Governments Persist After Hyperbitcoinization CryptoBlog

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This is an opinion piece by Will Szamosszegi, founder and CEO of Bitcoin mining hosting service Sazmining.

Money and energy are two of the most fundamental aspects of an economy because both are universal. Energy is needed to transform raw materials into final consumer goods and services. Money is needed to store wealth, calculate income and loss, and exchange goods and services that you could not acquire through barter.

Although Bitcoin greatly improves humanity’s relationship with energy and money, problems that affect both energy and money are likely to survive a Bitcoin standard, even if they become less severe . When it comes to energy, government regulations, subsidies and bans will continue to have influence. When it comes to money, governments will in all likelihood continue to use the second-tier fiat currency that citizens are forced to use.

The government interferes in energy

The United States government has attempted to centralize energy sector planning since 1789, long before fiat currency reached its “final form” in the fateful year of 1971. In extensive research On the topic of the US government’s history of energy sector subsidies, Nancy Pfund, Managing Partner of DBL Investors, and Ben Healey, a graduate student in economics, made several sober discoveries (although they are in favor of government intervention in the energy sector, of course):

Although not a direct subsidy, the US government levied a tariff on the sale of British coal in 1789 for the benefit of the American coal industry. This was only two years after delegates to the Constitutional Convention explicitly fought to include the “gold and silver clause” in the US Constitution. This clause made its way into Article 1 of the founding document, where it continues to state that individual states were not permitted to “do anything except coins of gold and silver, a call for tenders for the payment of debts”. In other words, the political apparatus of the time, while far more constrained financially than our current Leviathan state, was still able to exert its will over the energy sector.

To be fair, tariffs are easier for a government to adopt than subsidies because only the latter require the government to have money to spend. But history shows that subsidies also existed before the fiduciary standard came into full effect in 1971. For example, the Price-Anderson Act of 1957 required the federal government to subsidize nuclear power by paying for damages caused by a nuclear disaster.

Hydroelectricity has also been subsidized by the federal government since at least the 1890s, although it is difficult to quantify the extent of these subsidies. Earth Track, a think tank that works to standardize energy subsidy data, estimates that the U.S. federal government has provided about $2.7 billion (in 2010 dollars) for hydroelectricity since the nation’s inception until in 2010. Naturally, this period covers a range of different monetary regimes. .

The government meddles with money

As much certainty as many in the bitcoin community have that bitcoin will become the world’s next reserve asset, governments are unique institutions and can harm our relationship with money, even after bitcoin becomes the new gold.

Governments also wield the threat of violence and incarceration via the military-industrial complex to retain economic power.

For example, imagine that the US government/central bank accepts bitcoin’s new monetary regime and even keeps it on its balance sheet. Certainly by then the global economic order will have changed significantly for the better – however, if governments are still around, they are likely still using the threat of violence and/or incarceration to collect taxes. To keep a Layer 2 fiat currency alive, all they have to do is demand that taxes be paid in said fiat currency. People will then have no choice but to obtain this currency to hand over to the tax authorities.

True, there are several reasons why such a scheme may not work. On the one hand, “competition” between governments could lead them to relax the imposition of fiat currencies on citizens who use bitcoin and bitcoin-based layer 2 technologies in their daily lives. Second, ideological pressure from citizens could pressure politicians to refrain from creating their own fiat currencies for fear of professional suicide. And finally, governments themselves may consider such a system to be more inconvenient than it is worth, as a Bitcoin-based economy has the potential to grow at a much higher rate than a hybrid Bitcoin economy. -Fiat.

We must remain vigilant

When it comes to both energy and money, the government can still intervene after bitcoin has become the world’s next reserve asset and after bitcoin mining has forever improved our relationship with money. . In that sense, Bitcoin’s inevitable victory is just the beginning – we may still have to fend off the intrusive bureaucrats. Certainly, freedom-loving Bitcoiners will then be in a much better position to do so than we are now. However, we must not rest on our laurels.

What can we do to truly exorcise the money and energy state? The same thing we do now: explain our ideas.

We want a free energy market so that the most cost-effective forms of energy are discovered and made cost-effective over inefficient alternatives. In addition, subsidies, tariffs and regulations in the energy sector hinder innovation. As far as we know, in the absence of so many interventions over the centuries, our world would now be powered by cold fusion, the oceans and nuclear energy.

And government-imposed money, even if somehow backed by bitcoin, would throw sand into the wheels of capital accumulation and economic calculation. The cost of accumulating capital would increase, as we would need to keep garbage money in our back pocket for tax season. In other words, the production of all kinds of goods and services would never take place, since they would no longer be affordable. And entrepreneurs’ ability to calculate profit or loss becomes more difficult, as there is no longer a single immutable measuring stick (bitcoin), but also an unpredictable fiat currency that always trades alongside Satoshi’s creation. Nakamoto.

Our work won’t be done even after Bitcoin wins the money game and Bitcoin mining wins the energy game because governments won’t quit. But our ideas will be so much easier to sell then that I, for one, look forward to the battles to come.

This is a guest post by Will Szamosszegi. The opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

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