Author: Jeffrey Tucker, author and CEO. He has spoken extensively on topics including economics, technology, social philosophy, and culture.
People who participated in the Bitcoin market after 2017 encountered different operations and ideals than those before. Nowadays, no one cares too much about what happened before, let's say 2010-2016. They only focus on the upward momentum of prices and get excited about the increase in the valuation of assets in their portfolios.
Gone are the rhetoric about the separation of money from the state, of a market-based means of exchange, of a true revolution that extends from money to all of world politics. Gone are the rhetoric about changing the way money works, and thereby changing the prospects for freedom itself. Bitcoin enthusiasts have a different goal.
And all during this entire time, when this digital asset could have protected numerous users and businesses from the rapacious inflation brought about by the worst and most globalized corporate nationalism in modern history, the operation of this digital asset was made possible by the monetary monopoly of central banks, while the original asset with the BTC symbol was systematically diverted from its original purpose.
Hayek articulated this ideal well in 1974. As an economist, Hayek had spent most of his career fighting for sound monetary policy. At every important turn, he faced the same problem: governments and the institutions they served did not want sound money. They wanted to manipulate the monetary system to benefit the elite rather than the public. Finally, he perfected his argument. The only real answer, he concluded, was to completely separate money from power.
He wrote in 1976 (two years after winning the Nobel Prize): Nothing would be more welcome than to deprive governments of their power over money and thereby to arrest the apparently irresistible trend towards an accelerating growth of their share of national income. If left unchecked, this trend will within a few years bring us to a state in which the government will claim 100 per cent of all resources – and thus become a veritable totalitarianism.
Perhaps it will prove equally important to stop the government’s inherent tendency to unlimited growth, which is becoming as threatening to the future of civilization as the currency it provides, to shut off the spigot of additional funding for it.
The problem with achieving this ideal is both technical and institutional. As long as the national currency works, there is no real incentive to change it. Of course, the impetus will never come from the ruling class that benefits from the current system, and this is exactly where every old argument for the gold standard falters. How to solve this problem?
In 2009, an anonymous developer or group published a white paper that wrote a peer-to-peer digital cash system in the language of computer scientists rather than economists. To most economists at the time, Bitcoin's functioning was opaque and untrustworthy. It turns out that the operation of the system itself was already underway during 2010. In a nutshell, Bitcoin uses a distributed ledger, dual-key cryptography, and a fixed-quantity protocol to launch a new form of currency that operationally combines the currency itself and the settlement system into one.
In other words, Bitcoin realizes Hayek's dream. The key to making all this possible is the distributed ledger itself, which relies on the Internet to globalize the operating nodes and brings a new form of accountability that we have never seen before. It was impossible to merge the means of payment and settlement mechanism on such a large scale before. However, the emergence of distributed ledgers has earned it higher and higher valuations in the market.
So yes, I was an early Bitcoin enthusiast, wrote hundreds of articles, and even published a book called Bitcoin By Bit: How P2P Is Freeing the World in 2015. I may not have known it at the time, but those were, in fact, the last days of the ideal, the days before the protocol was controlled by a cartel of developers who completely abandoned the idea of peer-to-peer cash and turned it into a high-yield digital security that was not a competitor to national currencies, but an asset that was not used, but access was controlled by a third-party intermediary.
We watched this happen in real time, and many of us were shocked. All we had to do was tell the story, but it hasn’t been told in its entirety until now. Roger Ver’s new book, Hijacking Bitcoin, does the job. It’s a book for the ages because it lays out all the facts of the case and lets the reader draw their own conclusions. I was honored to write the foreword for this book.
What you are about to read here is a tragic story, a chronicle of a liberationist monetary technology being subverted to serve other purposes. It is a painful story to be sure, and the first time it has been told in such detail and complexity. We had a chance to liberate the world. We missed that chance, and it could very well have been hijacked and subverted.
Those of us who have followed Bitcoin from the beginning have watched with fascination as it has gained traction and appears to offer a viable alternative path to the future of money. Finally, after thousands of years of government corruption of money, we have an untouchable, sound, stable, democratic, incorruptible technology that fulfills the vision of history’s great defenders of freedom. Money can finally be freed from state control and serve economic rather than political goals – prosperity for everyone, rather than war, inflation, and state expansion.
That was the vision, anyway. Alas, it didn’t happen. Today, Bitcoin adoption is lower than it was five years ago. Instead of being on track to ultimate victory, Bitcoin took a different path, with prices accruing gradually to early adopters. In short, Bitcoin technology was betrayed by minor changes that few understood at the time.
I certainly didn’t understand it. I had been playing around with Bitcoin for several years, and was primarily struck by how quickly it settled, how cheap it was to trade, and how anyone without a bank could send or receive Bitcoin without a financial intermediary. It was a miracle, I wrote rhapsodically at the time. In October 2013, I hosted a cryptocurrency conference in Atlanta, Georgia, that focused on the intellectual and technical aspects. It was one of the first national conferences on the subject, but even there I noticed two factions coalescing: one that believed in competing currencies, and another that was committed to just one protocol.
Two years later, when I first saw the Bitcoin network clogged up badly, I realized something was wrong. Transaction fees were skyrocketing, settlements were slowing, and large numbers of on- and off-ramps were closing due to prohibitive compliance costs. I didn't understand it. I reached out to some experts, who explained to me a quiet civil war going on inside the crypto world. So-called "maximalists" were against widespread adoption. They liked high fees. They didn't mind slow settlements. And many were starting to dabble in the dwindling number of crypto exchanges still in operation because of government crackdowns.
At the same time, new technologies emerged that greatly increased the efficiency and usability of fiat currency exchange. These technologies included Venmo, Zelle, CashApp, FB Pay, and many others, in addition to smartphone add-ons and iPads that enabled merchants of any size to process credit cards. These technologies were radically different from Bitcoin in that they were permission-based and intermediary financial companies. But as good as these technologies seemed to be to users, their presence in the market squeezed out Bitcoin’s use cases, at which point the technology I loved had changed beyond all recognition.
The split of Bitcoin into Bitcoin Cash occurred two years later in 2017, with great cries and screams, as if something terrible had happened. In fact, all that happened was a restoration of the original vision of founder Satoshi Nakamoto. He believed, as did monetary historians of the past, that the key to turning any commodity into widespread money lies in adoption and use. Without a viable, market-based use case, it is simply impossible to imagine under what conditions any commodity could appear in the form of money. Bitcoin Cash is an attempt to restore this.
The period from 2013 to 2016 was a time for adoption of this new technology, but it was squeezed by two factors: the technology’s ability to scale was deliberately stifled, and the push for new payment systems squeezed out use cases. As this book shows, by late 2013, Bitcoin had become a captive target. By the time Bitcoin Cash emerged, the Bitcoin network had shifted its entire focus from usage to holding onto existing Bitcoins and building second-layer technologies to solve scaling issues. It’s now 2024, the Bitcoin industry is struggling to find its way in a niche, and the dream of a “moonshot” price is fading into memory.
This is a book that had to be written. It’s a story of a missed opportunity to change the world, a tragic story of disruption and betrayal. But it’s also a story of hope, of how we can work to ensure that the Bitcoin hijacking incident isn’t the final one. This great innovation still has a chance to liberate the world, but the path from here to there is a lot more twists and turns than we think.
Roger Ver doesn’t toot his own horn in this book, but he is the hero of this saga, both for his deep understanding of the technology and for his continued commitment to Bitcoin’s liberating vision from the beginning to the present. I share his commitment to peer-to-peer money for the masses and to a competitive market for free-enterprise money. This is a very important historical document, and the polemics alone are enough to challenge anyone who thinks they are on the other side. Regardless, no matter how painful it is, this book must exist. It is a gift to the world.
Does this story sound familiar? It certainly does. We’ve seen this trajectory in field after field. Institutions born and built from ideals are later transformed by various forces, channels, and nefarious intent into something entirely different. We’ve seen this happen with digital technology and the internet, not to mention medicine, public health, science, liberalism, and many other fields. The story of Bitcoin follows the same trajectory, with a seemingly unassailable idea turned to a different end, and a reminder that there will never be an institution or idea this side of heaven that is immune to compromise and corruption.
