Bitcoin: redefining F-You money

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You want me to do what?

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The term F-you money has been a part of American culture since at least the 1970s, having found its way over decades, from Hollywood to Wall Street to Silicon Valley, as people in these industries accumulated enormous wealth.

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What does Fyou money involve? It is a position of power; it means that you have gained complete control over yourself and your time. You are not indebted to anyone; you can say F-you to anyone who offends you without fear of retaliation.

F-you money is not an absolute amount of wealth, it is a comfort level. Some say that F-you money means being financially independent – having enough money to live on in perpetuity on passive income from low-risk investments. For others, it only means having a few months or a year of savings so that you can cut ties with your current job and have plenty of time to find a new source of income. F-you money allows you to achieve a level of freedom that is beyond the reach of most people.

However, it’s no secret that acquiring traditional wealth sets you on the path to more money, more problems. Why is this the case?

Historically, if you want to have an extreme level of asset protection, you have to use strategies that are only achievable by the rich. These strategies require the creation of complex financial and legal structures that are managed by specialists – and these specialists do not work for free.

Someone with traditional F-you money will have a diverse portfolio to provide some protection against inflation and single points of failure – the problem of too many eggs in one basket. The ultra-rich will also take advantage of countless esoteric tax rules to defer and reduce their taxable earnings, even going so far as to create trusts that protect assets from capital gains and inheritance taxes for generations. In some cases, they operate in obscure legal areas without much precedent, but it is not a problem if the authorities dispute the use of a given strategy – the rich will send elite lawyers to fight on their behalf.

How does Bitcoin fit into all of this? As a completely new asset class, unlike any that has ever existed.

Those who only know Bitcoin in passing tend to view it as a very volatile speculative investment. It is often said that it is like digital gold. I postulate that Bitcoin as an asset is more sophisticated than this comparison suggests.

Bitcoin reduces the cost of extreme asset protection to the point that it is accessible to the average person. It exploits a key element of the security model offered by cryptography – defensive asymmetry. That is, the cost of attacking such a system is much higher than the cost of its defense, thus dissuading an attacker from even trying.

Reinforced fortifications deter attackers.

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Bitcoin advocates often use fancy words to describe qualities of the system such as decentralization and resistance to censorship, but the point always comes down to power and control. As the owner of bitcoin, you are free to cede control of your property to a third-party specialist in the same way traditional financial assets are managed by bankers and brokers, but by no means is this mandatory. If you choose to maintain control of your own bitcoin and a third party wants to prevent you from using it, the network will not allow it. This is not to say that there are no longer any real consequences for those who break the laws of their jurisdiction, but rather that the Bitcoin network is rejecting the guardians.

A Bitcoin user who exercises the maximum sovereignty the system gives them is not beholden to anyone when it comes to enforcing their property rights. There is no minimum value required to reach this position – any amount of bitcoin can be F-you money.

With Bitcoin, you can build your own digital bank with a stronger security model than any traditional bank out there. A bank that has no physical form to speak of, no single point of failure that can be exploited. There are of course challenges to overcome and risks to manage, but the rewards are enormous.

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With Bitcoin, you can build trust that is secured not by the laws and courts of a specific jurisdiction, but by cryptography and a global network that can withstand even attacks from nation states. For example, you can lock funds in a digital safe that cannot be removed for decades by anyone, including yourself.

In short, Bitcoin is the first form of ownership that allows normal people to truly and unequivocally own it. The assertion of the property rights of bitcoin holders should not depend on the authorities, nor does it require an army of specialists to defend them. Bitcoin is a ruleless system of rules, in which each participant can govern themselves. If you are looking for freedom, Bitcoin is an asset in a class of its own.

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