Topic: Bitcoin's Dystopian Future - page 13. (Read 28248 times)
Most of these scenarios are only plausible if national currencies completely disappear. Though many on these boards predict this outcome, I do not. Instead, a more likely outcome is that Bitcoin and other cryptocurrencies will exist alongside national currencies in a stable equilibrium, each used in contexts where it works better than other alternatives. In this scenario, any threat to Grandma's pension will come not so much from Bitcoin as from other factors. As has been pointed out, human trafficking will exist, even without cryptocurrencies, regrettable as that may be.
I see a paradox. For BTC to become successful, it's adoption must rise but on the other hand, you see enormous wealth disparity. Somewhere down the line, these two will cross. Moreover, those that got in later are probably the people who are the producers in this world. Gradually, their position will be better because they provide stuff people want/need. Granny could be taken care of by her kids who have more time and means to support her.
Another thought: the more people put into BTC, the more their debts can be paid of by rising BTC value compared to fiat. Less burdened by debt, their situation will improve and improve as a function of time, taking along more and more new people. Once people learn of this phenomenon, it's game over for the system. Much more intriguing than very dark scenarios.
Another thought: the more people put into BTC, the more their debts can be paid of by rising BTC value compared to fiat. Less burdened by debt, their situation will improve and improve as a function of time, taking along more and more new people. Once people learn of this phenomenon, it's game over for the system. Much more intriguing than very dark scenarios.
[n.b., "utopian" is in my browser's spell-checker by default. "Dystopian" is not. Curious.]
Oh no! Newspeak! They are already in our browsers.
I always enjoy reading people's opinions on the future effects of bitcoin. I'm personally a little more optimistic, but can certainly respect a negative outlook.
I hope grandma takes some much needed advice from friends/family/financial adviser & convert her wealth to a more stable currency in the event T-bills' days are numbered. Even in the worse case scenario, people are pretty giving (especially with all the extra money they will have when they stop paying taxes). The transition will be so gradual, you'll basically have to be living under a rock to miss it. Trust in new currencies doesn't happen over night.
I personally believe the greatest reason for wealth disparity is governments. Laws, grants, contracts, etc give many an unfair piece of the pie. Between lost coins, cashing out, & regular business, bitcoins will get dispersed.
I definitely think your increased fear of kidnapping & extortion due to Tor/bitcoin is baseless. Those same things can & do happen now with cash. Although not non-existent, I'd venture to say they are pretty rare. Not to mention most government security is a joke. For profit, non-government security will make what we consider safe now seem dangerous.
Of all your theories, the one I fear most is government backlash. There are a LOT of powerful people that rely heavily on benefits of central banking & taxation. My hope is that those people are too arrogant to attempt to stop bitcoin while it is young. An attack now might not kill bitcoin, but it would certain set it back a few years. Maybe we'll get extremely lucky & Rand Paul will get elected in time to prevent a law banning bitcoin. Regardless, bitcoin will continue to flourish, and the people who embrace it will eventually overtake the people that don't. I just hope that doesn't result in war.
I hope grandma takes some much needed advice from friends/family/financial adviser & convert her wealth to a more stable currency in the event T-bills' days are numbered. Even in the worse case scenario, people are pretty giving (especially with all the extra money they will have when they stop paying taxes). The transition will be so gradual, you'll basically have to be living under a rock to miss it. Trust in new currencies doesn't happen over night.
I personally believe the greatest reason for wealth disparity is governments. Laws, grants, contracts, etc give many an unfair piece of the pie. Between lost coins, cashing out, & regular business, bitcoins will get dispersed.
I definitely think your increased fear of kidnapping & extortion due to Tor/bitcoin is baseless. Those same things can & do happen now with cash. Although not non-existent, I'd venture to say they are pretty rare. Not to mention most government security is a joke. For profit, non-government security will make what we consider safe now seem dangerous.
Of all your theories, the one I fear most is government backlash. There are a LOT of powerful people that rely heavily on benefits of central banking & taxation. My hope is that those people are too arrogant to attempt to stop bitcoin while it is young. An attack now might not kill bitcoin, but it would certain set it back a few years. Maybe we'll get extremely lucky & Rand Paul will get elected in time to prevent a law banning bitcoin. Regardless, bitcoin will continue to flourish, and the people who embrace it will eventually overtake the people that don't. I just hope that doesn't result in war.
This thread must be sticked.
I need to read it more thoroughly later, but I just wanted to quickly observe that Bitcoin is not untaxable. There are proposals for building income/sales tax systems that can apply to cryptocurrencies and it's a topic I intend to write more about in future.
Most of OP's predictions will happen regardless, with or without Bitcoin. This just speeds up the process a little bit.
You're really focused on the negative stuff. Nothing of this is really new, and your dystopia can happen with fiat currency just as well, or any money at all. Hyper-commercialization is evil (but so are other ideologies taken to extreme).
A distributed global currency can bring a lot of good stuff as well. For example, by encouraging cooperation between people in different countries without barriers, it could be a force for peace.
Then again, no one knows what the future will bring. But I doubt cryptocurrencies will play such a big role as you think in creating an utopia/dystopia. It sounds a bit like the airpunk/steampunk/cyberpunk/... fantasies in which one technology somehow dominates everyones life and everyone is obsessed with it.
A distributed global currency can bring a lot of good stuff as well. For example, by encouraging cooperation between people in different countries without barriers, it could be a force for peace.
Then again, no one knows what the future will bring. But I doubt cryptocurrencies will play such a big role as you think in creating an utopia/dystopia. It sounds a bit like the airpunk/steampunk/cyberpunk/... fantasies in which one technology somehow dominates everyones life and everyone is obsessed with it.
Does anyone really expect the government to sit back quietly and watch while their currency is debased, terrorism is funded, and children are kidnapped? The only question is when and how they will strike back against these forces. While the government does have a lot of options, ultimately those options only slow things down. At some point, we collectively with our governments face a difficult choice between trying to survive this deadly storm or attempting to destroy all decentralized computer networks (including the internet). The former seems unthinkable, the latter, impossible.
I wouldn’t be surprised if this chaos gives rise to a strong, centralized, one-world government which gets its revenues by tightly reigning in freedom of commerce in order to collect taxes. For instance, I will not be surprised to see a requirement someday that every person buying or selling have an implant which tightly binds their identity to the sale. Perhaps the implant will even be located on the back of the right hand or the forehead! This may seem repugnant to you now, but wait until you have lived in the storm for a while before you call it impossible. The natural reaction to the deadly chaos of decentralized currency is for the populace to embrace increasingly centralized controls on commerce. The battle lines are only just starting to be drawn, and your guess is as good as mine for how it will play out.
You overestimate the dedication the government has to their own organization. They are in it for the money, mostly. When it is no longer profitable to keep the structure in place they abandon it.I wouldn’t be surprised if this chaos gives rise to a strong, centralized, one-world government which gets its revenues by tightly reigning in freedom of commerce in order to collect taxes. For instance, I will not be surprised to see a requirement someday that every person buying or selling have an implant which tightly binds their identity to the sale. Perhaps the implant will even be located on the back of the right hand or the forehead! This may seem repugnant to you now, but wait until you have lived in the storm for a while before you call it impossible. The natural reaction to the deadly chaos of decentralized currency is for the populace to embrace increasingly centralized controls on commerce. The battle lines are only just starting to be drawn, and your guess is as good as mine for how it will play out.
That's exactly what happened in the USSR. Everybody in the government could see that the system was headed for collapse due to unavoidable mathematical realities, and when that knowledge spread they looted what they could and abandoned ship. The number of true believers who were addicted to power for its own sake weren't great enough in number to hold things together.
The same thing will happen to the western governments when socialism collapses here. As Bitcoin grows large enough to represent a real threat governments might make noise about regulating it or shutting it down, but the entire time politicians are spewing hot air insiders throughout the bureaucracy are going to be quietly stashing whatever money they can get control over in Bitcoins. All the scare stories that pop up between then and now are designed solely for the purpose of scaring early adopters into letting go of their bitcoins so those who don't have them yet can buy in cheaply.
Yeah, there are some possible grim side effects, but they mostly have to do with currently conditioned human behavior and its reaction to change. The behavior problems can be addressed independently of the financial system. The real benefits of Bitcoin that cause positive behavioral changes will overshadow the negative in the short term. Ultimately, we are people with our foibles. It will take something more drastic than Bitcoin to change that.
Very interesting read - but to be trusthful, while I might agree with you, there is no point in predicting the future and then try and avoid the future you've imagined!
You have no idea what everyone else is planning for the same future!
You have no idea what everyone else is planning for the same future!
You are one grim SOB. 'Bleak' and 'dystopian' doesn't even begin to cover it...
I suppose somebody has to think of this stuff though.
[n.b., "utopian" is in my browser's spell-checker by default. "Dystopian" is not. Curious.]
I suppose somebody has to think of this stuff though.
[n.b., "utopian" is in my browser's spell-checker by default. "Dystopian" is not. Curious.]
I have seen the future of Bitcoin, and it is bleak.
The Promise of Bitcoin
If you were to peak into my bedroom at night (please don’t), there’s a good chance you would see my wife sleeping soundly while I stare at the ceiling, running thought experiments about where Bitcoin is going. Like many other people, I have come to the conclusion that distributed currencies like Bitcoin are going to eventually be recognized as the most important technological innovation of the decade, if not the century. It seems clear to me that the rise of distributed currencies presents the biggest (and riskiest) investment opportunity I am likely to see in my lifetime; perhaps in a thousand lifetimes. It is critically important to understand where Bitcoin is going, and I am determined to do so.
My hundreds of hours of thought experiments have been productive. I published a whitepaper about the future of Bitcoin, and because of that paper I’ll have the great privilege of sitting on the “Bitcoin in the Future” panel at the 2013 Bitcoin Conference in San Jose. Through these years of deliberation I have satisfied myself that the answer to the “Trillion Dollar Question” of whether any form of distributed currency can ever achieve a stable price, is “yes”. (There are three ways this will happen, as I have written elsewhere).
I have been predicting for years that the world’s first trillionaire by USD valuation will be an early investor in distributed currency — quite possibly Satoshi Nakamoto, whoever he/she/it/they may be. I own a few bitcoins, and I intend to keep them until I find a more attractive investment (that is, I want to invest in whatever replaces bitcoin or builds on top of it).
To many people, this sounds like an implausibly rosy future, and for early adopters that is true — it feels like winning the lottery every day. However, for most other people, the ascendancy of distributed currency systems will feel like a disaster. If you are involved in Bitcoin now, you should prepare to be almost universally hated someday.
In this article, we will examine a few simple thought experiments to show how the rise of distributed currencies such as bitcoin could create massive social upheaval due to governments’ rapidly degrading capability to fulfill their core functions of taxation and regulation of commerce. We’ll see how the end result could be extremely painful for common citizens due to previously unimaginable wealth disparities, hyperinflation of previously stable government-backed fiat currencies, and a greatly empowered criminal class.
The Bleak Future of Fiat Currencies
Anarchists and hardcore libertarians love Bitcoin, but most people outside those circles are not in favor of completely doing away with their government. If you aren’t part of a fringe political movement, chances are there is something the government does that you like, whether it’s handing out entitlement money, killing enemies, putting people in prison, building dams and roads, funding research, or any number of other things. The government can do these things because the government can collect taxes, which in turn they can do because the flows of money are highly regulated and tracked at every level. Whether you are collecting a paycheck, buying furniture, cashing out investments, or simply dying and leaving an inheritance, the government knows about it and takes a cut.
For our first thought experiment, let’s imagine a world where distributed currencies like bitcoin have become wildly successful due to technological advances which make them easy to use and completely stable. In this world government-issued money is as good as dead. It may take a few years for everyone to realize it, but there will come a point when the ever-increasing outflows of money from fiat money into untaxable, unseizable decentralized currency will reach a tipping point, and we’ll have a financial panic like the world has never seen. Frightened lawmakers and banks will try to stop people from cashing out, but that will just increase the panic. Those who don’t get out before the door closes will be in dire straits indeed. This is the ultimate bank run — the run on the world’s central banks, and who could possibly step in and restore order?
When people think of hyperinflation, they usually envision a Zimbabwean printing press running around the clock in the dark corner of a mud hut, putting ever more zeroes on cheap paper. Has it ever occurred to you that hyperinflation can happen while the printing presses are off? The value of the money in your pocket is not ultimately guaranteed by your government, but by simple supply and demand. The government controls the supply, and we control the demand. If demand falls precipitously, we have hyperinflation without ever needing to print another dollar or euro. If people start fleeing government currencies en masse, hyperinflation is the inevitable result.
The good news is that you don’t need to worry about current government debt in this scenario. If government currencies lose their value rapidly, debts which previously seemed overwhelming suddenly become much more manageable. Perhaps your debt-laden government will someday completely pay off it’s national debt by simply selling a few gold bars and a couple national parks.
The Bleak Future of Retirement
For our next thought experiment, let’s consider what will happen to Grandma. For her whole life, she has carefully saved her money, and now she is living in reasonable comfort. She gets money and health care from the government, and she has her own savings to fall back on. Grandma has done everything right, including taking her savings out of the stock market; most of her savings are now invested in the safest asset known to man: U.S. Treasury Bonds.
Rather suddenly, things start to go wrong. At the same time all her expenses start skyrocketing, the government has a liquidity crisis; they are having trouble collecting taxes and can no longer pay for her health care. Her savings are still “safe” in the sense that she will get U.S. Dollars out of them, but that is little comfort when those dollars which should have lasted years can barely pay her weekly grocery bill.
Grandma’s retirement has been sabotaged by the rise of a new kind of money that she can’t even begin to understand. All she knows is that she did everything right, and now she has nothing.
The Bleak Future Wealth Disparities
All the world’s wealth has essentially been stolen, but by whom? By you, dear reader.
We’ll be very lucky if we aren’t all rounded up and summarily executed. Thankfully, you’ll be able to use some of that money to purchase protection, but I’m not at all convinced that it will be enough. A wrathful government backed by an enraged population is a fearful enemy. Satoshi foresaw this long ago, and I doubt he/she/it/they will ever voluntarily come into the light.
If there are enough of us, and we are very careful and charming, we may be physically safe. However, the massive displacement of wealth will still have some awful consequences. People argue all the time about the societal benefits and drawbacks of wealth disparities, and the rise of distributed currencies will create disparities that previously did not seem possible. It seems clear that there will be a lot of jobs created by the new wealthy, but whether the average person is better off or not, one thing is sure to rise: resentment. What right do we have to take all the wealth of the world and put it in our pockets? Sure, a nifty new idea should pay off for early visionaries, but nobody ever expected a new idea to suck all the wealth out of the world like a financial black hole!
The Bleak Future of Law Enforcement
This is where things get really bleak. Currently distributed currencies facilitate money laundering, black market commerce (the Silk Road), and insider trading (TorBroker). These applications in their current form are just a snowflake on the tip of the iceberg. Not only will they get MUCH bigger, but we will see applications which are much less savory. Historically, the “Dark Net” accessible by Tor and private networks has been nothing more than a hidey-hole for illegal files and a hangout for paranoid schizophrenics, but it is quickly becoming the platform of choice for large-scale illegal commerce.
For this thought experiment, we will imagine that your child has been kidnapped and put up for sale on “TorSlaver”. Their business plan is to kidnap children and sell them to the highest bidder, whether parent or pedophile. The winning bidder is sent the location of the child, probably bound and gagged and dumped somewhere. As long as they don’t get caught doing the kidnapping, the kidnappers can do this again and again with complete impunity. Once someone proves it can be done, copycats will come out of the woodwork, and it won’t matter if the first mover gets caught.
As a parent of three small children, I cannot describe to you how awful this makes me feel. I have always been a very reluctant bitcoin investor, for this very reason. I don’t invest in bitcoin because I think it will bring about a happy utopian world. Quite the opposite. I invest in bitcoin because the rise of distributed currency is inevitable, and owning some bitcoins seems to be the best way to prepare for the chaos ahead. And just maybe, if I position myself correctly, I can make things a little less awful.
The Government Strikes Back
Does anyone really expect the government to sit back quietly and watch while their currency is debased, terrorism is funded, and children are kidnapped? The only question is when and how they will strike back against these forces. While the government does have a lot of options, ultimately those options only slow things down. At some point, we collectively with our governments face a difficult choice between trying to survive this deadly storm or attempting to destroy all decentralized computer networks (including the internet). The former seems unthinkable, the latter, impossible.
I wouldn’t be surprised if this chaos gives rise to a strong, centralized, one-world government which gets its revenues by tightly reigning in freedom of commerce in order to collect taxes. For instance, I will not be surprised to see a requirement someday that every person buying or selling have an implant which tightly binds their identity to the sale. Perhaps the implant will even be located on the back of the right hand or the forehead! This may seem repugnant to you now, but wait until you have lived in the storm for a while before you call it impossible. The natural reaction to the deadly chaos of decentralized currency is for the populace to embrace increasingly centralized controls on commerce. The battle lines are only just starting to be drawn, and your guess is as good as mine for how it will play out.
What Should We Do?
We need people thinking about this. I’ll admit that many of the things I wrote about may not happen at all, or may happen very differently than I imagine. However, there are lots of people touting the fantastic benefits that bitcoin and its children can give us, and I don’t see anybody talking about how bad things could potentially get.
We need solutions. When the government finally starts taking decentralized currency seriously, it will probably be doing so in a state of panic. We need to be advising governments now about how they can survive the storm and protect their populace. We need to think of ways the government can pay for its most critical operations, and what legislation makes sense to mitigate these new risks while preserving as much freedom as we can.
The Lifeboat Foundation is attempting to provide this thinking, advice, and solutions. They are already getting ready for a new advisory board, culled from computer scientists, economists, and bitcoin experts. If you make a fortune from your investments in decentralized currency, I urge you to consider how you can help all the people harmed by these rapid changes. Many bitcoin enthusiasts seem to think they will get to retire on a private island with a harem and a stable of Italian sports cars. This is wrong. Bitcoin investors need to someday become bitcoin philanthropists, and our giving needs to be targeted at helping all the people we have harmed. The Lifeboat Foundation is one option, but I’m sure there will be others.
I first published this article on the blog of the Lifeboat Foundation: http://lifeboat.com/blog/2013/04/bitcoins-dystopian-future
Reddit version is here: http://www.reddit.com/r/Bitcoin/comments/1cos8x/bitcoins_dystopian_future/
tl;dr: Wildly successful distributed currencies could hurt a lot of people.
The Promise of Bitcoin
If you were to peak into my bedroom at night (please don’t), there’s a good chance you would see my wife sleeping soundly while I stare at the ceiling, running thought experiments about where Bitcoin is going. Like many other people, I have come to the conclusion that distributed currencies like Bitcoin are going to eventually be recognized as the most important technological innovation of the decade, if not the century. It seems clear to me that the rise of distributed currencies presents the biggest (and riskiest) investment opportunity I am likely to see in my lifetime; perhaps in a thousand lifetimes. It is critically important to understand where Bitcoin is going, and I am determined to do so.
My hundreds of hours of thought experiments have been productive. I published a whitepaper about the future of Bitcoin, and because of that paper I’ll have the great privilege of sitting on the “Bitcoin in the Future” panel at the 2013 Bitcoin Conference in San Jose. Through these years of deliberation I have satisfied myself that the answer to the “Trillion Dollar Question” of whether any form of distributed currency can ever achieve a stable price, is “yes”. (There are three ways this will happen, as I have written elsewhere).
I have been predicting for years that the world’s first trillionaire by USD valuation will be an early investor in distributed currency — quite possibly Satoshi Nakamoto, whoever he/she/it/they may be. I own a few bitcoins, and I intend to keep them until I find a more attractive investment (that is, I want to invest in whatever replaces bitcoin or builds on top of it).
To many people, this sounds like an implausibly rosy future, and for early adopters that is true — it feels like winning the lottery every day. However, for most other people, the ascendancy of distributed currency systems will feel like a disaster. If you are involved in Bitcoin now, you should prepare to be almost universally hated someday.
In this article, we will examine a few simple thought experiments to show how the rise of distributed currencies such as bitcoin could create massive social upheaval due to governments’ rapidly degrading capability to fulfill their core functions of taxation and regulation of commerce. We’ll see how the end result could be extremely painful for common citizens due to previously unimaginable wealth disparities, hyperinflation of previously stable government-backed fiat currencies, and a greatly empowered criminal class.
The Bleak Future of Fiat Currencies
Anarchists and hardcore libertarians love Bitcoin, but most people outside those circles are not in favor of completely doing away with their government. If you aren’t part of a fringe political movement, chances are there is something the government does that you like, whether it’s handing out entitlement money, killing enemies, putting people in prison, building dams and roads, funding research, or any number of other things. The government can do these things because the government can collect taxes, which in turn they can do because the flows of money are highly regulated and tracked at every level. Whether you are collecting a paycheck, buying furniture, cashing out investments, or simply dying and leaving an inheritance, the government knows about it and takes a cut.
For our first thought experiment, let’s imagine a world where distributed currencies like bitcoin have become wildly successful due to technological advances which make them easy to use and completely stable. In this world government-issued money is as good as dead. It may take a few years for everyone to realize it, but there will come a point when the ever-increasing outflows of money from fiat money into untaxable, unseizable decentralized currency will reach a tipping point, and we’ll have a financial panic like the world has never seen. Frightened lawmakers and banks will try to stop people from cashing out, but that will just increase the panic. Those who don’t get out before the door closes will be in dire straits indeed. This is the ultimate bank run — the run on the world’s central banks, and who could possibly step in and restore order?
When people think of hyperinflation, they usually envision a Zimbabwean printing press running around the clock in the dark corner of a mud hut, putting ever more zeroes on cheap paper. Has it ever occurred to you that hyperinflation can happen while the printing presses are off? The value of the money in your pocket is not ultimately guaranteed by your government, but by simple supply and demand. The government controls the supply, and we control the demand. If demand falls precipitously, we have hyperinflation without ever needing to print another dollar or euro. If people start fleeing government currencies en masse, hyperinflation is the inevitable result.
The good news is that you don’t need to worry about current government debt in this scenario. If government currencies lose their value rapidly, debts which previously seemed overwhelming suddenly become much more manageable. Perhaps your debt-laden government will someday completely pay off it’s national debt by simply selling a few gold bars and a couple national parks.
The Bleak Future of Retirement
For our next thought experiment, let’s consider what will happen to Grandma. For her whole life, she has carefully saved her money, and now she is living in reasonable comfort. She gets money and health care from the government, and she has her own savings to fall back on. Grandma has done everything right, including taking her savings out of the stock market; most of her savings are now invested in the safest asset known to man: U.S. Treasury Bonds.
Rather suddenly, things start to go wrong. At the same time all her expenses start skyrocketing, the government has a liquidity crisis; they are having trouble collecting taxes and can no longer pay for her health care. Her savings are still “safe” in the sense that she will get U.S. Dollars out of them, but that is little comfort when those dollars which should have lasted years can barely pay her weekly grocery bill.
Grandma’s retirement has been sabotaged by the rise of a new kind of money that she can’t even begin to understand. All she knows is that she did everything right, and now she has nothing.
The Bleak Future Wealth Disparities
All the world’s wealth has essentially been stolen, but by whom? By you, dear reader.
We’ll be very lucky if we aren’t all rounded up and summarily executed. Thankfully, you’ll be able to use some of that money to purchase protection, but I’m not at all convinced that it will be enough. A wrathful government backed by an enraged population is a fearful enemy. Satoshi foresaw this long ago, and I doubt he/she/it/they will ever voluntarily come into the light.
If there are enough of us, and we are very careful and charming, we may be physically safe. However, the massive displacement of wealth will still have some awful consequences. People argue all the time about the societal benefits and drawbacks of wealth disparities, and the rise of distributed currencies will create disparities that previously did not seem possible. It seems clear that there will be a lot of jobs created by the new wealthy, but whether the average person is better off or not, one thing is sure to rise: resentment. What right do we have to take all the wealth of the world and put it in our pockets? Sure, a nifty new idea should pay off for early visionaries, but nobody ever expected a new idea to suck all the wealth out of the world like a financial black hole!
The Bleak Future of Law Enforcement
This is where things get really bleak. Currently distributed currencies facilitate money laundering, black market commerce (the Silk Road), and insider trading (TorBroker). These applications in their current form are just a snowflake on the tip of the iceberg. Not only will they get MUCH bigger, but we will see applications which are much less savory. Historically, the “Dark Net” accessible by Tor and private networks has been nothing more than a hidey-hole for illegal files and a hangout for paranoid schizophrenics, but it is quickly becoming the platform of choice for large-scale illegal commerce.
For this thought experiment, we will imagine that your child has been kidnapped and put up for sale on “TorSlaver”. Their business plan is to kidnap children and sell them to the highest bidder, whether parent or pedophile. The winning bidder is sent the location of the child, probably bound and gagged and dumped somewhere. As long as they don’t get caught doing the kidnapping, the kidnappers can do this again and again with complete impunity. Once someone proves it can be done, copycats will come out of the woodwork, and it won’t matter if the first mover gets caught.
As a parent of three small children, I cannot describe to you how awful this makes me feel. I have always been a very reluctant bitcoin investor, for this very reason. I don’t invest in bitcoin because I think it will bring about a happy utopian world. Quite the opposite. I invest in bitcoin because the rise of distributed currency is inevitable, and owning some bitcoins seems to be the best way to prepare for the chaos ahead. And just maybe, if I position myself correctly, I can make things a little less awful.
The Government Strikes Back
Does anyone really expect the government to sit back quietly and watch while their currency is debased, terrorism is funded, and children are kidnapped? The only question is when and how they will strike back against these forces. While the government does have a lot of options, ultimately those options only slow things down. At some point, we collectively with our governments face a difficult choice between trying to survive this deadly storm or attempting to destroy all decentralized computer networks (including the internet). The former seems unthinkable, the latter, impossible.
I wouldn’t be surprised if this chaos gives rise to a strong, centralized, one-world government which gets its revenues by tightly reigning in freedom of commerce in order to collect taxes. For instance, I will not be surprised to see a requirement someday that every person buying or selling have an implant which tightly binds their identity to the sale. Perhaps the implant will even be located on the back of the right hand or the forehead! This may seem repugnant to you now, but wait until you have lived in the storm for a while before you call it impossible. The natural reaction to the deadly chaos of decentralized currency is for the populace to embrace increasingly centralized controls on commerce. The battle lines are only just starting to be drawn, and your guess is as good as mine for how it will play out.
What Should We Do?
We need people thinking about this. I’ll admit that many of the things I wrote about may not happen at all, or may happen very differently than I imagine. However, there are lots of people touting the fantastic benefits that bitcoin and its children can give us, and I don’t see anybody talking about how bad things could potentially get.
We need solutions. When the government finally starts taking decentralized currency seriously, it will probably be doing so in a state of panic. We need to be advising governments now about how they can survive the storm and protect their populace. We need to think of ways the government can pay for its most critical operations, and what legislation makes sense to mitigate these new risks while preserving as much freedom as we can.
The Lifeboat Foundation is attempting to provide this thinking, advice, and solutions. They are already getting ready for a new advisory board, culled from computer scientists, economists, and bitcoin experts. If you make a fortune from your investments in decentralized currency, I urge you to consider how you can help all the people harmed by these rapid changes. Many bitcoin enthusiasts seem to think they will get to retire on a private island with a harem and a stable of Italian sports cars. This is wrong. Bitcoin investors need to someday become bitcoin philanthropists, and our giving needs to be targeted at helping all the people we have harmed. The Lifeboat Foundation is one option, but I’m sure there will be others.
I first published this article on the blog of the Lifeboat Foundation: http://lifeboat.com/blog/2013/04/bitcoins-dystopian-future
Reddit version is here: http://www.reddit.com/r/Bitcoin/comments/1cos8x/bitcoins_dystopian_future/
tl;dr: Wildly successful distributed currencies could hurt a lot of people.
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