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Bitcoin: Why We Struggle to Understand It

Bitcoin—is this “a thing”? How can something that cannot be seen or felt have a value, let alone be exchanged as currency or be used as money? Since it claims this use, how can it be anything more than scrip at a company store, casino tokens, or poker chips? These are questions we have when considering this digital thing, which is so very new, it seems it cannot be categorized using our experience up to this point.

Curiosity, Patience & Perspective

While the older generations may scoff at Bitcoin in bewilderment, younger people may, perhaps too readily, sneer at the mental challenge to accept the world of decentralized money. The good news is this: with effort and the will to understand our world as part of a transactional universe, we can accept and endorse this technology.

It’s frightening that Bitcoin is, by nature, detached from the material world. For example, Bitcoin is the manifold result of these three components: a digital currency native to the internet, the database or data structure called blockchain, and the network of computers each containing a copy of that blockchain to provide consensus.

Well-meaning proponents, arguing in favor of Bitcoin’s ability to transport value across space and time, don’t seem to help. We’re perplexed without the prerequisite conceptual background. When we express our concerns about Bitcoin’s stated stability and security, our worries are usually dismissed by the response, “it’s in the code.”

Understanding from Observation

The popular practice is to explain from a computer programmer’s perspective through deductive reasoning, descending from abstract principles and technical know-how, when it would be better to use inductive reasoning through observation—taking what we can already grasp and understand about money and to then progress toward something new and unexpected. So, we build upon the things that are familiar and recognizable as opposed to extracting and divining meaning from technical descriptions, only.

To this end, understanding the nature and use of money demands that both monetary history and value theory not be so esoteric or ephemeral. The origins of value and the factors contributing to its increase are of paramount importance. The mental imagery of gold or silver bullion, coins, bills of exchange, and paper currency are useful before demanding that we, the intended audience, accept the mysticism of digital money value transformation without suspicion.

Relevance of History

The past is not dead. The relationship between past and present is organic. It is possible that old sources can help us perceive a revealed truth about value offered by new technology. Writing in the late 1300s, the “father of English literature”, Geoffrey Chaucer encouraged us when he wrote, “As from the soil, each year comes new corn. So, from old books, new learning springs.” Expressing this, he offers us comfort that the wisdom of the ages can provide familiarity to the strangeness of our present time and what we may see as a disintegrating world.

This column is the first in a series exploring monetary history, interaction, exchange, and how these factors apply to Bitcoin. Here, older and younger generations have a new opportunity to learn from each other.

Let’s begin.

Bitcoin Self-Custody Prevents Value Loss Through Forced Sales

Bitcoin, Value

https://www.wikiwand.com/en/Santa_Anita_Assembly_Center

When it comes to ownership and property rights, the confidence, comfort and security that our society provides us is often times taken for granted. We may look to our Bill of Rights, additional amendments within the U.S. Constitution, case law, and believe all is well. But something happened in the spring of 1942 that, if examined closely, should shake us to our core.

We tend to think that the confiscation or the plunder of private property happens elsewhere. Surely this kind of thing doesn’t happen in the United States of America, at least not in the modern era—but it can, and it did.

Historian Dr. Larry Arnn has said that “Good history presents an accurate picture of what happened in the past with a sympathy for those who lived before us”. While keeping this thought and attitude in mind, we can look at what happened on the American Pacific coast during the Second World War and apply our understanding of how Bitcoin may help solve the threat of it happening again in our present time.

Executive Order 9066

Trauma, fear and rage followed the surprise attack at Pearl Harbor on December 7, 1941. Things were going very badly for American forces in the Pacific Theater. Great suffering would soon be endured by American prisoners of war in the Philippines, and by American civilians living in and around the capital of Manila.

On February 19, 1942, President Franklin Roosevelt signed Executive Order 9066 designating “military areas” of the continental United States and to exclude from those zones anyone perceived as a threat. The style of expression was innocuous enough, but its target was the population of Japanese descent living in the western coastal areas of the United States.

Japanese issei immigrants had not been allowed to own property themselves or be citizens, but their native born children, the nisei, could do so while being citizens by default.

Forced Sale, Abandonment and Plunder

With President Roosevelt’s Executive Order 9066, and after being given notice, Japanese-American citizens, their parents and grandparents were given one week’s time to leave their businesses and homes, bringing whatever they could carry with them and nothing more. Arriving by train, temporary assembly centers received them. The Santa Anita Race Track in Arcadia, California, would be one of those receiving centers with the horse stables serving as makeshift living quarters until permanent facilities, such as the Manzanar War Relocation Center, were available.

“We were allowed to bring whatever we could carry,” Susumo Satow recalled. “That’s it.” Everything else was to be left behind. “It was the middle of the harvest,” he remembered, “but still we had to abandon it and leave. And so we made arrangements with our friends. ‘Hey, come and pick the strawberries because they’re ready to be marketed.’ And so I imagine they did that.” They did—and kept the profits. The Satows were more fortunate than many: they owned at least some of the land they farmed—purchased in young Susumo’s name, since his elders were not citizens—and so hoped to have something to return to when the war was over. Many others lost everything, forced to sell off homes, shops, furnishings, even the clothes they couldn’t carry with them, to white buyers happy to snap them up for next to nothing. The Satows’ refrigerator went for three dollars; the family Buick fetched just twenty-five.”
Ward, Geoffrey C. “Chapter 1/A Necessary War.” Essay. In The War: An Intimate History 1941-1945, 35–35. New York, New York: Knopf, 2007.

Such was the time, situation, and circumstances for this market during these forced sales. The ownership of high value was forcibly transferred by way of unnaturally low prices in a market no longer free.

No loud outcry or protest was heard from the American public. “It’s the war”, it was probably reasoned. But these people, apart from those foreign nationals who had originally immigrated and not allowed to be citizens by law, were born American citizens. They were marginalized, their property devalued, stripped from them through sales under duress; and then they were bodily relocated to facilities where they could be concentrated and monitored.

Relevance to The Present

A precedent was set then with the potential to be a pattern followed today. The overwhelming fear and trauma of the unknown can move a population to ignore the natural rights, civil rights, or human rights of others who do not conform or comply with directives, especially when those directives come in the form of health and safety.

Today, though we may wish for justice and restitution for damages to the value of lost businesses, layoffs from jobs, etc., inflicted by the worldwide lock-downs, these things rarely come to pass in a satisfying way. After all, wealth restored to anyone at the expense of the collective is value ultimately plundered through direct taxation or plundered indirectly by way of inflation of our fiat currency supply. Genuine justice, not “social justice”, requires great care and sincerity—-we don’t want to see anything remotely as ugly as portable guillotines clattering over cobblestone streets for purposes of misplaced vengeance.

While we endeavor to create new value in our economic recovery, we have something better in which to secure and store that value—Bitcoin, held in self-custody.

It’s a technology which comes to the aid and rescue of all those whose dignity and property are under threat, no matter where they are in the world. Utilizing our energy and allocating our time, with purpose, is our priority. Now is the time to learn about Bitcoin. Use it wisely.

Bitcoin is Strategic Defense Initiative for Private Property

Bitcoin

Like the unconventional approach of President Ronald Reagan’s Strategic Defense Initiative (SDI) to combat the Soviet missile threat of the 1980s, Bitcoin is an unconventional technological leap capable of defending against the legal but unlawful taking of private property. Learning what Bitcoin is, owning it outright as opposed to an ETF proxy and applying good savings practice can make the difference between protecting the value of what you have earned and losing your assets as their value declines toward your impoverishment and yes, eventual enslavement.

Educating for Adoption and Advocacy

Like the challenges of effectively communicating to the American public about SDI and that program’s potential role which contributed to President Reagan’s consequential negotiations with the Soviet Union, engaging with people’s imagination about the meaning of value decoupled from currency price and value’s relationship to Bitcoin is a tall order.

While opening for the Pacific Bitcoin Festival 2023, Cory Klippsten echoed his fervent plea imploring us to improve our messaging toward Bitcoin adoption and advocacy. For the previous year’s opening, the CEO of Swan.com drew upon dark but accurate imagery. The appeal was earnest, the message was clear—time is of the essence. We are in a race to avert a high handed smack-down from the financial and governmental establishment keen on preserving the status quo of fiat currency dependence. Fully utilizing Bitcoin may be inevitable, eventually. But this may occur later rather than sooner unless concentrated and focused efforts are applied to educate and to persuade.

Discouraging Financial Independence: Redistributing Stolen Value

Two examples reflect the lack of ability (or the will) of our current governing powers. Not only is our value of earnings and savings lost by weakening our buying power through our currency inflation, the injustice of our authorities favoring squatters taking up residence in private property real estate, seems to have no recourse. Here, policy makers and law enforcement authorities equivocate between the ethics of lawful ownership while comparing them to the “virtues” of non rent-paying occupants who have less, and are therefore more deserving. Property devaluation results and foreclosures soon follow. From here, the faceless functionaries of bureaucracy thrive upon value confiscation, redistributed to the favored beneficiaries of the day. Alarms may be raised by some, but if the public at large is baffled in compassionate confusion spurred by inaction and pronouncements from public leaders refusing to assert ownership and property rights, the private means to pilot the course of our lives will be lost.

Comparing SDI to Bitcoin

In very broad terms, the SDI of the 1980s was, like the long development process preceding Bitcoin, the result of continued missile defense systems research begun decades earlier. Once revived, this research provided the ability to intercept incoming missiles launched toward the United States and its allies. Instead of relying on the hope of peace through a balance of power between the United States and the Soviet Union and other policies such as mutually assured destruction through an exchange of nuclear weapons, SDI was preferred for its defensive capabilities as opposed to the negative incentive of global obliteration.

The national discussion then pivoted to center around whether the US could or should defend itself from nuclear attack. Here, foreign policy critics chose to equivocate the position of peace through strength and compare it with a foreign power’s known amoral designs of global domination at any cost. Enhanced self-defense capability may anger the aggressive bully, the critics seemed to reason, so we mustn’t antagonize an aggressor lest we make him angry. Surely we can reason with him, even if he’s unreasonable.

Breaking the Impasse of Absurdity

Appeals and assurances seem to have always been the only thing available to good people who are without power while wishing to avoid conflict. But such appeals have their limits, relying on promises that always seemed to fail by bad faith and cunning sleight of hand. We have relied on principle-minded authorities, hoping those authorities were in positions of power to heed and act for the good of all for peace and prosperity.

Fortunately for us, a technology that doesn’t depend on the cooperation of corruptible authorities is available. In this way, we have the very real opportunity to avoid the financial, political and economic disasters suffered by the previous generations of past centuries.

Solving Difficulties with the Help of Technology

Both innovations were and are still savagely ridiculed for being silly and without merit. Whereas SDI was criticized as a “Star Wars” fantasy, Bitcoin is ridiculed as false and scoffed at, indicted with the charge of having no intrinsic value and therefore deserving little or no respect. SDI sought to neutralize an international threat, Bitcoin is poised to shelter the real value of our assets and private property from the threats of a domestic one.

While being realists, we have every reason to be optimistic. With the help of Bitcoin technology, futile demonstrations of self sacrifice to gain attention for the cause of true economic freedom aren’t necessary. The CEO of MicroStrategy, Michael Saylor, delivered this point in his keynote speech at the 2022 Atlas Society Gala signaling, like the flash and sparkle of a sky rocket: “We don’t want to be a martyrs. We want to be winners”.

To preserve the freedom of choice and the agency to act as a free people, humanity doesn’t need to cry out for an answer in despair. Though the wolf is at the door, he need not be allowed to cross the threshold. The time to learn about Bitcoin is now. Use it.

Bitcoin’s UTXOs Preserve Private Property

Bitcoin, Education, Value

Most people believe that value is a thing. For instance, most of them believe that the value of a gold bar is the gold bar, itself. They are distracted by the high price in money that a gold bar commands; and because of this, while the high price number commands great respect, the job of the gold bar in preserving and transmitting value is usually forgotten. However, if you are able to read this and if you are able to work your thoughts toward letting go of this distraction, not only will you will be better off for it, you will have an advantage.

Similar to a gold ingot, a value-based digital document holding information on a public ledger has a job to do. This unspent transaction output (UTXO) is the answer to most people’s questions about how a bitcoin is able to have any value at all. The UTXO is the record of fact. It is the UTXO that both embodies and retains critical information. The UTXO is valuable because the information it contains is valuable, along with the valuable energy it took to create it.

Like a gold bar, a bitcoin has the job of transmitting value across time and space. As the Internet is a protocol for information where data can be borrowed, augmented and transformed, Bitcoin is a value protocol where data of value cannot be corrupted. It is merely assigned and transferred.

The decentralized Bitcoin Network of computers and the value protocol have sovereign power, exercising dominion and control as it issues a new UTXO as a new batch of value, confirming new transactions and reconfirming UTXOs in older transactions every ten minutes.

Because you wish to purchase this digital asset as merchandise while holding your private keys in your hardware wallet, your bitcoin becomes your private property. Your UTXOs, tagged as being possessed by you, reside on the blockchain safely and securely until you decide to transfer the value contained in them to someone else.

The security benefits of cryptography and the Bitcoin Network contribute to the value of the UTXOs, as well. Because of an older and more secure form of programming was chosen for Bitcoin (stack-based programming), meddling with the Bitcoin protocol is that much more difficult.

Corruptible centralizing state and corporate authorities are threatened by growing awareness and knowledge of holding private property in this manner. Because they can’t control, commandeer or hijack this technology, they must attempt to neutralize it with negative news stories of criminal activity, threatening to ban Bitcoin while posing as defenders and keepers of the helpless.

So, as you appreciate these layers of security concerning records for value held within records of value, you come to see that your wealth, transformed into a digital asset, is private property after all. And incidentally, because bitcoin is better able to be transported over great distances in little time (intangible though it may be), this digital asset will become exponentially more valuable than its weight in gold.

Gain Confidence NOW Toward Protecting Your Wealth: Free Special Outline Highlighting Difference of Currency From Money, Readable Within 5 Minutes And Without Any Math!

Education, Money

Below is a mental process and some tools for having better conversations with your financial and legal advisors and for improving your confidence to ask better questions.

In your quest to better understand money, it makes sense to think of gold and silver as the ultimate hard money before transitioning to the hard money of the immaterial world—Bitcoin.
But before learning about Bitcoin in terms of math, value, physics, and cryptography, learn the difference of money from currency.

Arriving here on your Bitcoin journey-of-discovery, you are aware of at least one of the following:

You know that value (buying power) of currency decreases as inflation increases.
You are concerned about maintaining your savings for retirement and estate planning.
You sense that Bitcoin isn’t merely a “solution in search of a problem”.
You are determined to safeguard the value of your earnings and savings by looking into the asset, monetary and private property characteristics of Bitcoin.

Differentiating money from currency is a major step. Once you get there, focus on the long term store-of-value factor of money (Step 3) and the lack of this feature in currency. Leading up to this crucial difference, begin with the familiar similarities of currency and money (Steps 1 and 2).

Step 1 Medium of Exchange (currency & money)
Think of the most often used approach to money—buying things!
You exchange what you have for what you want. For your money to work, it must be:
1.1 Widely accepted by those exchanging with you,
1.2 Portable from one place to another,
1.3 Divisible to make change easily,
1.4 Common and Accessible for ease and convenience to quantify and express value from one market to another,
1.5 Relatively Stable from wild price fluctuation, and
1.6 Fungible so that a unit of money in your hand has the same buying power as the same amount in another’s hand.

Step 2 Unit of Account (currency & money)
Imagine how a monetary system wouldn’t work if no two coins were similar in size, shape or purity. Do you notice how consistency plays such an important role?
2.1 A Uniform Unit of Measurement gives consistency in accounting for value. Without a standard weight and measurement of material making coins, money fails to make sense.
2.2 With a Sufficient Granularity of money, a small enough fraction of a monetary unit can express the smallest value being sold.

Step 3 Store of Value (money)
And finally, notice, think and see this factor reserved for true money, alone.
To be a good store of value, money must be:
3.1 Durable—it doesn’t corrode or decay. It keeps its value for a long time over many decades.
3.2 Value Dense, holding high value and desirability without being cumbersome or burdensome to maintain. For example, think of a diamond with its value compacted in its size compared to the same value in a quantity of grain.
3.3 Maintain purchasing power by being scarce or hard to produce (as opposed to arbitrary currency creation). Think of a sum having the ability to purchase both the same quantity and quality of an item in the distant future as it does in the present.
3.4 Liquid: It can be quickly and easily sold, always in demand.

Professional advice and counsel are good and valuable. Nonetheless, avoid being too hasty to discount your own thinking, discernment and good judgement.

Creating Value: Payment in Money

Education, Value

Even when popular expressions are inaccurate, they tell us something. Such is the case when we say, “I need to make some money”. When we work, create and exchange what we produce, we earn payment, but we don’t actually make money. This long-standing habit of confusing money and value is expensive unless we make the effort to clarify one from the other.

You may think, “Ha! You’re being silly. You know what I mean when I say I need to make money. Trying to differentiate money from value is academic and pointless: it shouldn’t matter”.

Perhaps you’re right. Our lives are busy enough trying to meet our obligations and pay bills. Money is our means to meet these responsibilities. Relieving payment anxiety is our priority. Differentiating money from value may be too much for our attention to care. But this would be a mistake—it has been a mistake for centuries.

Let’s think about the quantity of something and value.

A long time ago, before widespread use of money, the surplus of a commodity like grain was casually exchanged for a different and desired commodity like wine (a surplus in possession of another). Both people had, not only enough, but an overabundance of what they possessed. Their self-interest led them to value less of what they each possessed and value more of what they both wanted: and they were willing to trade. People valued other things as they related to their own needs and to what they were willing to give to satisfy those needs for the exchange to take place, making their values not only relative but subjective. They viewed and sensed value through their self-interest, developing their own opinions and estimations.

These exchanged surpluses weren’t closely measured. They were reckoned as “good enough” for the exchange to take place. But when this kind of exchange was no longer a direct barter transaction and the amount was purchased with money, it became necessary to measure the quantity with greater accuracy.

Instead of measuring in rough estimates for barter, precise measurements made more sense while pricing in money. People got used to measuring goods down to a granular level, and naturally assumed that value itself could be treated this way, as in a fixed measure.

While seeing value expressed in price, fluctuating in parallel as quantity increased or decreased, people misconceived money and value as being the same thing.

The potential to understand true value as being relative was lost, repeatedly. Writing in 1776, the French philosopher, Condillac said, “They will speak of value and price without thinking what they are saying: they will forget that the notions they make of them can only be relative; and they will assume that they are absolute”.

So, when you labor, create, and apply your skill to whatever people are willing to pay you for, you are creating value, worthy of payment in value regardless of whether it is enumerated in money, or not.