You’ve probably heard that one before. And it isn't a completely unfounded piece of advice; built into the supply-predictable, demand-elastic protocol of Bitcoin is the assumption of increased purchasing power over time. But to what limit should that be followed? Many Bitcoiners have seen their bitcoin holdings relative to their net worth explode upward and sit in waiting to see how the U.S. dollar system reacts to being cornered by another variant and that pesky debt ceiling limit. Anyone telling you anything other than “I don't know” is making grand assumptions about what happens next. As comforting as fractals from previous runs can make us feel, Bitcoin finds itself in quite literally uncharted territory.
As Bitcoin putters away and keeps producing blocks, ossifying its immutable incentives every 10 minutes, the global economy finds itself sputtering in the whiplash of central banks trying to taper their fiat Ponzi schemes. Citizens around the world are standing up and removing their economic activity from oppressive regimes, and the ability to live nearly entirely on the Bitcoin standard has never been more technologically accessible. Of everything to be learned from the Blocksize Wars, as the working class attempts their own user-activated soft fork (UASF) from legacy finance, is that the only votes that matter are from economic nodes. Go ahead and fork Bitcoin and run a billion nodes; if no one is using your consensus for economic activity, your governance over a ghost chain means nothing. The suggestion to conserve your satoshis for the long haul, to hold them for the next generation, is the ethical and incentivized economic strategy, but perhaps we should also be employing our means to remove as much personal economic footprint from the fiat system as we can.
The Bitcoin protocol is innately apolitical, but the social implications of a base layer of economic activity that is in the hands of no centralized entity gives citizens a true choice. We have an opportunity as humans to stop donating our life energy to these vampiric parasites that feed off the productivity of the working class. The greatest trick the devil ever pulled was normalizing a compounding 2% inflation on our national store of value. The fiat system is at a crux of disbelief on both sides; Modern Monetary theorists trust the Federal Reserve to control the yield curve, and Bitcoiners think they have already won. In many ways, I agree with the Bitcoiners, and I believe the natural growth of a truly open, first of its kind network to continue. But where I get off the train a few stops before many fundamentalists is that we should let up in our skepticism of attack vectors. Rather than be defensive, I think we are presented with a unique opportunity to leverage our knowledge and means to set up institutions and systemic infrastructure to ensure Bitcoin can flourish in whatever comes next.
But how do we best set ourselves up to ensure we can not only survive but strengthen in the breakdown of bond markets and their respective nation-states? It has never been more important to focus on the fundamentals of Bitcoin and how you can take back control of your own economic activity and start being the change you want to see. The game is to create not just as many economic nodes as possible on the Bitcoin network, but to create strong, sustainable nodes that can weather short-term unpredictable price action and regulatory uncertainty. This is not a call to sell your bitcoin, but a call to be conscientious about where you place your energy, who you feed with your capital, and how to best prepare yourself for the economic unknown.
“Not your keys, not your coins” is more than just a catchy colloquialism of the space, but an empirical truth in regards to ownership rights of ledger space on the Bitcoin blockchain. If you give your keys to a custodial centralized exchange, or worse to some yield-generating re-hypothecary, you are giving up your user rights to those UTXOs for nothing more than paper promises from, frankly, most likely dubious venture capitalists. There is no such thing as a free lunch, and exchanges offering any short time frame incentive for users to stake their coins are far outpacing their yield expenses by using your liquidity to trade. Zero free transactions on off-chain, custodial brokerages like Robinhood are sold to large firms that often directly trade against your order in the digital but public book. You incentivize firms to continue this behavior when you utilize these services and give up your rights as a property holder on the blockchain.
Simply buying bitcoin and leaving it on an exchange, while it might help you with the monetary expansion effects, it will not help you remove your liquidity and thus economic vulnerability to the macro-global economy. Exchange wallets have, are going to, and will always be, attack vectors for hackers to direct their energy, and by not doing your duty to protect your rights with the entropy of your own private key, you incentivize bad actors to continue sub-ideal economic activity. Bitcoin needs to be held by its users. It needs to be distributed and in custody of the people in order to siphon energy away from the ever-expanding debt bubble of our fiat system. Inevitably, incumbent banking elites will take custody of bitcoin and stablecoins for their users, and offer banking services to the new Bitcoin class.
These products, while perhaps may make sense for some, are very likely going to be an attempt to capture float and, more importantly with it, economic activity that leads to transaction fees and thus revenue streams. Satoshi himself talked about the need for bitcoin banks and payment processors, but he never mentioned if we should allow the legacy system to control these rails out of habit from their years of financial terrorism inflicted on the working class.
“What's your plan?” Alex Gladstein asked the Bitcoin masses. It is a serious and important question to ask yourself in regards to how well-equipped you are in all time frames.
Hyperbitcoinization will not be pretty. The overwhelming incentives to be a peaceful, good faith actor will ultimately bring a fair playing field to the world, but the transition there should not be assumed to be without a fair amount of turbulence. Millions of people around the world rely on dollar-denominated philanthropy and subsidies to reliably source such fundamental things we so quickly take for granted such as food, clean water, medicine and electricity. A further breakdown of supply chains will hurt the least prepared, and a further expansion of monetary supply could hurt even the most traditionally prepared. This is not an attempt to cast doom on our situation, but rather how important it is to handle this culmination with grace and sound execution. A systemic flipping from a fiat standard to a Bitcoin standard will require a concentrated effort of economic nodes of self-custodial users to maintain the chain and feed the incentive structure of withholding network integrity for the mutual benefit of all.
One obvious way to reduce your fiat footprint is to utilize bitcoin as a top of its class savings technology. Another less obvious way is situating your lifestyle in such a way to barely interact with the fiat rails at all. The model only works if you feed it your energy; true for both the Bitcoin network and the U.S. dollar system. While I cannot in good faith condone any other long-term, or even medium-term, investment outside of bitcoin, there are other ways to limit your personal exposure to central bank financial manipulation. If getting yourself set up to live the life you want to see more people in the world living means utilizing some Bitcoin, perhaps that will ultimately be well worth the inward investment. Consider building a low-overhead life to preserve persistent leakage from your addressable digital energy, but not so frugally you miss out on experiencing a truly beautiful day to day that brings you self-driven purpose no matter the ticker price.
The only way to preserve the collective human spirit is by carrying on with the very reasons we were plopped on this planet: creating art, writing books, exploring spaces, sharing experiences, extending life and helping it along. Onboarding your community and being loving and patient with all those that deserve it is not only just a neighborly gesture, but also directly incentivized in the presumed expansion of economic network effect. The more robust we make the network, by educating, saving and using bitcoin, the better the chance we have to massively disrupt the centralizing incumbent vultures. Build yourself an ark that can withstand the rains of another season of Jerome Powell, but one that's fun to live in if an unforeseen drought comes out of a potential macro-collapse. Bitcoin is the air mask that falls when an airplane loses cabin pressure, and you should feel good about putting it on your face; but now is the time to help those around you gain sovereignty and build lifestyles and infrastructures apart from the repressive regimes revealing themselves thoroughly throughout the start of the decade.
You may get rich along the way, but the intentions of the ideal money principles behind Bitcoin will spread net-beneficial user access and user rights from this disruptive technological advancement in the human energy economy. How do you create a world that encourages and empowers healthy Bitcoiners? Not by wasting bitcoin on frivolous things, but by utilizing bitcoin to monetize good ideas and sustain discourse toward a better and freer future. The hash rate continues to recover from the Great Migration, and network security has rarely ever been mathematically stronger against, or rather more difficult and expensive, to maliciously attack. But it does not matter how secure the hash string is if you use paper order books for high margin trading and gamble your ticket to the deflationary world.
Live somewhere you like, that upholds your views and that you can be proud to participate in. You are an actionable agent for jurisdictional arbitrage, and you can limit spending your satoshis only to where you want to see growth. Build homes, plant seeds, support creators and developers, and give yourself a saturated life you'll be proud of living in alignment with your personally held beliefs. Trust your instincts that brought you to Bitcoin in the first place, for you have put yourself in place to be given a grand gift of opportunity. There has not and will never be a greater transfer of wealth like this in the history of human economics. The transistor brought us analog logic, as the microprocessor has brought forth further applications of data storage and manipulation, all culminating into the mesh of human intelligence formulated in the world wide web. Digital scarcity in a near infinite universe is a very big deal, and you as a Bitcoiner have a unique opportunity to directly affect the ever-important rest of the decade.
If Bitcoin is going to be a peaceful revolution, then put yourself in a position to be at peace, full and sovereign. But best yet to prepare to protect the network in the many small, but compounding, ways you can. You can't fix the world until you fix yourself, and you can't fix all the money until you fix some of the money. Fix your money, fix your world.
This is a guest post by Mark Goodwin. Opinions expressed are entirely their own and do not necessarily reflect those of BTC, Inc. or Bitcoin Magazine.