Bitcoin Is Venice: Fiat Delenda Est

This article is part of a series of adapted excerpts from “Bitcoin Is Venice” by Allen Farrington and Sacha Meyers, which is available for purchase on Bitcoin Magazine’s store now.

You can find the other articles in the series here.

“If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered… I believe that banking institutions are more dangerous to our liberties than standing armies… The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.”

–Thomas Jefferson

In extracts six through 11 in this series, from chapter seven of “Bitcoin Is Venice,” we characterized the likely general way in which Bitcoin fixes finance, communications and our relationship with the environment as being that Bitcoin makes access to and control over these capital stocks more decentralized. In extracts 12 through 15, from chapter eight of “Bitcoin Is Venice,” we also detailed successes in more abstract cases of “capital.” The primary effect, in the former was and the latter probably will be, to remove single points of failure and the heightened risk of failure at these points brought about by excessive leverage that wouldn’t exist if it weren’t for distorted flows of knowledge and competence as conveyed in prices, language and culture.

So, as a tangible example following from chapter seven: The Lightning Network performs a similar role to the card networks, but is nearly impossible to meaningfully “attack” as a peer-to-peer network rather than a client/server model, the “servers” of which are a handful of multi-national, multi-centi-billion-dollar companies with data centers, regulators, CEOs and their friends and families… in other words, attack vectors galore. Likewise, Bitcoin creates an incentive to extend “the grid” digitally rather than physically. This obviously introduces a number of fascinating binaries worthy of comparison, but consider one not yet mentioned: known versus anonymous.

A miner can connect to the network while under a waterfall, in a sunlit desert or on a geothermal spring, or anywhere at all they can transport a diesel generator, without anybody anywhere in the world knowing their identity, their location, their hardware… anything besides that they proved their work and that they are entitled to and receive the block subsidy and the transaction fees. Now we have peer-to-peer energy as opposed to the gigantic server of “the grid” and the helpless clients of “pretty much everybody who wants reliable electrical power.”

As an intangible example following from chapter eight, consider that the very prediction just outlined of economic dependence being gradually pared back and eventually removed will in turn remove the primary incentive for everything to be political. The politicization of everything rests on grudging compliance, and people tend to comply out of fear that the resources on which they depend will be withdrawn for insufficient ideological support. If it is possible to live independently of centralized leverage over material well being there is no reason whatsoever to heed unrelenting panic porn and comply with the continued descent into a panopticon of social credit; which is to say, the incessant strip mining of social and cultural capital.

With true self sovereignty and independence, there will be no need for ketman — we can heed Aleksandr Solzhenitsyn’s advice rather than Czesław Miłosz’s, and live no longer by lies. Independent of ever-invasive corruption, we will finally be free to do so; to no longer host an economic, social and cultural cancer, but to carve it out and let it expire. We find a guilty, sadistic pleasure in the realization that those who have the most power over others to lose due to the ripples of Bitcoin’s pressure on political economy are also those so ideologically compromised as to be the very last people to understand Bitcoin itself, if they ever do.

Once the reader grasps the rough mental model here of the obvious benefits of peer-to-peer networks over client/server models, it is not difficult to extrapolate. Nor is it difficult to ensure such extrapolation can be kept realistic rather than utopian simply by accurately referring to Bitcoin’s astonishing and novel technical properties. To repeat Henry Kissinger’s aphorism, “Who controls the food supply controls the people; who controls the energy can control continents; who controls money can control the world.”[i] We are on the cusp of a brave new world in which nobody controls the money, hence the energy, hence the food supply. What happens to control of the people, the continents and the world, remains to be seen.

To keep up the theme of resilience, but to move even further away from the idea of “the sovereign individual,” we would further argue Bitcoin provides less-powerful states with a means to resist and escape predation and exploitation. Probably the most obvious example, and in a sense the one that ultimately underpins the rest as far as money goes, is the important role played in U.S. dollar hegemony by Organization Of The Petroleum Exporting Countries (OPEC) pricing. We assume this is relatively well known and well understood and so offer two completely different flavors of example, both of which have recently been explored in great depth by Alex Gladstein of the Human Rights Foundation.

In his essay “Fighting Monetary Colonialism With Open-Source Code,” and drawing extensively on “Africa’s Last Colonial Currency” by Fanny Pigeaud, Ngongo Sylla and Thomas Fazi, Gladstein investigates the history and ongoing reality of the French colonial CFA franc system. In 15 sub-Saharan African nations, across more than 180 million inhabitants in an area two-thirds the size of India, citizens of countries ranging from Senegal to Gabon use the CFA franc instead of a national currency. The currency — launched at the end of the colonial period in the 1940s — has been gradually debased by more than 99% against the French franc, or what is now the euro. The latest major devaluation was in 1994, when half of the purchasing power of the CFA franc was destroyed in an attempt to boost the competitiveness of CFA nation exports. Since colonial times the French state has used the CFA system to cheaply harvest resources ranging from uranium to tin to lumber from CFA nations at below market prices, often selling finished goods back to those very same CFA nations at above-market prices. The French state has a de facto first right of refusal on exports coming from CFA nations, as well as construction and service contract imports. The CFA nations are prevented from building their stocks of productive capital, and end up exporting raw goods, unable to develop manufacturing bases. This parasitic relationship has helped finance and subsidize the French welfare state over the past seven decades, and has given it a huge captive market for goods that it would have trouble selling elsewhere. Historically, CFA nations had to keep as much as 100%, and only recently 50%, of their reserves in Paris with French banks. CFA nations may have won their independence in the 1960s, but remain financially dependent on France.

Political leaders who threatened to disrupt the CFA system were dispatched with violence, or were left by the French to fend for themselves against violent insurgencies. The economic histories of Burkina Faso, Togo, Guinea and Mali are especially vivid in this regard. Today, the French state is introducing some reforms to some CFA nations, but they are considered surface-level by many observers. Going back decades, the French government has propped up a variety of odious dictators to keep the CFA system in place. With the exception of Senegal, none of the 15 CFA countries have experienced meaningful democratization, and countries like Guinea Bissau, Chad, Niger and Benin remain some of the poorest on earth. Here, the French continue to operate a capital strip mine on par with the most striking colonial operations of the past. And, given President Emmanuel Macron’s plans for French expansion in Africa in coming decades, it is unlikely that the French will agree to a reduction in control in this matter.

What choice do CFA citizens have? They can seek political change through rebellion or revolution, but it is unclear if independent states with their own currencies will fare that much better. Yes, countries like Ghana with independent monetary policies have fared demonstrably better than CFA nations, but Nigeria, with price inflation at 17%, is a low bar for success. Hyperinflation would be a constant and fatal threat to any new currency. At the national level, there simply isn’t much hope for a better currency. And so, many CFA citizens are now opting into Bitcoin. Though their per capita use lags behind Anglophone countries like Ghana and Nigeria, some countries like Togo are now in the top ten in terms of peer-to-peer cryptocurrency volume as noted by Chainalysis’s 2021 Global Crypto Adoption Index, adjusted for population and internet penetration. If the regime won’t change, and the old colonial powers won’t leave, at least citizens can opt for a currency that they control. This is why activists like Farida Nabourema from Togo and Fodé Diop from Senegal call Bitcoin the currency of decolonization.

This hope is echoed by some in Palestine, as well. The Palestinian political struggle is well known throughout their world, but their economic struggle is barely discussed, yet equally severe if not worse in terms of human impact. Gladstein explores this crisis in his essay, “Can Bitcoin Be Palestine’s Currency of Freedom?” in which he reveals how the capital stock of citizens in the West Bank and Gaza Strip has been relentlessly eroded over decades of Israeli colonial policy. After 20 years of Israeli occupation, these trends were clear in 1987, as Sara Roy’s article, “The Gaza Strip: A Case of Economic De-Development,” makes clear, that the Palestinian economy was becoming completely dependent on Israel for jobs and imports, and unable to build up a manufacturing or agrarian base. Over time, farmers and builders in Palestine were priced out by subsidized Israeli goods, and were forced to give up their economic productivity and independence for higher-paying jobs in Israel. Statistics show, for example, despite a rising Palestinian population, a decline in agricultural jobs occurred between the 1960s and 1990s. These trends were amplified after the Paris Protocol of 1994, an overlooked but hugely influential economic document signed by the newly-minted Palestinian Authority, which granted…