A Fundamental Change in the Relationship Between Individual and State
Bitcoin is right in the middle of the path to mass adoption. Many still do not understand the disruptive changes in the relationship between the state and the individual that will come with the triumphant advance and expansion of this technology.
Let’s take a look a decade into the future and sketch a likely scenario that could play out:
Western democracies are currently experiencing an economic depression that is exacerbated by a pandemic and geopolitical conflicts. Central banks are flooding the market with an unprecedented amount of freshly printed banknotes to cushion the negative effects on the real economy. The negative long-term implications caused by this are completely ignored or deliberately brushed aside by politicians whose concerns only last as long as the legislative periods for which they were elected.
Continuously increasing inflation rates, rising national debt and the impossibility to accumulate wealth due to ever-increasing tax-rates are only a few worrisome aspects of the much broader concerning status quo.
There’s a diminishing number of new enterprises being formed due to overregulation, increasing time preferences of enterprises & consumers and the corresponding waste of resources from keeping zombie companies alive.
Nevertheless, there is a way out = Bitcoin. This decentralized, censorship-resistant and nonconfiscable store of value with a fixed cap of money supply enables an escape from this broken system. It is not a hidden or unrecognized escape, but more of a traceable escape. Because Bitcoin has a publicly viewable, fully verifiable transaction ledger, it can make individuals transparent and recognizable through once-disclosed personal data being connected to transactions. Certainly this situation will change. By imposing absurd and abusive state regulations, individuals will begin to use privacy-enhancing tools and techniques. The current software for storing and sending Bitcoin will gradually integrate this technology as a fixed component in order to enable the transfer of value to the ever-growing cyber realm – without recognition in terms of traceability of a transaction and assignability to an individual identity.
States can therefore only access the assets of their population with a high degree of difficulty. Prosecution of individuals will be harder with the use of privacy techniques offering legal improvability. There is also no reasonable cost/benefit-ratio from the point of view of the state to further violently enforce their theft of individual wealth. State issued currencies will face harsh competition through Bitcoin. Therefore, in the long run, the behavior and role of the state as a monopoly of coercion dictating many aspects of its people’s lives will change fundamentally.
The individual will be empowered through Bitcoin, forcing the state to offer services for which people are willing to pay lest being abolished. Thus, the state will transform itself into an agency that is comparable to an enterprise serving the individual needs of its customers. The state’s ability to function as an unlawful gangster organization trying to mass-surveil and control everyone’s life will be over.
A deflationary money-system like Bitcoin will let a society emerge in which individuals are incentivized to save, to invest their time in productive activities which are well planned and thought out and punish resource-wasting and rash behavior. Basing on these fundamentals, the economy will flourish and prosperity will grow exponentially.
This is the rough sketch of a future we are heading for with Bitcoin becoming the dominant worldwide standard. A requirement for this playing out is to solve and implement the last part of the puzzle: easy to use privacy in Bitcoin for everyone.