Bitcoin’s promise to the world monetary system isn’t its native token (whether you prefer BSV or BTC) or how much these units might be worth. “The really exciting thing Bitcoin has brought is enabling different ways to capture and monetize different things,” says Dr. Neil Smith, Head of Research at Atlus Investment Management, at a presentation this month at the University of Exeter Business School.
“We’re very much in very early days. It’s quite exciting but I still think a lot of people don’t get this. Too many people are focusing on this coin, and saying ‘look, this is my digital gold, how exciting is that?’ my answer is, not really exciting at all actually,” he said.
Much of Dr. Smith’s presentation to students was an exploration of “What is Money?” and whether Bitcoin can be considered money. These are well-trodden paths for anyone who has been in the Bitcoin world for a few years or more, but it’s often interesting to go back to the basics to see if (or how much) our attitudes may have shifted over the past 15 years.
Dr. Smith noted that the question “Is this money or not?” probably shouldn’t be asked at all, since trying to find a definitive answer is more likely to cause insanity than revealing the truth. There are many things that are either “money” or “money-stuff/money-like,” whether they be fiat cash, shares, Treasuries, gold, or other forms of value.
He took an objective look at the two main and competing popular theories on money: the “Chartalists” (e.g., John Maynard Keynes), where money is based on the State/community, authority, and law enforcement; and the “Metalists” (e.g., Karl Menger) where money is based on trust, collateral, and the market.
The dominant narratives around Bitcoin have (erroneously) come from libertarian or Austrian School proponents, who see and trumpet Bitcoin as a way to escape the clutches of governments and central banks. These narratives focus only on the Bitcoin unit, he said, whereas the reality is a much broader system where any kind of information can have a value and be transacted.
Bitcoin and money are information transactions
“Money is a form of information, and that’s a crucial thing.” Think of a Bitcoin “sat” as a little shipping container of information, he said. Suddenly, we have this system where we can capture really important information and transact it, put a value on it.
What blockchain technology can do is “compress this spectrum of money-ness” by making any kind of asset more liquid and more easily transferable. In this world, there’s room for fiat currencies and CBDCs to share the network with NFTs, credit, tokenized assets, and any other form of digitized “money-like” value people choose—probably including a lot of monetized-information concepts we haven’t even thought of yet.
Dr. Smith clarified his own politics by calling himself “a bit of a lefty libertarian.” His presentation strongly argued against the laissez-faire, Rothbardian world of anarcho-capitalism much loved by Bitcoin’s loudest voices since 2009.
He said the popular narratives that dominate Bitcoin propaganda even today have skewed far away from what the technology should have been, or what it still could be.
He’s certainly correct on that point. If you hang around long enough in the cesspools of “BTC influencer” social media, you’ll see the exact same cliches they and their predecessors pushed over a decade ago: Bitcoin is freedom, Bitcoin is life without banks and central banks, Bitcoin means freedom from government, Bitcoin will (somehow) stop wars, etc. etc.
“I see exactly the same stuff repeated, ad nauseum… and that’s pretty much all they’ve got to say,” Smith said.
The ‘dark places’ of anarcho-capitalism
The presentation included a tangental railing against the anarcho-capitalist world of writers like Murray Rothbard, noting that ancap thought experiments always quickly lead into some logical extremes and “pretty dark places” like assassination markets, baby markets, and scenarios where abuses are not legally prohibited, but somehow prevented by invisible-hand forces. That’s unrealistic, Dr. Smith added.
“Who doesn’t want to be free? Who doesn’t want liberty, to be left alone by Big Government?” he asked, referring to Isaiah Berlin’s concepts of “positive liberty” and “negative liberty.” For people to be truly free, there needs to be a restraint on the “liberty of the strong,” whether they be strong physically or economically.
“(Money) should improve society, it shouldn’t be about enriching small groups of monopoly rent-seekers. But that’s what the Bitcoin narrative has become,” he noted.
But back to Bitcoin as a means of capturing and valuing information: Hal Finney made that point in one of Bitcoin’s earliest-ever brainstorms in the thread of responses to Satoshi Nakamoto’s white paper in 2008:
“… in many ways Bitcoin is two independent ideas,” Finney wrote. There’s the monetary unit/system problem, but “solving the global, massively decentralized database problem is arguably the harder part.”
If you read those early threads, you won’t find anything about how much a BTC/BSV unit could trade for in the future. That conversation came later, and it’s been misleading the world ever since.
Watch: Here’s how Bitcoin works as the base layer for other blockchains
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