Saturday, June 29, 2013

Bitcoin's Religion Problem

Call me Satoshi...

No I won't go that far. However, I will attempt to make a few parallels between the state of the Bitcoin market today and, well, Moby Dick, religion, Wall St., and the future of it all.

Imagine with me the typical trading day on: Magic The Gathering Online Exchange... anemic volume (calm seas), BTC-E and IRC Trollbox rumors (the birds)... and than low and someone with a lot of money or Bitcoin surfaces...the whale..."He Rises!"

In case you don't follow: I'm using what to Captain Ahab and his men as a euphemism for what happens to all the Bitcoin traders, market participants, investors and long-term holders. No one shared Ahab's fervent hatred for the White Whale, and they all give up... the same goes for Bitcoin. The religious few, the Libertarian and Occupy Wall St. crowd will pursue the financial institutions as they exist today until the ends of the earth. For them, Bitcoin is religion, for the rest, however, Bitcoin is just, well money. 

Money that's unstable, hard to understand, and with a lot more trouble than it's worth.

Around the same time Moby Dick was published, Wall St. looked something like this:
Yeah, people stood near each other and traded, occasionally by telegraph or whatever, but most importantly, they traded directly with: each other. Unlike today, when individuals trade with endless oceans of algorithmically controlled shares. 

Occasionally people got rich, more often than not people got poor, and the rest played out like a bell-curve, and over time we arrived at the present. Wall St. became the financial world's Vatican, and like all religions, more than few wars were fought in it's name.

Love it or hate it, Wall St., like a religion, built itself a few facilities to embed itself into the landscape of civilization:
  1. Bank branch locations (think local churches of a particular faith)
  2. Financial advisors (think various levels of priests, pastors, etc.)
  3. Played local and national politics (think of a religion that didn't do this, the Pope runs his own country)
  4. Fought wars (trading is war, financing weapons manufactures and mercenaries is war, think of the crusades...)
Bitcoin promises to be different: everyman is own bank, we can throw of the chains of Wall St. oppression, fees, financing of wars, bullshit financial advisors whom pimp you mutual funds into your strictly enforced 401k, and a litany of other advantages that only a technology, no a religion could provide, and most importantly, we can trade with one another like free people are supposed too, or at least like they did in the 1850's on Wall St.

Also, a technology started by a mysterious pseudo-anonymous mathematician whom vanished from the internet makes a good genesis for a religion...but I digress.

There is just one problem: Like religion, the vast majority of people aren't financial zealots: they don't care about any of this. Financial obligations make them miserable, but life makes people miserable. Yet everyday they keep slogging it out.

Which brings me to my point: I'm not advocating that Bitcoiners abandon their religion. Far from it in fact, religion is a powerful ally. Arguably, more powerful than money. However, I am willing to argue for the establishment of exactly the institutions that made Wall St., what it is today:
  • Brokers/dealers. With the ability to absorb the "Whale Effect", create stability amongst market participants, ability to vouch for participants credit and clear their trades. 
  • Playing politics. Advocating for Bitcoin, doing what all politicians do: promise people changes that will make their lives better. Prepare for some give and take.  
  • Advisors and bank style local locations. Believe it or not, people have a hardtime with change. I'm sorry, but as much as it might make Bitcoiners sick to their stomach: the vast majority of people need to be able to touch and feel their money in some way, no-one can touch the internet yet.
  • Prepare to fight wars. Hong Kong, one of the world's financial meccas was original established in a war between the British and Chinese over the Opium trade. Fiat currency systems and central banking might finance wars by nation states the same way war has been financed since Sodom and Gomorrah. Taking it to an extreme, Bitcoin could be used by corporations and investors to fund wars as well. Imagine an investment fund or corporation that raises money to hire mercenaries and provide them with weapons to invade and liberate North Korea!? The pay-off: The economic value created for the original investors when they were first-to-market with their services for 20 million newly free Koreans!
Moby Dick's centers on the meaning of one man's hatred and religion and it's ability to consume him. Bitcoiners have religion, that's not a bad thing, but if they ever want to achieve more than cult status, they're going to have to realize that fervent hatred of central banking, war, and all the things institutional can set them back further than chasing whales ever can.

“Better to sleep with a sober cannibal than a drunk Christian.”