Bitcoin: An Empire For Us All

The rise and fall of an empire: It is a story that has repeated itself throughout human history. Ray Dalio points out in his book “Principles for Dealing with a Changing World Order“, and in a YouTube video with the same title, that it always seems to play out the same way. First, an empire rises by being productive, well-educated, innovative, and ambitious. It experiences growth and peace during this period. However, it becomes decadent over time and borrows to pay for things it can not afford and does not need. It then repeatedly defaults on its obligations both to its citizens and to outside nations who have come to depend on its currency as the unit of value for economic trade. Dalio points out that the empire’s leadership fails to take responsibility and instead prints the empire’s money into oblivion to cover up for their decadent spending. Next, internal strife and international loss of confidence lead to the empire’s collapse, while some other upstart empire rises to take its place, only to eventually repeat the same tragic mistakes that lead to the former empire’s collapse.

One might conclude that this is the inevitable and natural order of things — like the cycle of the seasons. But when we look closely, we see that the same avoidable and unnecessary mistakes repeat themselves each time. The two most significant of these errors are, first, the empire borrowing more than it can repay, and, second, printing its money in excess to ‘pay’ off that debt. Each time these mistakes are made, it is because they are very tempting ways of dealing with the problem. They appear to be an easy way out of a challenging situation. Or, at the very least, they seem to be a way to defer dealing with the challenge until later. That is, they are a way to make the problem someone else’s problem.

But succumbing to this temptation is not a necessity. Resisting temptation is hard, but it is not impossible. Even in the bible’s first moral, it warns that succumbing to temptation will lead to a fall from grace.

Without making this too much of a biblically inspired analogy, the “forbidden fruit” for any empire is excess money printing — which is the debasement of the money. Every time this indulgence is taken, it is a poison pill that eventually leads to the collapse of the empire.

Yet, since every empire in history has committed this sin, including the now declining American empire, are we not already doomed to witness a repeat of what happened before? Are we not sure to see some other empire rise, while alongside it we witness the destructive chaos of our collapsing empire, which has always been an ugly chapter in human history? Will it be China, Russia, or some other as-yet-unknown new empire?

But what actually is an empire? As we often do, let’s begin by turning to the dictionary. 

For my purposes, I would like to define empires as vast geographic territories under common laws enforced by one authority.  

I would also like to add one much more important observation that the dictionary overlooks. Empires are vast economies that almost always use a common currency throughout their territory.  Once we invented coins in around 600BC, you could always tell which Empire’s territory you were in because everyone there used “the coin of the realm.”

Of course, today, to transact in the United States, you must use the US dollar, which is the coin of the realm for the United States. But, because there is also the American Empire, the US dollar can be used almost anywhere in the world.

Here is an infographic showing the coins of various empires or realms that came before the great American Empire, courtesy of Titlemax.com:

The ancient Greek legend of Achilles says that his mother dipped him in the River Styx, thus making him invulnerable except for that part of him which she held him by — his heel.  All empires throughout history have demonstrated the same Achilles’ heel — succumbing to the temptation of money printing. When their money lost its power, they lost their power to pay for their defense and infrastructure, and, either gradually or suddenly, they collapsed.

We are now in a time when a new empire is poised to rise, since the old one has already committed the irreversible and self-destructive act of endless money printing. 

But perhaps the fall does not need to be as ugly as past ones. And, even more importantly, maybe this new empire can be constituted in a manner unlike any that came before — an empire without an Achilles heel.

Let us recall that throughout history, you could always tell which Empire you were in based on the coin used. In disputed territory, more than one coin might be used. 

Where is Bitcoin used? It has no homeland. Yet it exists, at once, everywhere on Earth. Its operators, accountants, or scribes, who track its ledger operate in almost every country. Perhaps it even already operates in every single country on Earth. Anyone who runs a Bitcoin node anywhere in the world is maintaining Bitcoin’s currency, bitcoin, in that country. There are tens of thousands of such people spread out across the globe. Even more are trading their Empires’ money for this new coin because they see something special in it. They see that it is invulnerable to debasement, which is also known as money printing.  

Bitcoin is not printed onto paper on a press. It is not forged or stamped out of metal at a mint. It is made from mathematical formulae expressed as computer code, requiring energy. This creation process, for which there was no word at the time of Bitcoin’s creation, is often called mining. But it is not like mining for coal, nickel, or gold. The mathematical formulae ensure that only 21 million bitcoin will ever be created. They ensure the timeframe over which these coins will be issued. They provide anyone in the world with the easy ability to verify the authenticity and genuineness of any coin offered to them in exchange for their services.  And nobody, not now, and not in many generations, can debase the coin by making more of it or making it ‘less pure.’  

Bitcoin is the unprintable coin. It is the un-dillutable coin. It is un-debaseable.  We must, after all, either create new words for this new phenomenon or attempt to apply old words imperfectly.

As Bitcoin spreads to more people worldwide, it establishes a new type of Empire. I wish I had a word for it, but it is the first of its kind — and possibly, since it could last forever, the last as well.

Like other empires before it, Bitcoin establishes a coin for an economy covering a vast geography. But Bitcoin does NOT spread as other Empires before it have. Bitcoin does not take over nations by military conquest. It does not force any individual to accept it. It does not seize and destroy, or make illegal the use of any other coin. Bitcoin spreads peacefully, through earning the choice of those who choose it. And those who choose it, choose it for themselves also, for the value it gives to them.  

Unlike all empires before it, Bitcoin does not have leaders. All people are equals in the Empire of Bitcoin. The same rules apply to all, and they are simple rules: First, you may only spend coins that are unspent. That is, you may only spend them if you can prove ownership of them by providing a digital signature corresponding to encrypted spending instructions. Second, you may only add a block of transactions to the ledger if it meets the conditions of doing so. (Technically speaking, those conditions are that it adds a block to the highest proof-of-work chain, satisfies the proof-of-work requirements for that block, claims only the mathematically permitted amount of newly issued coins and fees, and all the transactions in it satisfy the first rule).  

These are the only rules. There are no other rules. But unlike the laws of previous empires, these rules are not open to human interpretation, or violation. They are designed to be scrutinized only by the operations of mathematics. And each transaction and block either passes or fails, objectively, mathematically, according to all participants in the Empire.

No emperor will someday become decadent and decide to print more bitcoin to finance a war or build himself a monument. There is no emperor in this Empire. It is an Empire whose citizens choose to be in it because they do not want to be ruled by the whims of some ‘ruler’.  

Bitcoin’s unique construction protects this Empire from ever being able to commit the deadly sin or become victim to the act that destroyed every empire that has come before — the inflation and debasement of its coin.  

This Empire is neither naive about nor vulnerable to those who seek power over others. It has no Achilles heel.  There is nowhere that you can strike it and kill it.  If you take out nodes anywhere on Earth you have done nothing to harm the operation of Bitcoin. If you withdraw energy from its process of adding blocks it will adjust itself in short order to ensure its ongoing process of adding valid blocks of valid transactions returns to its targeted rate of one block every ten minutes.  If you try the opposite, to flood it with energy, it will adapt to this as well. Make any attempt to inflate the supply and your attempt will be mathematically rejected by every node in the world. Try to pass off anything that is not 100% pure bitcoin as a transaction and your attempt will also be mathematically rejected by every node in the world.

Nobody can stop the operation of this “Empire-of-the-Coin.” So the choice then is simply to accept it or reject it.  And that is a free choice for every person on the planet. The Empire of the Coin invites all to choose to join. It rejects nobody who obeys its simple rules. And it forces nobody to join.  It is the first Empire in history to expand entirely through the voluntary participation of its citizens.

Today, many people focus on the investment opportunity that Bitcoin represents over a relatively short time when measured against the lifespan of empires. But what they implicitly are acknowleding in doing so is that what drives this opportunity is this: Bitcoin is not some flash-in-the-pan or Johnny-come-lately that will soon be replaced by the new “new thing.”  Bitcoin may be the “new kid on the block” as far as empires go, but it defines what the block is better than any empire before it.  

The more people recognize this, the more this Empire rises — in both users and economic value. Nothing in history has grown more quickly than Bitcoin to a value of $1 trillion. And Bitcoin did this without hiring a single employee and without spending a dime (or a satoshi) on marketing.  It did so by offering itself to the world and letting those who saw its value in it join it, work on it, and tell others about it.

At this moment in history, Bitcoin is truly the dawn of a new Empire. It is an Empire of peaceful expansion, voluntary participation, reliable promises, freedom, and an un-debase-able coin. It offers a provable solution to the problem that led to the collapse of all empires before it. It is a tremendous gift to all humanity. And, all we have to do to preserve our civilization and thrive for many generations is accept this gift.