With inflation rates in the US recently topping 8.5% and major fiat currencies struggling to retain their worth, one Bitcoin advocate is confident he has backed the right horse – but fears that the idea could be hijacked by states and used to effectively enslave populations.
“Fiat money is ultimately nothing,” says Samson Mow, recent founder of the Bitcoin advocate group JAN3 and designer of the cryptocurrency-based massively multiplayer online (MMO) game Infinite Fleet. “It is deemed to be in existence and literally minted out of thin air. That is the nature of the money-printing system today: you don't need to print physical bills because it is already digital – all you do is push a button and inflate the money supply.”
His new company has an ambitious goal – to make “hyperbitcoinization” – the moment when Bitcoin achieves its ‘singularity’ moment and overtakes fiat as the main system of global money – a reality. The space JAN3 operates in is abuzz with this fresh term, with some pundits even predicting that hyperbitcoinization will take place by the middle of the century.
Mow believes it will happen sooner than that. His rebuttal to the naysayers is to point to the pioneer digi-coin’s resilient performance in a year of seismic shocks, prompted by Russia’s decision to attack Ukraine and the economic fallout that ensued. Since March this year, Bitcoin has remained above $20,000 according to the 200-week moving average benchmark.
That said, Bitcoin has proved quite volatile over the past twelve months. Peaking at an all-time high of $68,000 one year ago, it dropped back to around $33,000 in January. As at the time of writing, it’s valuation is roughly half that – but when assessed across the moving average, it would appear that, for now at least, the digital currency is proving equal to the task of surviving in troubled times.
"Fiat money is ultimately nothing. It is deemed to be in existence and literally minted out of thin air. You don't need to print physical bills because it is already digital."Samson Mow, CEO of JAN3
Mow believes this 200-week aggregate of valuations constitutes a floor of around $20,000 below which Bitcoin is now unlikely to fall significantly, making it a stable asset in which to invest during uncertain economic times.
“Historically the floor is the moving average,” he says. “I just checked earlier today, the average is about $23,800 right now. It could go below – there's always this volatility – but if you look at the last nine months it's hovering pretty close, sometimes above or a little bit below, but in this five-month mark it's been relatively stable, in a time in which currencies around the world are going out of control. So if that doesn't signal for you that Bitcoin is a safe haven, I'm not sure what will.”
Mow believes the spiraling inflation crisis will prompt what he calls “a flight to hard assets” that will spur the move towards Bitcoin, as more investors seek a stable alternative to fiat currencies.
“It's just a matter of time – as inflation starts to really kick in and accelerate, the move to Bitcoin is going to accelerate, and I don't see that stopping,” he says. “There's no way to stop it, because people automatically flock to ways to store their money, because time is money, money is time. Nobody wants to just give it up without a fight.”
Easy money isn’t sound money
Talking to Mow, it seems apparent that two key themes preoccupy him. The first is what he calls “sound money” – currency that has a stable, dependable value that can restore public confidence in the entity for which they trade their time and labor power. The second, in keeping with Bitcoin’s original libertarian ethos, is freedom. The latter concern informs Mow’s inherent distrust of state attempts to mint their own versions of cryptocurrency, commonly referred to as central bank digital currencies (CBDCs).
“I actually don't have a problem with a state-backed stablecoin,” he says, referring to digital coins that are in effect pegged to traditional fiat denominations like the US dollar. “Technology in and of itself is neither inherently good nor bad: it's what you do with it. State-backed monies already exist – we have dollars and Canadian dollars, pounds, they're all made by the state, backed by its full faith and credit. There's nothing wrong with that. The problem lies in turning the money into a mechanism for surveillance and control.”
This, he believes, is what will inevitably happen if governments forge ahead with mooted plans to develop their own centrally controlled versions of digital money, which Mow argues will by nature have to be antithetical to the peer-to-peer model championed by Bitcoin and its myriad impersonators.
“If a central bank created a CBDC using the same technology, it would not be a bad thing – it would be easily accessible, because you don't need to get anyone’s identity or create any gatekeeping, it can be accessed with open-source software,” he explains. “There's no barrier to preclude usage of that cash, and it's privacy preserving, so it still is cash – no one can tell if you spent a dollar or ten or where you spent it. But that's not what they're going for.”
Central bank slavers?
Mow cites a job advertisement posted on Canada’s central bank website a few years ago.
“They were looking to hire people to develop a Canadian CBDC, and if you read the job posting, it simply said, ‘we want it to be private – but not that private,’” he says. “There's no partial privacy, it doesn't work that way! This is why CBDCs are a bad thing – because the intention is obviously to surveil and control money. And when you give that level of power to the central bank, nothing good will come of that.”
He points to the example of Nigeria, which floated the eNaira, a centrally backed digital version of its currency, last year. According to Bloomberg, just 0.5% of the population adopted it, a fact not lost on Mow.
“They're all using Bitcoin or stablecoins, they don't want to use this thing,” he laughs. “So if you launch it and it's optional, then you are also wasting money and time – the only way people will use a CBDC is if they're forced to. Now if you force people, you have to think about all the edge cases. I'm a game designer by trade, so that's all I do – think about how things interact with each other, and what are the trickle-down or knock-on effects of any system added to another system.
"The only way people will use a central bank digital currency is if they're forced to."Mow
“So, how do you deal with tourism? Can they spend their own money, do they have some special exemption? Can they convert into the CBDC? Then what happens when they leave? How about international remittances? There's just a ton of problems with the whole idea, because when you get into the weeds it has to be mandatory, or else it won't work. All of those things that you need to do to enforce it are going to effectively enslave the population. You need perfect surveillance to get this thing functioning in the way that they would want it to.”
He appears deadly serious about the totalitarian potential of CBDCs, which could, in his opinion, give governments greater power to apply leverage against citizens deemed troublesome or subversive.
“The way to design anything is to think, can this be turned against you?” he says. “If one day you're not in power, some madman is, and you're on his shit list or bad side of the party in power – can they use this to put an end to you? The problem of money is it's so critical to our lives and our livelihood. If you live in Canada and can't access your funds, you can't pay for heating or transport. It's almost like they killed you.”
Brave old world?
His concerns about increasing state regulation and surveillance of our daily lives may be well founded, but I put it to him that – human nature being what it is, and money in all its forms arguably an iteration of that in terms of its ability to confer control of goods and services on its owner – won’t the brave new tech world of Bitcoin-dominated currency simply usher in a new era led by a new elite?
“This is a very common concern, that the new money will be centralized with a new group,” Mow admits. “I guess my counter points to that are there's no way that you can ensure everyone has a Bitcoin. People have argued that there need to be more, so everyone can have one. It's impossible to give everyone in the world equal holdings of money – simply because money is scarce, that's the nature of what sound money should be.”
That doesn’t sound too reassuring to those who might be concerned about global wealth inequality. It has been stated that Bitcoin – supposedly dreamed up more than a decade ago by the elusive mastermind(s) known as Satoshi Nakamoto – can never have more than 21 million units in circulation. According to Investopedia, in August 2022, there were an estimated 19.12 million, leaving just under 1.88 million left to be mined – a process by which Bitcoin can essentially be ‘bought’ using electricity.
"It's impossible to give everyone in the world equal holdings of money - simply because money is scarce, that's the nature of what sound money should be."Mow
However, this very mining process appears to underpin Mow’s hopes for a fairer financial system spearheaded by Bitcoin. Because anybody with access to basic hardware and easily downloadable software can theoretically become a Bitcoin miner, the ‘minting’ of this digital currency becomes more transparent, albeit not exactly free.
“Yes there is a cost, but there has to be a cost to do something,” he insists. “The key is that you have an opportunity. Equality of opportunity, not outcome. You have the opportunity to buy a miner and mine Bitcoin, and that is the most important thing.”
He points to the uptake of Bitcoin in the Global South as one example of this growing equality of opportunity. Long regarded as the poorer cousin of the northern hemisphere, taking in underprivileged countries in Latin America and sub-Saharan Africa, the region is adopting cryptocurrency, and in doing so, buying into the peer-to-peer model championed by Nakamoto’s disciples.
“A lot of the transactions in the Global South or emerging markets in Latin America, they are peer to peer,” says Mow. “And that is a very promising thing.”
Not for the people
But why is that so important? Given that central banks have regulated currencies, what is so special about a peer-to-peer transaction system, even if it does allow residents of countries like El Salvador – where Mow is heavily promoting Bitcoin – to use an alternative means of paying for goods and services?
“With Bitcoin, all you need is an old laptop,” he explains. “You can download the software, and you can check the entire transaction history, and also the supply. And this is something that has not been able to be performed by ordinary people in the past. We can't really audit any central bank in real time. We don't have permission to see the whole picture – that's not for us, even though we should.
“Technically, the central bank is part of the government and should be of the people, by the people, for the people. But we can verify Bitcoin – if I send you a transaction, you can see on your computer it is registered in the chain and settled. And this is where Bitcoin is so empowering – it brings power back to individuals.”
So he says, but again I put it to him that money has always been based on arbitrary principles even when it was literally minted from precious metals such as gold and silver. Historically a group of people with better access to whatever the unit of exchange value is deemed to be has typically emerged, causing individualism to become eroded by wealth inequalities. What makes Mow so sure Bitcoin, with its emphasis on mining, won’t end up going the same way? Or to cite the iconic Who song Won’t Get Fooled Again, isn’t this just another case of “meet the new boss – same as the old boss”?
"We can't really audit any central bank in real time. We don't have permission - even though we should."Mow
“The biggest thing is you can access Bitcoin,” he replies when I point this out. “You can't always access gold. So when we went off the gold standard [in the early 1970s], going into fiat currency, we were just along for the ride. Whereas with Bitcoin you're opting in. If you go back to the origins of gold, it wasn't some king somewhere said ‘this is good, we're going to use it.’ It originated from people ascribing value to it. Now, the value could have been: it's yellow and shiny. But it also has good properties: it does not corrode and is easy to shape and turn into a coin. So people adopted it organically at first, if you go back into human history around the world.
“The reason why it's not ‘meet the new boss same as the old boss’ is because it is permissionless,” he says. “To use a monetary system created by a king, you have to agree to use the coins that they mint and you have no visibility or access to the minting process: they can debase the currency, mix other metals.”
Nor does this apply only to archaic forms of currency such as gold and silver coins, he argues, because central banks dictate the supply of fiat currencies without any recourse to public opinion – hence the inflation of the money supply known as quantitative easing in the fallout of the sub-prime mortgage crisis of 2007 that triggered a wave of global recessions.
“You have no insight or input or control over the dollar-minting process either,” he says. “You just hope that these guys at the central bank are not going to do something crazy and devalue the currency or raise rates too much. You're basically a spectator of these systems – but with the Bitcoin system, you are a direct participant. Most people don't mine Bitcoin – but you can mine Bitcoin, that's the biggest thing. You buy mining containers for your home and run one or two, and you're securing the network. You can mine Bitcoin at the minting level, similar to a central bank or a king of old.”
Pretenders to the throne
And what about the vast hordes of pretenders to the Bitcoin throne he anticipates, known in some circles as “shitcoins?” Mow says there are at least 20,000 of them, but the surging crypto-mob doesn’t seem to worry him. Most of these, he believes, will, over time, disappear, maintaining the faintest of pulses as only those gullible or desperate enough to invest keep them from flatlining. Once again, he says it is the effort and energy required to keep Bitcoin going that makes it stand out from the pack.
“Bitcoin is mined – you still have to require an energy input to produce Bitcoin,” he says. “That's why Bitcoiners like to say this is sound money, hard money. Because there is a cost to produce it, it's not something you can just create on a whim. And this is a point that a lot of people misunderstand, because they think Bitcoin and all these other cryptocurrencies are the same thing. They're not! Those are more similar to dollars or pounds or yen – they are just minted.”
Nor is his confidence in Bitcoin shaken by claims that the mining process underpinning it makes it environmentally unsustainable because of the huge quantities of energy this requires.
“They use the narrative of: ‘we're green, it doesn't consume energy,” he says. “The dollar minting process does not consume energy [but] to maintain a dollar monetary system does – you have to maintain a strong military, an entire banking infrastructure, you have to physically truck tools around. There's a vast amount of energy that the banking industry itself probably uses – about 130TW of energy a year – and Bitcoin is roughly 110. So you're replacing a broken system with a functioning one for less energy.”
The orange pill
He’s clearly something of a Bitcoin evangelical and makes no bones about it. In the Bitcoin world, I learn, this is known as “orange pilling” – loosely taken to mean when an advocate of the cryptocurrency tries to ‘enlighten’ the uninitiated as to the inherent flaws in the fiat-based financial system and the alternative they believe will, as Mow himself puts it on JAN3’s LinkedIn profile, “fix the world.”
When I ask him about the flagship MMO game Infinite Fleet being developed by his older company, Pixelmatic, he readily acknowledges this is part of his drive to increase the uptake of Bitcoin.
“The story of the game, I'm actually trying to use that to orange pill people subtly,” he admits. “So not slapping them in the face with Bitcoin, but weaving a lot of Bitcoin elements and ethos into the story. In the Infinite Fleet universe, you have future nation states called citadels, and they operate on a very different level from countries today. It's not based on democracy, it's based on consensus. If your nation or citadel wants to take any action like a declaration of war, or any major activity, you need a super-majority. Not a 51% referendum – 95% of the people have to agree. And that directly relates to how Bitcoin works – if you want to upgrade the network, it needs a 95% super-majority of nodes to agree before anything will effectively change.”
It remains to be seen whether Mow and his fellow Bitcoin advocates will need that kind of majority for a shift from fiat to peer-to-peer currency to happen – but if the events of 2022 have taught us anything, it’s that anything is possible.
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