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@ Lau
2024-03-21 12:43:42Considering our most acute problems in the EU is a matter of great debate, which is not necessarily all evidence based. Our seemingly most pressing problems might not even be problems at all, just public opinion. To create unenforceable policy to address these problems is costly, so much so that I think it’s necessary to create a standard. I will not trivialise any particular policy, but I will make a case for at least having a Bitcoin strategy.
There are three ways that policy fails:
- The policy is not enforceable.
- The policy is costing more to enforce than it benefits.
- The public adjusts its behavior to circumvent in a roundabout manner, which requires yet again more policy: praxeology.
The only way that any policy has a measurable desired effect is when it is enforceable, is cost effective and doesn’t motivate adverse or roundabout behavior. This is the necessary standard to measure policy by. Budget management for the calculation of policy efficacy also needs to be represented in the balance.
An example of a failing policy is the 100km/h speed limit in the Netherlands. To enforce this requires policing of the highways, which costs money. To pay for the enforcement speed tickets are issued. Highway users use the app Flitsmeister, which is a social media app that allows users to share gps data of traffic controls. As a result less speed tickets are issued and highway users speed more. The government can’t ban the app because using the app is the user’s freedom of speech, it’s just allowing users to communicate coordinates on a map. This is a lawful behavior, any ruling against an app like Flitsmeister will not hold up in court. A calculation must be made to see how much it would cost to just allow highway users to speed versus what it would cost to continue enforcing. A calculation must be made to see what the benefit is of the policy. In this case the policy is in place because the EU has decided that emissions from motor vehicles must be brought down, so the 100km/h policy was a consequence of an unenforceable policy. So this example shows all three ways in which a policy can fail:
- Simply telling people to create less emissions is unenforceable.
- Revenue from speed tickets dwindle, people keep speeding and emissions do not measurably go down.
- People adapt to the policy with a lawful measure so that they can continue driving at the speed they desire, behavior known as praxeology. (Keep in mind that people were used to driving 120km/h before, and most people don’t consider that speed as excessive speeding or as unlawful.)
Just by using epistemology we now have the basic requirements for policy to exist. Pretending to be moralistic doesn’t help. In the end moralism points to sustainability, which means to not wasting public funds. Therefore being strategic is actually the best moralistic approach.
Bitcoin is a free and open source project, anyone can contribute. Direct participation is possible by transacting and holding Bitcoin, by running a Bitcoin node or by mining Bitcoin. To ban Bitcoin transactions is to ban freedom of speech, because transacting Bitcoin is basically the exchange of information. There is no entity that controls Bitcoin, so you can’t address the organization because there is no organization. Because of its value propositions, Bitcoin is proving to be a better store of value than any other asset class. If you have no confidence in this, then you still need to play along with Bitcoin because not playing means you will lose asymmetrically over time. The game theory of Bitcoin is that not playing results in loss. The costs to participate are low, which is a benefit that stems from the asymmetry. So there can be no reason not to participate at all, to at least offset the cost of opportunity.
To use Bitcoin as an example of framework for policy I propose to look at the failures to enforce a mining ban. If a government were to make Bitcoin mining illegal, the miner would simply move its operation. Bitcoin mining is not jurisdiction specific; this was made clear by the restoring of hashrate after the China Bitcoin mining ban. Miners that chose to stay are difficult to find, enforcement will be costly and ineffective. Miners that do leave will not pay any taxes, nor will those that have been made illegal miners within the jurisdiction. Not banning Bitcoin will allow power plants to offset inefficiency by mining Bitcoin. Energy efficiency is the greatest benefit of Bitcoin mining, which will prove to become the largest possible sustainability improvement for participants. So from this example we can see that this policy also fails on three counts in which it can fail:
- Banning Bitcoin mining does not magically make Bitcoin miners disappear. Heavy policing will not find those who still chose to continue. You can’t stop miners in other jurisdictions, yet they still give access to the network to users in the jurisdiction. Remember, the internet doesn’t do geography.
- Loss in tax revenue from multiple sectors of business will prove to be devastating. Policing illegalised Bitcoin miners is costly in many ways. There is no benefit. Allowing Bitcoin mining on the other hand would reap enormous societal benefits.
- Illegalised Bitcoin miners will still exist within the jurisdiction, but will not pay any taxes. Those who chose to leave, take with them their thriving business and the entire framework of the involved financial sector.
If you still oppose Bitcoin in any way, make sure to look up your specific criticism in the list published on https://www.endthefud.org . You will see that your misinformed belief does not hold up against matter of fact.