Author: Shinobi, Bitcoin Magazine; Translated by: Wuzhu, Jinse Finance
Mircea Popescu is a mostly forgotten figure in the field, but he was an early and highly influential cultural figure before he faded from public view and eventually "accidentally" drowned off the coast of Costa Rica. He was a pretty crazy and eccentric guy, but he left a lasting impact on the field. I think he's essentially the godfather of what people think of today as "toxic extremism," even though he makes people who claim that label today look like overly sensitive and whiny children.
In my opinion, one of his most informative posts is his thoughts on the price of Bitcoin and its long-term market dynamics since 2013. He discusses the dynamics of the interaction of supply and demand, and specifically the mentality of current Bitcoin holders, compared to the average consumer who may or may not be motivated to try to accumulate Bitcoin in response to the deterioration of the fiat monetary system.
He sees the supposed friction between the two groups as a stalemate where current holders don’t have much incentive to give up their Bitcoin, while Bitcoin holders trying to get out of devalued fiat currencies have no real remedy if they do.
He proposed three possible ways to resolve the impasse.
“One of them is that consumers capitulated, the price of Bitcoin went up to thousands of dollars, and people were rushing to get society out of this dysfunctional standard. Banks started accepting Bitcoin deposits, Bitcoin hedge funds popped up everywhere, the Chairman of the Federal Reserve, the Chairman of the European Central Bank, and everyone else would come to Timisoara whenever they wanted to take action, get my support, and so on.”
This seems to be the path we are on right now. Abandoning the existing system, integrating into the legacy financial system, worshipping the early adopters and Bitcoin as the solution to the systemic problems of fiat currencies. This is why Bitcoiners are currently cheering our path forward, citing every little piece of news from banking institutions, ETFs , investment funds as evidence of their capitulation! We win!
This is pure delusion. Trump does Bitcoin no real good by pandering to Bitcoiners seeking campaign funds, and he is and always will be a fan of the US dollar. His mentality is based on the idea of a money printing press, exporting our inflation around the world, and that is a very positive thing for US interests. The Democratic Party is overwhelmingly hostile to this space for similar reasons.
Even if such a future actually became a reality, and not just in name only, it would be a very scary and depressing future for anyone who sees Bitcoin as a tool for freedom and sovereignty. Using Bitcoin will provide this service to almost no one. Hedge funds, banks, ETFs will all become key holders for the vast majority of people. No one will truly have any degree of freedom, it will be the same financial system we have in existence now, where nothing can be done without seeking permission from some overlord who actually controls your money. Regulation will not foster more competition in this space, the existing players will use their revolving doors to encourage capture and high walls around their privileged position in this role.
This path essentially means the failure of Bitcoin as a tool for freedom, and the same game we see being played out now, imposing slightly stricter rules on the privileged few who get to sit at the table.
“Another reason is that consumers revolted, governments intervened, and we all spent the rest of the decade fighting each other. The price of Bitcoin also rose to thousands of dollars, but the energy, effort, and resources that could have been used for easy surrender and effective submission were wasted on an ultimately doomed effort to defeat the strong with the weak. Neutral and uninvolved governments won, and as the dust settled, the balance of macroeconomic power had shifted away from the Western world to countries like China, Iran, Brazil, and others.”
This is the path they took to openly oppose Bitcoin. People actually started to move to Bitcoin en masse, and governments reacted reflexively by trying to prevent that from happening. From now on, things will be like dominoes, and as Bitcoin starts to become a more important aspect of global finance outside of the traditional financial system, the countries that opposed and refused to let Bitcoin happen will only end up suffering the consequences, while the smaller, more adaptable jurisdictions that either stayed out of it or embraced the change will ultimately benefit greatly.
In this world, Western governments have made it an extremely difficult task to use Bitcoin, but people have persisted. The rest of the world's thinking people have either stayed out of it or actively embraced it, while the West has spent all its energy and resources futilely fighting the inevitable. The rest of the world has experienced a financial renaissance, while the Western world has stagnated, and its citizens have been forced to constantly struggle to maintain some level of economic success (or even just to stay afloat).
It sounds harsh, but this is the world I want to see. A world where the West’s domination and coercive control over the rest of the world gradually diminishes. We have no right to rule the rest of the world the way we currently do, and this path forward will gradually take away our ability to continue to do so. Western citizens can embrace Bitcoin to defend our individual freedoms and sovereignty, and in doing so, protect us from the collapse of corrupt institutions.
The victory of the revolution did not come easily. For Bitcoin to truly live up to what many of us expect, it will ultimately have to take a painful path. This means people have to choose to take that path. Many in this space think that governments will easily give in and let Bitcoin win, but this is just a feint to feint and take Bitcoin.
We need to push to build around them, build in parallel, force them to act. If they don't actively fight it, then something else will happen. It's not good for us.
"The other trend is that consumers revolt, entrepreneurs step in, and by the end of 2015 there were somewhere between 10 and 1 million different Bitcoin forks around the world, each with a monetary base worth about $1. The size of the market between Bitcoins, the attendant complexity and chaos made it all nearly impossible for the "average person" to manage. The hedge funds and banks (those who were slightly better at using Excel) who traded in this nebulous complexity made a killing and became a major driver of global economic growth. Not only were consumers just as bad off as they are now, but for everyone he once again made it clear that revolt = being hit harder, longer, with a thicker, pointier tool. Just as conveniently, the things to revolt against became more obscure and elusive. On a scale of probability, this seems the most likely outcome, as history always moves in the direction of squeezing the "average person" the most brutally."
Popescu believes this is the most likely outcome. Bitcoin keeps splitting, creating countless offshoots from the original Bitcoin. Each region or group of people with different ideas will split into their own different network. The network effect keeps eroding until it becomes localized, creating more sub-shards than people can keep track of.
Everyone thinks this is over, that this door is just a phase we went through during and after the blocksize wars, and that it is closed forever. This is delusion. Nation states are adopting Bitcoin, financial institutions that primarily set government policy are coming on board and integrating it into their systems.
The world is a game of coercion and blackmail politics, with the US invading countries and slaughtering hundreds of thousands of people just to get commodities to flow the way it wants. It is naive to imagine that they and other interest groups will not fork Bitcoin for their own benefit on a global scale. I would even go so far as to say that opening the first door and these people quickly "surrendering" and seizing Bitcoin almost guarantees that the last door will eventually open.
It was an abject failure. Fragmented, with no single network effect to enforce true supply scarcity, and more importantly, no rules to influence global economic players. A brief respite, then an immediate return to the game as we know it now. A complete failure of any kind of revolution.
All three doors are still there, and we haven’t walked through any of them yet. No one knows which one we will eventually walk through. Bitcoiners need to be humble enough to admit that not only are we not close to winning, but that the possibility of failure still exists. There are many ways to fail.
