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Censorship Resistance

How The Federal Government Showed Me The Importance Of Bitcoin

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The government’s overreach in taking my website was a hands-on experience that taught me why Bitcoin was necessary.

Jason Harris is a world-class American glass artist and founder of Jerome Baker Designs, a leading functional glass company founded in 2003 and based in Las Vegas, Nevada. 

The feds seized my website JeromeBaker.com during Operation Pipe Dreams, which was a federal effort to bring those of us selling bongs and pipes across state lines to justice. It was 2003. There were not a lot of website seizures going on. The internet didn’t really start in earnest until 1996. There wasn’t a lot of regulation out there at first. Porn was big on the internet. And then, buying and selling drug paraphernalia caught on.

During Operation Pipe Dreams, when 55 of us were arrested including Tommy Chong, they seized my website. A Quicktime-animated American flag was placed on my website. It was a pixelated graphic, and they made it so it looked like it was flying in the wind. It read: “This website is property of the United States Department of Justice.”

It was the new equivalent of seizing my car or boat. Instead, they seized my website. I bought it back from somebody for $700. It’s like getting an old car back that got seized by the police. I feel incredibly blessed to be operating off the original domain.

Attorney General John Ashcroft stated at the time: “With the advent of the internet, the illegal drug paraphernalia industry has exploded. The drug paraphernalia business is now accessible in anyone’s home with a computer and internet access. And in homes across America we know that children and young adults are the fastest-growing internet users. Quite simply, the illegal drug paraphernalia industry has invaded the homes of families across the country without their knowledge … Today, the Organized Crime Drug Enforcement Task Force … has taken decisive steps to dismantle the illegal drug paraphernalia industry by attacking their physical, financial and internet infrastructures.”

This experience led me early on to become interested in bitcoin. I started taking bitcoin when it was probably at about $600. It was attractive to me because I could do business with different parts of the world and not be banned. Ask anyone in the cannabis industry: you’re constantly having to deal with account closures, app closures, etc. I know those in the bitcoin industry experience the same. Bitcoin was also attractive to me, because I enjoy the “gray area” quality of it.

Being able to be part of the original Silk Road, being able to be attractive to people that wanted to buy things online without being noticed, all go hand-in-hand with what I do: making bongs. I did have an inkling the bitcoin price was going to explode, so I was promoting it as much as possible as a payment method on JeromeBaker.com.

I don’t blow glass anymore, unless for a special purpose. For a time, one such special purpose was for customers who paid in bitcoin. I’d blow them a Slyme Bubbler for one bitcoin. They would send bitcoin to Jerome Baker Designs’ public bitcoin address and email a shipping address. I still remember my last bitcoin purchase for a custom piece. The price was $700.

I don’t see the same viability for other cryptocurrencies that I do with bitcoin. I accept bitcoin at my business. You can buy products with bitcoin. Tesla accepted bitcoin for a time, and I am sure they will again. Ethereum and other altcoins are more about speculation. Bitcoin has volume and velocity, and it holds value.

To me, bitcoin is the ability to be a mover and a shaker, and empowers anyone to hold a separate account with value and not have to worry about it being shut down. Bitcoin is a great currency for all markets, as we’ve seen. It not only lends itself well to high-risk industries, as had been a big part of its story, but also for nation-states looking to protect their own population’s from currency devaluation. Bitcoin is a biblical algorithm. It has changed humanity forever.

This is a guest post by Jason Harris. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

Does Bitcoin Have Intrinsic Value?

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Contrary to popular belief, value cannot exist without an evaluator. Bitcoin has both objective and subjective value which is only starting to be recognized.

Listen to various Bitcoin critics for long enough and you’ll inevitably hear the argument that Bitcoin can’t possibly succeed because it doesn’t have any intrinsic value. You can’t hold a bitcoin in your hand, you can’t wear it, you can’t do anything with it besides trade it to someone else.

Gold bugs love to point out that unlike bitcoin, gold is used in all sorts of industries such as electronics, jewelry and dentistry. Establishment fiat investors and economists love to point out that unlike stocks, bonds and farmland, bitcoin does not produce anything. However, what both groups fail to understand is that these are not bugs, but rather very key features of Bitcoin.

Intrinsic Value

To fully understand how to go about answering the question of Bitcoin’s intrinsic value, we must first define intrinsic value itself.

Investopedia defines intrinsic value as, “A measure of what an asset is worth. This measure is arrived at by means of an objective calculation or complex financial model, rather than using the current market price of the asset.”

This definition, to put it bluntly, is useless. Who decides which objective calculation or complex model to use? How do we determine which inputs and variables to include in these calculations?

There is no such thing as “intrinsic value” in the sense of an object having objective value in and of itself. As a thought experiment, think of assets typically assumed to hold intrinsic value such as gold, farmland, stocks and real estate. Now imagine a world where no humans exist. Do these assets still have value? The answer has to be no, because value only makes sense in the context of human existence.

Therefore the entire concept of intrinsic value is based upon a false premise: Value can be separated from the evaluator, when in fact the two are intrinsically intertwined.

Value cannot exist without an evaluator any more than a buyer can exist without a seller, or a heads on a coin can exist without a tails.

Think of a man stranded on a desert island who comes across a bar of gold. All alone with no one to trade with, the bar of gold is completely useless. If it were true that gold has such a thing as intrinsic, objective value then the gold bar would necessarily retain value to the man. But on the island the bar of gold has no more value to the man than does a rock of similar shape.

You may be tempted to assume something like oxygen has intrinsic value. However, when we once again remove the evaluator from the equation, the idea of oxygen having value loses its appeal. Oxygen has value because humans need it to survive. Without humans the idea of any material object containing value becomes nonsensical.

Sticking with this example, since we do give value to life and presumably always will, oxygen will always be valuable to us. But this is not the same as having intrinsic value as defined by stand-alone objective value, above and beyond human preference. However, what it does suggest is the simple fact that while man has been endowed with the ability to choose his values, he cannot escape the consequences of these values. In other words, if man values living (subjective), then he needs to value oxygen (objective).

Therefore it is nonsensical to talk about value as being either subjective or objective. Just as a transaction is not either a purchase or a sale but both, value is not either objective or subjective, but both simultaneously.

Bringing the conversation back to the realm of economics, we can say: If man values wealth preservation, then he must save his wealth in money that cannot be inflated or debased. Or likewise, if man values monetary sovereignty, then he must use money that cannot be confiscated or censored. This means any form of money with properties that best meet these criteria will then necessarily hold objective value to anyone with the corresponding subjective values.

Intrinsic Properties

With our new perspective on the relationship between the subjective and objective, it becomes more fruitful to shift the conversation away from the concept of intrinsic value and toward the concept of intrinsic properties.

The question then becomes not, “What is bitcoin’s intrinsic value?” But rather what are our individual and shared subjective values (what matters to us) and do the objective properties of bitcoin meet these values?

It is safe to assume that for the vast majority of people on Earth, wealth accumulation and preservation are valued favorably.

It is for this reason, in conjunction with its intrinsic properties, that gold has held a high monetary value for thousands of years.

Gold’s intrinsic properties of supreme durability and high degree of scarcity in the Earth’s crust launched a seemingly inevitable sequence of events whereby humans with the desire to preserve wealth would collect it and use it as money.

It was not just gold’s intrinsic properties (objective) or just humanity’s desire to preserve wealth (subjective) that caused gold to be used as money, but both simultaneously.

To determine if Bitcoin is capable of achieving and surpassing the level of success found by gold over thousands of years, we must analyze Bitcoin’s intrinsic properties. There are several intrinsic properties of Bitcoin, however for the purposes of this article I will identify and analyze four major properties.

Bitcoin’s Intrinsic Properties

1) Decentralization

Bitcoin is decentralized, meaning it has no single points of failure. Unlike a corporation which has a CEO, headquarters and a board of directors, the Bitcoin network is distributed across the entire world and no one has the power to enact unilateral changes to the protocol.

In order for anything about the Bitcoin protocol to change, the change must first take place in the hearts and minds of the users of Bitcoin. Any node in the network who attempts to change the code of Bitcoin will be rejected by the rest of the nodes. As the size of the network grows, it will get progressively more difficult for any changes to be made. Bitcoin’s core design is like cement, starting off malleable but growing more rigid each day.

2) Censorship Resistance

Bitcoin is open to anyone and cannot discriminate. At a point in time when many Western governments and corporations are fully embracing the idea of censorship, Bitcoin provides a medium in which no one can be censored because of race, politics or any beliefs at all.

Bitcoin does not and can not distinguish between transactions. Any transaction that includes a sufficient mining fee ($1.37 on average, as of March 2022) will be included in the blockchain.

3) Settlement Finality

Bitcoin aims to settle transactions every 10 minutes. One of the most overlooked but groundbreaking features of Bitcoin is its ability to perfectly and trustlessly synchronize itself across time and space. Through proof-of-work, Bitcoin utilizes the laws of thermodynamics to ensure that the system can’t be cheated.

As Gigi explains in his article titled “Bitcoin is Time,”

“Proof-of-work provides a direct connec­tion between the digital realm and the physical realm. More profoundly, it is the only connec­tion that can be estab­lished in a trust­less manner. Every­thing else will always rely on external inputs.”

No one has the power to cancel Bitcoin transactions. Once a transaction has several confirmations, it can be considered irreversible.

4) Guaranteed Scarcity

Perhaps the most well-known property of Bitcoin is its hard cap of 21 million coins. Thanks to its digital nature, Bitcoin is able to offer what no physical object can — absolute scarcity. Robert Breedlove explains further in his brilliant piece, “The Number Zero and Bitcoin,”

“The supply of any physical thing can only be limited by the time necessary to procure it: if we could flip a switch and force everyone on Earth to make their sole occupation gold mining, the supply of gold would soon soar. Unlike Bitcoin, no physical form of money could possibly guarantee a permanently fixed supply—so far as we know, absolute scarcity can only be digital.”

Unlike fiat money, the supply of which can be expanded with the click of a button by a small group of insiders, the 21 million supply cap of bitcoin is set in stone for the rest of time.

Subjective Value and Objective Properties

Now that we have outlined Bitcoin’s main intrinsic properties, the objective side of the equation, along with individual and collective human preference, the subjective side of the equation, we can unite them to finally get a clear picture of bitcoin’s value.

In its most basic sense, money is a tool which helps us to achieve certain goals. Bitcoin derives its value by being a superior tool for fulfilling these goals than any alternatives.

It has been demonstrated empirically throughout generations of civilization that wealth preservation and monetary sovereignty are two preferences shared by most people. We will define “wealth preservation” as the protection of the value and purchasing power of wealth. Monetary sovereignty is the ability for the individual to make free choices regarding the use of wealth without the threat of censorship or discrimination.

Modern-day fiat money falls short in both categories. The Federal Reserve and most other central banks have explicit mandates to debase the value of their currencies through what are known as inflation targets. In other words, currencies like the USD fail miserably at wealth preservation because they are specifically designed not to preserve wealth. It would require over $700 today to purchase what $100 was able to buy in 1970.

Our current system of fiat money relies completely on payment rails that travel through governments and banks, meaning transactions can be denied or censored for any reason. Banks can close customer accounts and governments can monitor the financial transactions of anyone they please.

Gold bugs love to assert that returning to a gold standard solves these issues. However, what they fail to mention is that it was the failure of the gold standard in the first place that brought about our current fiat system. Gold’s physical nature made it susceptible to centralization, an issue Bitcoin does not face.

Because of the luxury enjoyed by Americans and citizens of many developed countries, the benefits brought about by Bitcoin may not be as obvious as they are for many people in developing nations. Inflation in the United States has been persistent, but not devastating over the past two generations, and most people haven’t had issues with their banking services being shut down. However, after recent events in Canada and with inflation in the U.S. reaching multi-decade highs, many people are now finding that the value proposition of bitcoin is becoming too obvious to ignore.

Thousands of years ago people gradually found themselves using gold to store and transact value. Unlike modern fiat money, gold was not “decreed” to have value by any authority, but was simply chosen by people who both implicitly and explicitly recognized its superior objective monetary properties.

In the same way, Bitcoin does not need to be forced upon anyone in order for it to succeed. Gradually over time, rational humans with value preferences aligned toward wealth preservation and monetary sovereignty will automatically be drawn toward Bitcoin as a direct result of its superior objective properties.

This is a guest post by Bob Simon. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.

Contrary To Popular Claims, Bitcoin Is Alive And Well

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Bitcoin critics like to claim its failure every time there is a major price drawdown, but a true representation of the network proves otherwise.

Embittered nocoiners love to cherry-pick moments when Bitcoin doesn’t live up to arbitrary expectations. The joke’s on them as Bitcoin grows ever stronger.

Mainstream economists, pundits, journalists and others trapped in a fiat mindset never miss the opportunity to dig a grave for Bitcoin. And Bitcoin offers plenty of such opportunities: the popular site 99bitcoins tracks “Bitcoin Obituaries,” a repository of more than 400 proclamations of Bitcoin’s death from mainstream news sites, politicians and investors.

Every time the price of bitcoin falls in the midst of a crisis, it is proclaimed a horrible failure. Last time we saw that was in March 2020, when bitcoin fell from $8,000 to around $4,900 in one day. Of course, it then recovered within a month and went on to reach more than $60,000 over the course of the next 20 months, but unsurprisingly, the critics didn’t proclaim Bitcoin a huge success then.

(Source)

The most recent fall in bitcoin’s price at the outset of the Russian-Ukrainian conflict was no exception to the rule of nocoiners burying Bitcoin at every occasion. We saw a lot of tweets like the one below, accompanied by articles on mainstream media such as CNBC’s “The Case For Bitcoin As ‘Digital Gold’ Is Falling Apart.” 

(Source)

We can always cherry-pick moments like these, when several hours of price action exactly match our bias. I did the same once the price trends of bitcoin and gold reversed:

(Source)

This is just to point out that judging any asset with the attention span of a goldfish is ludicrous. Every person who takes themselves seriously should consider things with a broader perspective, taking into account both the past price performance and the future value proposition.

Bitcoin’s Value Proposition Doesn’t Fit In One Chart

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We’ve all seen the lifetime price chart: the number goes massively up with some bumps on the road. But referring critics only to the price history doesn’t usually work. They could rightly point out the age-old adage that “past performance is no guarantee of future results.”

Full appreciation of Bitcoin takes not only price, but also value into consideration. Price is just a current intersection of market supply and demand, whereas value is needs that are fulfilled, preferences that are met, goals that are reached — all made possible thanks to a particular valuable good, in this case bitcoin.

So what are the needs that Bitcoin helps fulfill?

Bitcoin has two crucial improvements over the current financial system.

“Inflation is always and everywhere a monetary phenomenon, in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.” – Milton Friedman 

First, Bitcoin prevents perpetual inflation. It used to be normal for several generations to buy a can of soda for the same price of 5 cents. After the politicians severed the remaining ties to gold in 1971, the price growth has been rampant: the U.S. price level has grown seven times over the last 50 years. And that’s just in the United States; the inflation has always been even more intense in other parts of the world. As Milton Friedman pointed out, the cause for the perpetual inflation is monetary policy. There is no end to fiat money printing and no hard limit on its issuance. While fiat monetary policy is decided by a small cabal of central bankers based on their subjective view of the economy, Bitcoin’s monetary policy is set in stone: the issuance algorithm is administered by the world’s largest collective super computer and enforced by thousands of independently run nodes all around the world. That is why we can say that bitcoin’s issuance cap of 21 million is credible.

Second, Bitcoin is resistant to financial censorship and has a high degree of fault tolerance. In the past few weeks, we’ve seen a fair share of fiat failing as a reliable medium of exchange. First in Canada, where peaceful protesters and their supporters had their bank accounts frozen, then in Ukraine and Russia, where ATM withdrawals were limited, digital payments were suspended, and bank runs commenced. Bitcoin, on the other hand, isn’t subject to a particular jurisdiction of geographical infrastructure: when China expelled 50% of the global mining hash rate last year, bitcoin users barely noticed. Moreover, when a particular country bans bitcoin, it still thrives underground, with users trading and transacting in a peer-to-peer fashion. When fiat fails as a medium of exchange, bitcoin becomes the best option available to ordinary people.

As we can see in various countries over the world — West and East alike — your savings, your operating capital, your money to feed the family can become inaccessible overnight, without any prior warning. This can result in life-threatening situations. Sufficient cash reserves can prevent your family from going immediately hungry; a sufficient bitcoin stash can help you start anew if your country ceases to be a livable place. 

Patience Pays Off

When you understand Bitcoin’s role in the world of ever-more dysfunctional fiat currencies, the short-term dips and alleged failure to thrive in an acute crisis become laughable. Bitcoin proves valuable for those who know why and how to use it. Some may need its long-term store-of-value properties, others may use it to save their lives when the world around them falls apart. These uses may not be intuitive to the ivory tower commenters with cushy jobs and subsidized pension savings plans, but for others they become more and more obvious.

As always, keep in mind that only bitcoin in your exclusive control is truly yours. Bitcoin kept on an exchange isn’t yours; use the best-in-class open-source hardware wallets to maintain your sovereignty in the adversarial environment of today.

This is a guest post by Josef Tětek. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.

Bitcoin Is The Trojan Horse For A Decentralized Internet

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The hosts of “Simply Bitcoin” discuss how the censorship-resistant nature of Bitcoin can lead to a disintermediated internet where free speech reigns.

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Simply Bitcoin” hosts Nico and Phil joined the “Bitcoin Magazine Podcast” for a discussion about censorship and global events.

Starting the podcast off with freedom at the forefront, the hosts of “Simply Bitcoin” say, “I think Bitcoin is going to usher in this mental idea that no human being should have the right to censor another human being’s speech. Period. And speech includes your ability to transact with somebody else.”

They go on to posit that Bitcoin could be the Trojan horse for a decentralized internet because communications can go from one person to a server to another person with Bitcoin nodes acting as that server, instead of a centralized hub.

The speakers move on to discuss their concerns about commodity prices and how those relate to the rising costs of everything else. When oil prices rise, the price of shipping goods goes up, resulting in increased prices. Wheat is another commodity that impacts the global food supply. Food scarcity and the ensuing hunger can lead to societal unrest which may bring about Orweillian means of control reacting to actions of hungry citizens. Phil and Nico recognize that even discussing this possibility makes them sound like conspiracy theorists.

Phil and Nico make the bold claim, “In 2003, if social media was around, we would not have invaded Iraq.” Because of the media’s ability to control information as well as the narrative around it, meant they could act as gatekeepers of information. The internet has disintermediated the legacy media and they don’t know how to control information anymore, so they are relying on censorship.

If Bitcoin can bring about a means of communicating and transacting with anyone around the globe without relying on a centralized internet, then it may create a world with incorruptible freedom of speech.

Bitcoin Was Made For This: The Apex Of Apolitical

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The entirety of Bitcoin’s existence is dedicated to its usability by anyone regardless of their intent.

Satoshi Nakamoto’s invention was made to be apolitical.

It was made for users to avoid being held monetary hostage to rulers who didn’t approve of their transactions or their political defiance. Its existence means that despicable dictators can’t take funds from you or stop you from transacting over its apolitical payment rails.

Flashy words like “uncensorable” and “without a trusted third party” might not mean much to rule-abiding Westerners who have never had their accounts seized, their payments blocked, or their assets sanctioned. For some of the millions of people living under questionable regimes worldwide, the lifeline that Bitcoin provided has been the difference between life and death, survival and starvation. The ability to get out, and to avoid the controls that rulers place on you, was always Bitcoin’s greatest promise.

In recent years, the examples where Bitcoin has excelled in humanitarianism are plenty and Bitcoiners have proudly treasured this, showing how the orange coin was above the rest of the cryptosphere’s memes and pump-and-dump schemes. Bitcoin has allowed individuals and small, marginalized groups to stand up to dictators, finance Belarusian insurgents, let Nigerian web designers bypass their corrupt regime, allow Argentinians a workable store of value and let them avoid capital controls and fix Palestinians’ monetary headaches. Salvadorians have since last year been able to remit funds back to El Salvador better and cheaper than they could before.

Simply put: Bitcoin fights “monetary colonialism.” It is freedom money.

We got a preview of that point earlier this year with the Canadian truckers and their crowdfunding hassles. A government with a strong political agenda turned the apparatus of the state onto the protesters of which its leaders so aggressively disapproved – calling them names, prosecuting them for made-up charges, blocking payments, voiding insurance policies, and seizing funds.

Bitcoiners hailed to the rescue, proudly displaying how Bitcoin is above such pesky political conflict: as an apolitical money, it can step into the monetary void, even when the powers of government and a captured banking system stood against the protestors.

A few weeks later, it was time for another test – and a much bigger one: the sanctions imposed by coordinated Western powers onto Russia for its attack on Ukraine. With Bitcoin poised to play center stage against pundits who think they can shape the world by words, sanctions, virtue-signaling, and self-flagellation, reality is a harsh mistress. In “The Fiat Standard,” Dr. Saifedean Ammous correctly argues that Bitcoin is a “shattering blow to the worldview of those who think reality comes out of fiat” – by which he means, among other things, government rules and legal proclamations. The centralizing mindset which thinks you can merely issue some government edicts, speak some words, and justice be done, will have a hard time arguing with the cryptographically obstinate nature of Bitcoin.

BTC doesn’t care about your opinions, or who you think should be financially cut off from the rest of the world. Instead, it works: confirming block after valid block that contains transactions that you may or may not approve of.

Now that the shoe is suddenly on the other authoritarian foot, we quickly learn who held Bitcoins’ principles consistently and who were merely using them for some other undisclosed end. The problem with (vast) government power is that eventually some distasteful person will turn those powers on you – by which time it’s too late for you to regret ever supporting the expansion of its influence.

“No, Bitcoin Won’t Save Russia From Western Sanctions,” we learn from Matthew Pines and David Zell at the Bitcoin Policy Institute, and one quickly wonders what happened to all the high-flying ideals of two minutes ago. If Bitcoin can’t overcome government sanctions, if Bitcoin isn’t capable of offering refuge from currency collapse, if Bitcoin doesn’t offer an escape from all-encompassing government powers – what good is it?

They offer a few reasonable predictions – the most convincing of which are the China connection and that Russia holds lots of gold. While tricky to ship abroad in exchange for goods and services, gold, explains Zoltan Pozsar to Odd Lots “… doesn’t have to be sold; it can be repo’d – just like any other financial instrument.” All you need is a willing financial system somewhere, happy to “… reverse-in gold in a repo transaction for you” to make payments.

Their two substantive points on why Bitcoin can’t help a censored country escape sanctions is that

  1. Bitcoin’s market capitalization is too small ($800 billion compared to $400 billion of Russian annual exports), and
  2. Doing so would exaggerate BTC’s volatility, which makes it “hard for Russia to predict or manage its commodity revenues.”

The second point is the least convincing. The entry of a new big buyer would make BTC’s volatility worse…? Besides: compared to what? On the sanctioned SWIFT payments, the option is no commodity revenue management at all.

The first point sounds clever, but is simply conflating two factors that have no necessary connection. Market cap is a stock and exports are a flow, so comparing the two makes no sense. Even if it did, onboarding an entire country’s industry would probably both increase price (and so market cap) and induce some prior holders to dispose of some of their coins. Thankfully, Bitcoin’s velocity is not measured at 1 (and it’s very close to the velocity measures for the dollar): a given amount of sats can circulate many times in an economy. Besides, the relevant trade goes in the opposite direction of what Pines’ and Zell’s argument requires: sanctions – with or without the access of chain analysis firms – don’t prevent a Dutch or Chinese importer from acquiring bitcoin, taking it off the exchanges, and then sending it to industry giants like Norilsk Nickel or Gazprom in exchange for copper and oil shipments.

Can ships be intercepted, oil pipelines cut off, copper deliveries seized? Sure. There is even some indication that, privately, global shipping companies are refraining from doing business with Russian counterparts. That’s a real-world interception that Bitcoin could never address; all Bitcoin does is getting around the monetary obstacles you so naively put in Russia’s way.

If Bitcoin works only with the regime’s permission, it isn’t working. And if you think that’s a good idea – in this conflict or any other – per Aleks Svetski – you should probably sell your bitcoin.

What the Russian sanctions are reminding the world – and the Canadian truckers’ crowdfunding issues a few weeks ago as a warm-up – is that money you thought was yours might not be, when your accounts get frozen and payments blocked by those who don’t like you. Even ostensibly self-custodial bitcoin held through MetaMask is now subject to some restrictions as its provider Infura has said that they will uphold U.S. sanctions.

“But This Is Different! Putin Is Evil!”

Sure, whatever. Bitcoin doesn’t care.

All monies are for enemies, and the more despicable the enemy, the greater the proof of bitcoin’s viability. Whatever the crimes of this masculine, horse-riding strongman, it’s the talking heads with outsized control over the USD monetary system that just showed how terrible and contingent their money is. When push comes to shove and you irk them once too many times, they’ll just limit your usage. They may swiftly and brutally decide that the money you thought was yours no longer is.

“All of the things that make crypto appealing to those under siege apply to those doing the sieging as well,” as Rebecca Heilweil and Emily Stewart report for Vox. Bitcoin doesn’t take sides:

“Whether it’s good or bad in wartime, crypto is doing what its proponents say it does — giving people a way to work outside of traditional financial institutions — and there’s no sign that will change anytime soon.”

For years, Iran has successfully used bitcoin to avoid sanctions, in a testament to the apolitical nature of BTC. North Korea allegedly uses all kinds of cryptocurrency to circumvent the obstacles the rest of the world has placed against its regimes. Only time will tell if in this conflict Russia – its people, companies, banks, and government – can follow suit.

Sanctions Don’t Work

In the last week or so, sanctions ostensibly designed to punish Russia for its behavior have been implemented. As policy tools to inflict economic damage on your opponent, it is not clear that they work – especially for a large, commodity-exporting, surplus country like Russia.

For Bloomberg, Jenny Paris writes:

“… the risk of hurting global investors and other innocent bystanders more than the intended target is very real. European banks, companies and countries that rely on SWIFT for fuel transactions would feel the impact along with ordinary Russian citizens.”

What’s so ironic about the tough guy stance taken by most international organizations is that last time around – Crimea, 2014 – writing for NATO Review, Edward Hunter Christie concluded that falling oil prices were evidence that sanctions worked. Back then, Russia’s gross domestic product fell and low oil prices severely hurt its export revenue. What, one might ask, does that imply about this round of sanctions? Oil prices have been on an absolute tear, aluminum setting an all-time record, and nickel at an 11-year high – are we sure these policies are designed to impoverish Russia and not enrich it?

Even more ironic are the many announcements by Western investors and companies with interests in Russia that they’re ridding themselves of these assets – at no or any price. The world’s largest fund, the Norwegian oil fund, wants out of any and all Russian exposure at rock-bottom prices; the British oil and gas company BP announced on February 27 that it exits its stake in Russian energy company Rosneft, a loss of assets worth some $25 billion – followed by similar exits from Exxon and Shell.

But to whom are you selling? There’s no buyer; brokers and clearing institutions won’t touch your shares. Maybe you just write off the loss or simply tear up the shares (or for maximum trolling: donate them to a Ukrainian charity); maybe they become a cheap entry for deep-pocketed and less moralistic others, say, the Qatari wealth fund. Exxon, for instance, seems keen on just handing back the shares of their Russian ventures. How does that hurt Russia, or prevent her from waging war?

“Thank you kindly,” says whoever ultimately buys their stakes as well as the Russian companies now in full control of their oil-processing facilities. No longer needing to revenue-share with Western counterparts, it’s hard to see that this was a loss for anyone but shareholders of Western oil companies. The always sharp Matt Levine reflects:

“… if you own Russian bonds it seems increasingly plausible that you might not get paid interest, because it might be illegal in Russia for the issuer to pay interest, and illegal in the West for intermediaries to pass along that interest.”

And even better:

“I suppose the last time major land wars were fought in Europe the settlement system for funding those wars consisted in some sense of moving around piles of gold, and you sort of knew what you were getting. Perhaps the next time major land wars are fought in Europe the settlement system will consist of transparent uncensorable transfers on the blockchain, and you will sort of know what you are getting. But the current settlement system for international financial transfers consists of book entries at regulated and somewhat policize-able central intermediaries, and it’s not clear anyone quite knows how they’re supposed to respond to a war.”

Bitcoin doesn’t take sides. Bitcoin doesn’t care about your opinion, or the opinion that others have of you. Bitcoin cares about its consensus rules, whether the proposed block is valid and the transactions therein made by entities wielding their private keys.

If you truly desire uncensorable freedom money, some despicable types are going to use it. And that’s a good thing.

This is a guest post by Joakim Book. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.