and first and foremost most bitcoiners are here to preserve & enhance wealth over the long term. He mischaracterizes proof-of-work as moral and virtuous rather than its role as a network security mechanism.

I think that plays into the idea of being rugged pioneers, almost, you know being on the frontiers of money on the digital frontiers of money.

JK — The precise definition of a cult might be hard to pin down, but, for those who study this the parallels between Bitcoin and recognised religious cults, are striking.

Amanda Montell — You can see how this is absolutely something that is isolating people from their systems of support, that’s imbuing people with a false sense of elitism, making people feel like the solutions to all of their problems and enlightenment can be found, and if that’s not a new religious movement, I don’t know what is.

JK — Amanda Montell is the author of a book called cultish, the language of fanaticism. She knows first hand about cults. Amanda’s father was a member of the church of synanon, in the 1970s.

Media clip — Syanon claims it has been the victim of bad publicity, losing more than one hundred thousand dollars in grants and contracts. Pure addicts are being sent there, parents are disowning their children who live there. Some are filing lawsuits, charging brainwashing and torture. And a grand jury is investigating charges of child abuse.

JK — Basically, the organisation was a drug rehab program turned cult

Media clip — it was founded 19 years ago by a man named Chuck Dederich

Chuck — I’m big brother, I’m big daddy, I’m.. all kinds of things

JK — followers shaved their heads, wore overalls, and underwent brainwashing group therapy live rituals.

AM — In a really really destructive group like Jonestown or Heaven’s Gate, or Scientology, you’ll hear a tonne of us vs them terminology, really loaded emotionally charged buzzwords and euphemisms, that are there to imbue insiders with this sense of superiority, with this transcendent purpose, that, just by showing up, you are better than everyone else, you’re tapped into an enlightened knowledge — the solutions to the world’s knowledge are laid bare before you, and as long as you align with this group, with this leader, all of these solutions can be yours.

JK — And Bitcoin follows that us vs them terminology as well, even if that is not dictated by any one leader or person.

AM — It’s like crowdsourced a little bit, they are really there to divide people into an us vs them, special, enlightened crypto people on the inside who understand this language and this unenlightened sheeple on the outside who don’t.

JK — Amanda says that in the crypto world, that language is particularly evident in the sheer number of acronyms and abbreviations believers use.

AM — ..which sort of makes the language feel all the more special, also all the more inscrutable.

JK — Anyone who has been on a Bitcoin message board or who follows Bitcoin twitter, might have heard of some of these

Narrator — what’s up you guys, so it’s Matt here, so I talked about BTD in a number of videos, right, but a lot of people don’t -

JK — BTD — Buy the dip

AM — It generally displays a bullish attitude towards crypto and NFTs that’s commonly used in the context of good news

JK — WAGMI — We’re all going to make it. Or NGMI — Never going to make it.

Media Clip — HODL, HODL, Baby, it’s like a football, you’re holding a football, you’ve got a big bag of cash

JK — HODL — that one is actually a misspelling, but a lot of people now treat it as an acronym for “Hold on for dear life”. And, if you do, your crypto token of choice will “Go to da moon”.

Media Clip — And I want to follow up today with my next list of 5 crypto currency coins that I think may take us to the moon

We’ve very much verged into wider Crypto here, and the world of trading.

JK — And then there’s the co-opting of the term “FUD”

Media Clip — FUD is an acronym for “Fear, Uncertainty, and Doubt”. [Various Clips repeating the phrase “Fear, Uncertainty and Doubt]

JK — which is used any time anyone tries to challenge the ideology of crypto believers.

Media Clip — a crash is normal. Seeing graphs shoot straight down like this is normal.

JK — It’s a way of dismissing criticism

Media Clip — Fear, Uncertainty and Doubt is a menace that threatens to reach into your pocket and steal your hard earned money.

JK — Amanda says this is a perfect example of what linguists like her call “A thought terminating cliche”

AM — This is a classic cult language technique, and it describes a sort of stock expression which is easily memorised, easily repeated, and aimed at putting down independent thinking and questioning, so dissent and pushback is obviously the number 1 enemy to any cultish group. You don’t want any wrinkles in your ideology to be pointed out. So whenever anyone expresses any sort of questioning, you’re going need to have one of these zany stock expressions to shoot them down, and alleviate the cognitive dissonance that they are feeling in that moment.

With Bitcoin the term FUD does of course get used. We’d argue it’s in part a defense mechanism for having argued in good faith and just having those points ignored when the next attack comes, time and again. There are plenty of far deeper arguments, if you just care to look (e.g. link below).

https://en.bitcoin.it/myths

JK — Amanda saw this in action when her Dad was a member of Synanon.

AM — The group where my Dad spent his teenage years, there was this thought terminating cliche which was “Act as if”. Whenever you feel yourself doubting one of the leaders protocols, just “Act as if” you believe in his wisdom, and eventually you will. I’ve heard thought terminating cliches show up in Qanon, in the form of phrases such as “Trust the plan”, or “I did my research”, or “Do your research”, or “Don’t let yourself be ruled by fear”.

In new age groups, a thought terminating cliche could sound like dismissing a valid fear or anxiety as a limiting belief, and there are of course thought terminating cliches that are used in crypto — “Don’t listen to the rumours, there are just spread by FUD”, and that’s thrown in the faces of anyone who proposes any kind of criticism towards a project in this space — they are a FUD, and again you can make a scientology comparison. Anyone in scientology who expresses any kind of doubt is dismissed as a suppressive, a SP — that stands for Suppressive person, and so there are parallels to be drawn there for sure.

JK — If Crypto, and Bitcoin in particular can be compared to a cult, like scientology, you might think of Nic Carter, who we heard from at the top of the episode, as the Bitcoin equivalent of the supressive person, an apostate bitcoiner.

NC — it certainly is a secular religion, I mean there’s a whole doctrine of salvation, there’s absolution, there’s even eschatology, I guess, the day of judgement concept, where all the fiats are going to disappear and everything will be subsumed into Bitcoin.

JK — Nic runs an investment fund, and for years, he’s been an advocate for Bitcoin as an alternative to the existing financial system. But recently, the rest of the hardcore Bitcoin community discovered something about Nic that to them was unforgivable. Nic wasn’t just worshipping at the altar of Bitcoin. He was worshipping at the altar of other crypto gods, too.

NC — and there is a faction within Bitcoin that thinks that you have to pick one side, basically that you have to believe exclusively in Bitcoin, that all other crypto assets are competing for attention with Bitcoin, that it’s a zero sum gain, so it’s immoral that a creator advocate to build on top of any other crypto asset. The whole debate is in a moral context.

JK — This purist fact that Nic refers to is know as “Bitcoin maximalism” and for Bitcoin maximalists, the cryptocurrency you invest in is a moral question, because for them Bitcoin isn’t just the best cryptocurrency, it’s the only one that’s morally good, and everything else — central bank currencies like the dollar, and every other one of the 20,000 plus cryptocurrencies out there is morally.. Bad.

NC — I was performing a deep moral sin, according to these people, so I guess a lot of the bitcoiners got upset because they realised that a high profile bitcoiner wasn’t, you know, a bitcoin puritan, or whatever.

We won’t get into Nic Carter’s deep moral sins against Bitcoin; we have no doubt that with appearances on podcasts like this, his star will continue to rise! However it is clear that there are bitcoiners out there who will defend Bitcoin to the death, and this is a feature, not a bug. As Michael Saylor has pointed out -

“If you really want a crypto to be successful over 100 years, the technology is only a part of it, right? It’s the ideology paired with the technology. And you’re gonna have to have an ideology that is so pure and so straightforward that people will fight to the death to defend the ideology. And that’s why I’m probably not gonna sacrifice my life for the 13th iteration on smart contracts. It’s not that important. On the other hand, if you tell me that we’re about to suck all of the economic energy out of the civilization and plunge ourselves into the Dark Ages, then I think I’ll fight for it. That’s worth fighting for.”

Michael Saylor; What is Money show episode 8

https://whatismoneypodcast.com/

JK — today, Nic no longer worships in the church of bitcoin.

NC — Now I’m a crypto apostate, right, ethical non crypto monogamy, and so I’m out. You know, I’m still a bitcoiner, obviously, they can’t really kick me out of Bitcoin — that’s not possible. But I’m certainly out of the core circle of hardcore bitcoiners which is kind of ok with me. As I view their views as really out of step with reality.

JK — but Nic does still believe in Bitcoin. And so this is where, in some ways, he hasn’t truly left the cult, he’s just left the most zealot part of it. Because Nic is still drinking the Bitcoin kool aid to some extent. He still thinks of Bitcoin as a viable solution to the broken financial system.

It’s worth considering another recent quote from Nic

“Today, the only ‘base layer’ asset that I like from an investment perspective is Bitcoin, because I think its monetary and governance qualities are supreme, but that doesn’t mean I haven’t been interested in other trends in the blockchain space.” (https://medium.com/@nic__carter/setting-the-record-straight-b4e1b415e7d9)

So is Nic Carter in this cult or not? Has he sold any Bitcoin? We don’t know, but he hasn’t announced it — it might help this analogy, mightn’t it. Has he removed any of his Bitcoin articles? No. So we’re left with Nic leaving the cult, but not really.

Here’s what we think. We think when Satoshi said “writing a description for this thing for general audiences is bloody hard — there’s nothing to relate it to”, that extends to podcast episodes trying to lay a glove on Bitcoin for being a cult in the manner of Qanon or Synanon. Reality check — Bitcoin is borderless, permissionless, digital, open source.. It is definitely a cult of sorts, but the active comparisons made here fall pretty flat.

NC — I do think that the fiat system is degenerate, and will eventually collapse. You think crypto will eventually collapse, I think currencies will eventually collapse — not all at the same time, and I think the dollar will be the last, and so I am searching for an alternative. To me Bitcoin best instantiates these values that I’m looking for, but it could be something else. If somehow we had reform, and we were able to create or engender a fiat system that didn’t lead to rampant asset price inflation, was relatively stable, didn’t cause financial crises, then I would probably reconsider, but I don’t have any faith in governments to do that.

JK — So as we’ve heard throughout this episode, there is something incredibly powerful about Bitcoin that really draws people in, and I do believe that some bitcoiners are really in for reasons other than making money. Even though Bitcoin has failed time and again to prove itself as a valid form of money, it has this mysterious and compelling mythology that makes people still believe that one day it will prove itself as the saviour of the economic system.

The idea here that Bitcoin has failed as a valid form of money is an unsubstantiated claim. Bitcoin still operates exactly as originally intended and laid out in its white paper. For an interesting read here we’d recommend Allen Farrington’s article “Wittgenstein’s Money” (now also forms a chapter in the book “Bitcoin is Venice”), in which he asks — “What would it seem like if it did seem like a global, digital, sound, open source, programmable money was monetizing from absolute zero?”

https://allenfarrington.medium.com/wittgensteins-money-7cac8d0635cf

We echo Nic’s sentiment regarding currency inflation and financial crises. If you view Nic as a credible voice in the space, then his continued bitcoin advocacy would seem to undermine the whole premise of this episode. It also brings to mind Jeff Booth, author of “The Price of Tomorrow,” who argues you can’t fix the system from inside the system.

https://www.amazon.co.uk/Price-Tomorrow-Deflation-Abundant-Future/dp/1999257405/

And in some ways that is quite understandable, even if it strikes me as quite naive. Who doesn’t want to be told that there really is an answer to all of our greatest problems. And in a world where technology has already changed pretty much every part of our lives in ways we couldn’t have ever predicted, why shouldn’t this technology fundamentally change money, too.

Good question — you’re so close!

Is it any wonder that so many people want to be part of something so much greater than them, part of a community that gives them a sense of identity and belonging. Amanda Montell says that’s why cults keep coming back

AM — Cults has also become one of those words that can kind of mean anything, depending on the context, you can use it to describe something as destructive as QAnon and Scientology, but you can also use it to describe a really popular beloved makeup brand, or wellness product, and I think that says a lot about how cultish our culture has become. As we increasingly move away from and mistrust these larger institutions, that are supposed to provide us with support and community, like the government, the healthcare system, the church, and so we start looking for these things in different places, in alternative places — feeling like you are part of something bigger than yourself is profoundly human pursuit.

It is certainly true that mistrust in large institutions has been growing for many decades. For a non Bitcoin related consideration of this, Adam Curtis’ documentary Hypernormalisation (2016) is well worth watching https://en.wikipedia.org/wiki/HyperNormalisation

It is little wonder that many out there identify with Bitcoin, where one of the central mottos is “Don’t trust, verify”, the opposite of a thought-terminating cliche.

JK — She says that cult behaviour isn’t intrinsically bad, it’s just about identifying which cults are harmful and which aren’t

AM — and that might look like, you know, a really passionate music fandom. It’s really not about avoiding cultishness at all costs, it’s about being aware of some of those signs that this cultish group is more abusive than another.

JK — and the problem with Bitcoin is that some aspects of it do sound alarmingly like the bad version of a cult. Back to the former Bitcoiner Aviv Milner

Aviv Milner — you might ask what’s the big deal with people identifying as bitcoiners. The problem there is down to what you’re accepting, and how that affects your life more broadly. As an example, people who believe in flat earth often have a very also like culty like behaviour where they talk to people, they find groups, they do a lot of experiments, you know, but it’s surprisingly harmless, as when you believe in flat earth, it doesn’t really change your day to day. When you believe in Bitcoin, you do what the president of El Salvador did, or what a lot of middle class people do — just take all of your hard earned money and put it into a volatile asset which you don’t understand, and that has so many chaotic things that could happen…

Who’s to say those who are buying it, like the president of El Salvador, don’t understand it? They might actually understand it better than someone who thought the future of Bitcoin was on chain payments to merchants. The frontline of adoption can be messy–we won’t sugar coat it. But El Salvador is betting on the side of open source tech rather than economic colonialism. On this perhaps we can agree to disagree.

…And so essentially you’re gambling. And so the result is we have an unprecedented level of gamblers. People my age, even younger, people in their 20s. That is a huge huge problem. That is not just me disagreeing with someone else’s hobby, this is me upset about the financial destruction about a growing part of our population putting their money into these things, and in many cases losing almost everything.

[followed by lead in commentary to next Episode]

We’d agree with the Stephan Livera article below when it comes to trying to trade Bitcoin.

https://www.swanbitcoin.com/traders-lose-stackers-win/

It’s worth asking the question though of what leads so many to speculate on cryptocurrencies and meme stocks and the like. Arguably the rampant speculation we observe is a symptom of the sickness in modern economics that Bitcoin was designed to address. There is a wider issue with the financial environment we are in, which forces everyone to become their own mini hedge fund manager. In the current environment, old fashioned savers are crippled — one has to invest far out on the risk curve to maintain any form of purchasing power, not save. Bitcoin turns this on its head. Bitcoin is saving.

Consider the long term. Let’s compare buying and holding $1,000 worth of a 30 year treasury bond now until maturity, versus buying and holding the same value of Bitcoin for 30 years. We can calculate what the 30 year treasury would return by the year of 2052, but have no idea on the purchasing power of that amount. Bitcoin is zero yielding, but of fixed supply. We don’t know the purchasing power of Bitcoin in 2052 either. Perhaps it should be a question of relative position size. Bitcoin may be a speculation in itself, but it is uncorrelated and serves to hedge systemic risk.

The final episode in the series considered the evolving state of regulation in crypto. It ended with this zinger from Stephen Diehl -

“..Every single aspect of cryptocurrency is not new. The technology is new, it’s kind of a rubbish piece of technology, but the kind of speculative manias that are around these kind of assets are not new. And in many ways if you look at the south sea bubble, you look at the tulip mania, you look at the wildcat banking era, you can see exactly what’s going to happen. Attempts to build private money, attempts to financialise nothingness, always end in ruin. Because they’re just bad ideas. Crypto pretends to be the money of the future, but it’s actually the money of the past.”

We’re back to “crypto”, of course. The hatchet job is complete, and yet Bitcoin lives to fight another day. The series might serve as reassurance for no-coiners to be content doing nothing, but for others it may be worth digging a little deeper.

There are a number of areas that would have been interesting to consider as part of this series -

• Which cryptocurrencies constitute securities and which commodities
• The difference between proof of work and proof of stake networks
• The link between Bitcoin and energy, and the core proposition for Bitcoin miners.
• Lightning Network
• El Salvador
• The wider macroeconomic environment

The real issue is that in 5 episodes — around 2 and a half hours (albeit only around 30 minutes on Bitcoin) — the listener is left desperately short.