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Sovereignism Part 2: Bitcoin, The Ultimate Offshore Bank

Sovereignism Part 2: Bitcoin, The Ultimate Offshore Bank

Posted 2/18/21 by Robert Breedlove

A 12-part essay series exploring the digital disrup­tion of the nation-state and the subse­quent ampli­fi­ca­tion of individual sover­eignty during the digital age. This series is based on the 1997 master­work: The Sover­eign Individual.

In Sover­eignism Part 1, we explored the creative destruc­tion of nation-states wrought by the technolo­gies and self-organizing socioe­co­nomic systems of the digital age. In Part 2, we take a closer look at a key catalytic innova­tion behind the global transi­tion to sover­eignism: Bitcoin. Analo­gizing Bitcoin as the “ultimate offshore bank” is a useful mental tool that can help us better under­stand the mega-polit­ical forces, game-theoretic consid­er­a­tions, and economic incen­tives propelling this emigra­tion of capital into the digital high seas of the 21st century.

Digital High Seas

Cyber­space is the ultimate offshore juris­dic­tion. An economy with no taxes. Bermuda in the sky with diamonds.

The Sover­eign Individual

Inter­na­tional waters have histor­i­cally been the greatest geographic safe haven from nation-states. Gamblers, pirates, smugglers, and other sinners seeking to engage in state-condemned activ­i­ties willingly make use of this ungovern­able terri­tory. This oceanic realm is rife with high degrees of risk, reward, and self-respon­si­bility. But exactly why is maritime law so different from the legal systems operating within terres­trial nation-states? A simple cost-benefit provides the root cause: given the sheer size and uninhab­it­ability of the high seas, the revenues a taxing authority might hope to generate by estab­lishing a perma­nent dominion there are far outweighed by the neces­sary costs of enforce­ment. Even assuming economic activity exhib­ited suffi­cient density on the high seas to justify a profitable tax regime, the cost of defending this monopoly from other profit-seeking states would need to be carefully consid­ered. For these economic reasons, inter­na­tional waters are the ultimate “wild, wild west” where states expend tremen­dous resources just to protect their terri­to­rial monop­o­lies from naval assault.

Even stable states are mostly unable to profitably extort commer­cial activ­i­ties on the high seas. Since the flow of water on Earth largely shapes the bounds of state dominion (many rivers and coast­lines carve out the shapes of nation-states), the dominant power in these boundary terri­to­ries tends to be dominant geopo­lit­i­cally. Aquatic access offers economic advan­tages: in moving energy or mass (mass is frozen energy) across space­time, the hydraulic forces of water help mankind overcome the frictions of gravity, thus radically improving produc­tivity. Pushing a 10 ton load on land takes exponen­tially more energy than pushing the same load on water. As a highly dynamic and low friction terri­tory, water is an accel­erant to the energy network of trade yet simul­ta­ne­ously an imped­i­ment to the estab­lish­ment of perma­nent dominion. This makes coast­line control a major geopo­lit­ical advan­tage. Indeed, unimpeded access to the Pacific and Atlantic oceans was key to 20th century US dominance, both econom­i­cally and militarily. Consid­ered in combi­na­tion, the violence monopoly that can bring the most force to bear on the seas is usually the nation-state supreme. As naval strate­gist Alfred T. Mahan wrote in his classic The Influ­ence of Sea Power Upon History:

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The waves of digital space are uncon­quer­able, which makes it a domain of maximal individual sovereignty.

Being surrounded by the vast empti­ness of the high seas is a natural defen­sive advan­tage. The costs neces­sary for a tax authority to surveil, patrol, and collect in oceanic terri­tory are simply staggering. Tax regimes must focus their efforts on terres­trial areas of high economic density to be profitable. Inter­est­ingly, economic dynamics of the high seas can help us under­stand the advan­tages of commerce in digital space.

Imagine that all commer­cial activity left its terres­trial base and was instead conducted aboard ships dispersed widely across the open waters of the world. Now imagine each one of these enter­prising vessels had a cloaking device, rendering it invis­ible to the eye and undetectable by radar or any other means of surveil­lance. Imagine further that knowl­edge as to the identi­ties of all souls sailing these high seas, all capital under their command, and all commu­ni­ca­tions between them are veiled under a similar cloak of epistemic opacity. Finally, imagine this oceanic market­place is suddenly ballooned to the size of the observ­able universe. How expen­sive and diffi­cult do you imagine it would be to regulate such a stealth and expan­sive economy? Fantas­tical as all this may sound, commerce, identi­ties, and capital domiciled in digital space enjoy equiv­a­lent advan­tages of defen­si­bility, conceal­ment, and untrace­ability. Although not yet mainstream, encryp­tion technology continues to advance at an accel­er­ating rate, rapidly reifying this analog fantasy into a digital reality for sophis­ti­cated sover­eignists worldwide.

As the config­u­ra­tion of 20th century nation-states evinces, it is diffi­cult to project dominion across the seas. In this way, the imagi­nary construc­tion equating digital space to the high seas is useful for discerning the challenges posed to all unilat­eral attempts at control­ling people in the 21st century. Would-be victims of economic tyranny now have recourse to the only invio­lable safe haven for capital — Bitcoin. Nation-state power is premised on its capacity to confis­cate wealth, an attack vector that stands to be largely neutral­ized by digital technolo­gies. Sometimes the best way to meet an attack is with empty space, and the digital domain enables empti­ness to achieve a vastness of cosmic propor­tions. With digital technolo­gies, infor­ma­tion and capital can be moved at the speed of light, cloaked behind walls of encrypted energy, and stored “every­where and nowhere” in a seemingly limit­less array of ways, limited only by devel­oper imagi­na­tion. Said succinctly: impen­e­trable digital defenses defy force. With the advent of Bitcoin, infor­ma­tion, money, and memory have achieved an irreversible fusion: a path-depen­dent event forever altering the fluxions of socioe­co­nomic self-organization.

Money without corpo­re­ality has mind-boggling impli­ca­tions. Every attempted unilat­eral transfer of economic value — infla­tion, non-consen­sual taxation, and direct confis­ca­tion — drives greater demand for more theft-proof capital. At the farthest end of the confis­ca­tion-resis­tance spectrum is the steady burning glow of Bitcoin. As citizens awaken to the natural advan­tages of sheltering their savings across the uncross­able chasm of the digital high seas, a feedback loop between escalating govern­ment overreach and digital escapism will emerge, with heavier-handed attempts at control driving ever-larger waves of capital flight. In self-defeating desper­a­tion, the tighter govern­ments grasp, the faster hyper-portable capital will slip between their fingers and into the digital ether. With no regard for decrees, game theory always governs human action.

A direct result of govern­ments tight­ening their grips is growth in Bitcoin’s market capital­iza­tion and network security, along with a commen­su­rate shrinking in its perceived risk of owner­ship (hard money is a Veblen good). A recent example of this is the Nigerian central bank ban on Bitcoin, which has only accel­er­ated local Bitcoin adoption. Ultimately, this dynamic will spin into a global game-theoretic vortex pulling all monetary capital into the ultimate offshore bank: Bitcoin. As govern­ment revenues collapse, the functions they tradi­tion­ally provided — like voting, private property rights, identity, public services, defense, and many others — will cease, creating a vacuum in the market­place for entre­pre­neurs to fulfill unsat­is­fied wants. A blue ocean of new market oppor­tu­ni­ties will burst forth as nation-state monop­o­lies disin­te­grate. Demate­ri­al­ized money demonop­o­lizes most markets, since it minimizes the attack surface neces­sary for effec­tive legis­la­tion and coercion, thereby deeming force­ful­ness decreas­ingly useful (with the excep­tions of direct ransom and extor­tion, which are not scalable). In this way, buying Bitcoin is the big short on statism. Some of the greatest minds of our time have already chosen their side in this historic trade:

‘Nuff said.

Life is a series of trades involving trade-offs. Individ­uals success­fully antic­i­pating and adapting to these mega-polit­ical sea changes will rise to power in a sover­eignistic world. And key to the success of sover­eignists on the digital high seas is capital access, privacy, and preservation.

Digital Offshore Banking

When this greatest tax haven of them all is fully open for business, all funds will essen­tially be offshore funds at the discre­tion of their owner.

— The Sover­eign Individual

In the 20th century, offshore banking became a preferred means of wealth protec­tion. Insula­tion from seizure is in high demand by plunderer and plunder­able alike, who both seek to shelter their funds from the confis­ca­tory reach of others. Offshore banks are tax havens, social insti­tu­tions that have existed ever since govern­ments decided to finance themselves through unilat­eral taxation and infla­tion. But tax havens haven’t always been banks. Ancient Rome gives us the example of a tax-free port estab­lished on the island of Delos with the inten­tion of under­cut­ting competing juris­dic­tions and drawing economic activity into its harbors. The Delosian tax-free port was one of the original tax havens. Rhodes, a neigh­boring Greek island state, quickly lost trade to this tax-free port, and declined as a commer­cial power in the ancient world. An impor­tant lesson is avail­able here: when properly armed with the option­ality of competing service provider offer­ings, customers dictate the fate of markets. Clearly, customers always prefer to pay less for equal services. A similar principle pushes capital into the safest store­houses avail­able in each era of history. In more recent history, banks have become bastions for safe capital storage.

A swiss bank account is perhaps the most infamous modern example of a tax haven. In the early 1800s, Switzer­land declared itself a neutral state. Over the next 100 years, its banks gradu­ally became an offshore tax haven for European elite. Following World War I in the early 1900s, this small Swiss industry began to boom. Due to the devas­ta­tion suffered across Europe during the war, most govern­ments were forced to raise taxes for recon­struc­tion. By virtue of its geopo­lit­ical neutrality, Switzer­land was not heavily damaged by the war, and there­fore was able to keep its taxes low in compar­ison to its more belligerent neigh­bors. This asymmetry of gover­nance philos­ophy attracted great flows of capital into Switzer­land. Lever­aging its nation-state’s geopo­lit­ical neutrality and the topolog­ical advan­tages of being encom­passed by large mountain ranges in the heart of Europe, Swiss banking soon devel­oped a reputa­tion for high quality service geared toward an inter­na­tional clien­tele. Naturally, everyone desires to “hold the keys” to their own finan­cial wellbeing, and histor­i­cally Swiss bank accounts offered customers superior assur­ances of finan­cial acces­si­bility, privacy, and security. Across these desirous dimen­sions, Bitcoin excels by many orders of magnitude.

Bitcoin is the catalyst of sovereignism.

As a public utility that facil­i­tates trade flows of private property, Bitcoin offers universal finan­cial acces­si­bility. A private key — the infor­ma­tional bearer asset allowing one to use Bitcoin — can be stored in analog, digital, or even biolog­ical memory. Private keys can be used to initiate Bitcoin trans­ac­tions from anywhere in the world with telecom­mu­ni­ca­tions access, at any time of day. Holding one’s own private keys is the holy grail of self-sover­eignty. Although Bitcoin’s trans­ac­tion history is univer­sally trans­parent, the owner­ship linkages between keys and holders can only be estab­lished through surveil­lance, and nascent software devel­op­ments like Taproot continue to enhance Bitcoin’s privacy. With proper opsec, Bitcoin is true stealth wealth. In terms of security, the Bitcoin network is the most powerful and secure computing network in history. By virtue of being a pure digital money, Bitcoin can be stored in a wide variety of ultra high security custody schemas that are virtu­ally immune to confis­ca­tion. Criti­cally, Bitcoin is the only money in history absolutely immune to confis­ca­tion via infla­tion. Taken in combi­na­tion, the acces­si­bility, privacy, and security assur­ances of Bitcoin make it the uncon­tested tax haven of choice for all 21st century sovereignists.

By virtue of being “the ultimate offshore bank” in the 21st century, Bitcoin oblit­er­ates statism and nourishes an emergent global culture rooted in sovereignism.

Bitcoin is the soundest safe haven from unilat­eral infla­tion, taxation, and confis­ca­tion in human history. This digital free market monetary system finally returns “the keys to the castle” to their rightful owners — the individ­uals who sacri­fice to produce the fruits of labor emblema­tized by money in the market­place (but only those individ­uals holding their own private keys, Bitcoin held on an exchange is not Bitcoin). In this new paradigm, all capital stored in Bitcoin essen­tially consti­tutes “offshore funds” at the full discre­tionary control of their respec­tive owners. Market actors are quickly realizing the impor­tance of monetary sover­eignty, and Bitcoin is rapidly flowing off exchange and into self-sover­eign custody schemas:

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As Bitcoin becomes more valuable, market actors are wising up to the impor­tance of self-sover­eign custody.

The power, freedom, and sover­eignty individ­uals gain by conducting their finan­cial affairs in Bitcoin is an irrefutable Schelling point in the greatest adver­sarial game of them all — human action. Beyond being a game-changer, Bitcoin is an entirely new game — its deriv­a­tive socioe­co­nomic system of sover­eignism promises to improve fortunes across the world as it incen­tivizes forsaking the use of force, forever.

The End of Mass Extortion

Power has always sought the readiest road to wealth by attacking those who were in posses­sion of it.

— William Playfair

In its grandest arc, civiliza­tional advance is centrifugal to sover­eignty: as market exchange makes us more produc­tive through innova­tion and more virtuous through accul­tur­a­tion, power radiates toward the periphery. As sover­eignty becomes more symmet­rical, decrees and force lose relevance relative to economic efficiency. As the returns on politics and (its natural exten­sion) violence decline, socioe­co­nomic systems tend to become free-forming and decen­tral­ized, since under such condi­tions it is more profitable to cooperate than confis­cate. An extreme example of this would be ancient hunter and gatherer society, in which violence could only win you the spoils from a single victim or small village, and the symmetry of infor­ma­tion (reflected in the relative sophis­ti­ca­tion of ancient tools and armaments) was quite high, meaning that armed conflict was typically as risky as it was poten­tially rewarding. Although highly decen­tral­ized, the drawback of this ancient socioe­co­nomic struc­ture was defined by the axiom “might is right,” meaning that individual sover­eignty was frequently disavowed by anyone carrying “a bigger stick.” As the first private property right not requiring protec­tion through the threat of force, Bitcoin makes decen­tral­ized yet non-violent socioe­co­nomic organi­za­tion achiev­able. A profound innova­tion for civiliza­tion — perhaps unequaled since the inven­tion of “clock time” — this global, digital, non-state digital cash perma­nently alters the logic of violence.

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Bitcoin is the “ultimate offshore bank.”

Force is the accel­er­a­tion of energy across space­time. The capacity to project and defend against force is a critical aspect in human affairs. Every age of civiliza­tion exhibits its own unique techno­log­ical reali­ties reflec­tive of the magni­tude and efficiency by which energy can be channeled through creations of the human intel­lect: including tools, money, and socioe­co­nomic organi­za­tions. As one example of this process, consider how human weaponry has progressed from spears, to rifles, to nuclear bombs — each capable of channeling more force than the last. Typically, innova­tions in this area are catalyzed by warfare, which has a tendency to accen­tuate the neces­si­ties of survival among those it impacts. Neces­sity, it is said, is the “mother of inven­tion.” Armed conflict is a forcing function that stimu­lates inven­tive­ness; it is deeply related to the distin­guishing feature of human action — the purposeful channeling of energy across space­time toward the achieve­ment of valued aims. War is the visceral colli­sion of counter­vailing human wills, a hellfire which has repeat­edly engulfed and redrawn the bound­aries of civiliza­tions across history. For these physical reasons, the methods by which mankind channels energy to wield coercion or violence — which are both force against others — are intimately inter­twined with the shape of socioe­co­nomic systems.

The calculus of violence contributes to why free market processes naturally favored monetary technolo­gies that were hard to steal. Since the threat of violence is ever-present, people prefer to hold assets of maximum (exchange or utility) value relative to their costs to secure. Defen­sible, secur­able, and hard to produce assets are naturally resis­tant to the extortive efforts of others. These secur­ability quali­ties were key to the selec­tion of gold as money on the free market. Secur­ability is a subset of the monetary property of porta­bility, as assets with a high value to weight ratio are easier to move and less costly to secure. Bitcoin perfects the monetary property of porta­bility, and its secur­ability subset, by virtue of its digital purity: it can be moved at the speed of light and secured in any infor­ma­tion-bearing medium. Solving the porta­bility short­com­ings of gold is one of the main reasons gold-backed curren­cies were intro­duced, which gave govern­ments an attack vector to monop­o­lize money supplies. Currency is a mecha­nism nation-states use to inflict mass extor­tion on societies through infla­tion and unilat­eral taxation.

Bitcoin optimizes the function­ality of money.

Origi­nally intended to energize and organize military forces, central banking (legal monop­o­lies on money) have degen­er­ated into systems of extortive force wielded unscrupu­lously upon citizens. Manip­u­la­tion of monop­o­lized money supplies is the primary lever govern­ments have used to usurp sover­eignty from individual citizens throughout the analog ages. From coin clipping to quanti­ta­tive easing (QE), monetary meddling has always served a singular purpose: the extor­tion of citizens. Infla­tion here means specif­i­cally arbitrary increases in a money supply under legal monopoly control, and not symmetric supply expan­sion, like that occur­ring with the mining of gold or Bitcoin, or the issuance of free market bank credit, which are distinct because they are free market processes bound by their produc­tion costs, and risk of economic losses, respec­tively. Infla­tion is strictly an asymmetric, non-free-market phenomenon.

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Actual footage of the “trick down effect” in economics.

Infla­tion is taxation, yet its precise measure­ment is problem­atic. Infla­tion results in the general erosion of purchasing power over time, as “more money chases the same amount of stuff,” which results in more working hours neces­sary to purchase the same amount of basic goods to survive. The US govern­ment erroneously (or perhaps decep­tively) quanti­fies infla­tion using the Consumer Price Index (CPI). The CPI is based on a calcu­la­tion that it has been recon­fig­ured many times to hit targeted rates, and excludes “volatile” categories like food and energy. Volatile here means the price changed, which seems self-defeating to exclude from an index intended to track price changes. In truth, infla­tion can never be described by any singular metric. Infla­tion is inher­ently subjec­tive, just like the valua­tions enervated by the loss of purchasing power it inflicts upon market partic­i­pants. Said differ­ently, infla­tion is relative to the unique aims held by each market actor, making all “universal” infla­tion metrics inaccu­rate. The most accurate proxy for the infla­tion tax is broad money supply growth, a percentage change roughly equal to how much fiat currency holders are being diluted over any given time span.

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The land of the free, except when it comes to money.

Infla­tion is impos­sible to quantify in a specific dollar value since it is a subjec­tive loss of purchasing power based on the basket of goods a partic­ular market actor is aiming to acquire. In other words, each market partic­i­pant subjec­tively sets (and resets) a unique infla­tion coeffi­cient for themselves by buying, selling, and holding assets. But don’t let its subjec­tivity fool you: objec­tively speaking, infla­tion is taxation, albeit a more insid­ious and indirect form. Stated even more straight­for­wardly: infla­tion is only taxation. Despite centuries of Keyne­sian propa­ganda, infla­tion offers zero economic benefit to anyone other than the currency infla­tion­ists — the central bank thieves who profit from this legal­ized monopoly on counter­feiting. Direct taxation can be quanti­fied more explic­itly (in dollar terms) since it is billed and paid in currency denom­i­na­tions. Although most US taxpayers are condi­tioned like Pavlovian dogs to submit their forms and pay tribute every April to avoid IRS “scary­grams,” it is impor­tant to realize that taxation at rates not consen­su­ally deter­mined is, by defin­i­tion, extor­tion. Non-consen­sual taxation and (its sinister twin) infla­tion are criminal and immoral acts indis­tin­guish­able from theft. At risk of being repet­i­tive, let me clearly edify the point: unilat­eral taxation and infla­tion are both acts of extor­tion perpe­trated against citizens world­wide by central banks.

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Market actors face major economic incen­tives to escape such ubiqui­tous, systemic extor­tion. Central banking is an insti­tu­tion­al­ized system of time-theft: one of the last vestiges of slavery in a world which has, in spite of the extor­tionary head-winds, morally advanced itself in many ways, thanks to the strident produc­tivity gains of entre­pre­neurial ingenuity. In many ways, morality is a luxury, and infla­tion under­mines its further­ance, in the same way it margin­al­izes other innova­tions. Fortu­nately for denizens of the digital age, an option to exit this rigged game is now avail­able. Anyone who values their own time, or the time of those in their life, can now choose a money concor­dant with the absolute scarcity of time. This seemingly simple shift in perspec­tive creates a hydraulic pressure of induce­ments that promises to bring about the final collapse of fiat currency pyramid schemes every­where. To quantify the disin­cen­tives faced by market partic­i­pants to hold their savings in fiat currency, and the commen­su­rate incen­tives to move their capital into the offshore bank of Bitcoin, consider the following figures:

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Fiat currency is premised on economic dynamics that all but force market actors to buy Bitcoin. An example will clarify: with the average US citizen paying $10,489 in explicit taxes to the US govern­ment each year, without consid­ering the perni­cious and more diffi­cult to calcu­late impact of infla­tion (which depends on portfolio mix, perfor­mance, aims, etc.), the choice to hold savings in Bitcoin is a $1.2M decision assuming only a 5% annual yield on that capital over 40 years, and quickly balloons to a $4.4M decision assuming a 10% foregone savings rate. So, for the average US citizen, the question of whether to adopt Bitcoin is equiv­a­lent to: “would you switch your savings account for $1.2M in retire­ment savings?” And again, this calcu­la­tion only accounts for direct taxation. Consid­ering that the US printed approx­i­mately $4.1T in 2020 — a year in which its direct tax revenue was only $3.9T — using our proxy above means the effec­tive tax bill (the combi­na­tion of infla­tion and taxation) is roughly double the direct tax bill imposed on citizens (although infla­tion is dispro­por­tion­ately adverse to the poor and those depending on fixed-income, like retirees and pensioners). Extrap­o­lating US money supply expan­sion from 2020, a doubling of the above figures more accurately conveys the true impact of the mass extor­tion effected through infla­tion and unilat­eral taxation, and the incen­tives for escapism.

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Clearly, at higher annual inflation/taxation savings amounts and rates, the incen­tives to adopt Bitcoin as protec­tion from nation-state preda­tion on capital become astro­nom­ical, reaching over $700M assuming $100K in annual savings at a 20% rate. As this calculus dawns on market actors, the rush into Bitcoin, its atten­dant explo­sion in market capital­iza­tion, and the subse­quent implo­sion of nation-state revenue models will be a spectac­u­larly historic event. The question then becomes: how will humans self-organize in the wake of nation-state collapse? Driven by their own overreach and the widened option­ality afforded to digitally fluent citizens, nation-state revenues will decline precip­i­tously: an event that presages the collapse of any business. Those who consider this question and its possible outcomes proba­bilis­ti­cally, and prepare accord­ingly, will find refuge in the digital high seas — a domain where 21M Bitcoin is the “law of the land.”

Sovereignists Set Sail

Taxing author­i­ties have grown accus­tomed to treating their taxpayers as a farmer treats his cows, keeping them in a field to be milked. In the digital age, these cows grow wings.

— The Sover­eign Individual

Authority is a strong word: it implies the will power of some imposed over others. For taxation, author­i­ties depend on taxpayers remaining in their terres­trial captivity or, at least, willingly complying with confis­ca­tory edicts when living outside their legal dominion (see the world­wide tax regime of the US govern­ment, for instance). Nation-states depend on clearly defined and imper­me­able juris­dic­tional bound­aries within which to monitor and tax economic activity. As taxation and infla­tion become more egregious, taxpayers are disin­cen­tivized from remaining inside (or, at least, complying with) juris­dic­tions. If too much commerce or capital exits a juris­dic­tion, tax revenues collapse, along with the wealth and produc­tivity gains gener­ated by the overly taxed economy. To maintain stability, parasitic tax author­i­ties must be sensi­tive so as to not “kill” their hosts — the produc­tive economies sustaining them. Throughout most of history, this economic struggle between tax author­i­ties and taxpayers disfa­vored citizens due to their depen­dence on the private property rights, insti­tu­tions, and the rule of law neces­sary for effec­tive commer­cial inter­ac­tion. Tradi­tion­ally, all of these pillars of socioe­co­nomic cooper­a­tion have been manip­u­lable by force — the specialty of nation-states. The mutability of mankind’s repre­sen­ta­tions of capital (assets), people (identi­ties), and the relation­ships between them (property) gave the most successful wielders of coercion and violence free reign to twist the rules of the economic landscape to suit their polit­i­cally deter­mined agendas. Now, Bitcoin — an immutable, non-identity-based form of personal property — enables a separa­tion from the central bank system of extor­tion by self-authoring sovereignists:

The root of Authority is ‘Author.’ Author­i­ties take author­ship and write your role in their story. A sover­eign individual is the protag­o­nist of their own.

— Mike Hill

Analog age insti­tu­tional authority now faces disso­lu­tion from an onrushing deluge of digital acid. With conse­quences compa­rable to the Guten­berg printing press, which broke the Church’s central­ized choke­hold on flows of knowl­edge, self-organizing networks like the internet and Bitcoin are dissolving nation-state stric­tures on commerce by giving mankind the means to permis­sion­lessly port infor­ma­tion and capital across space­time, juris­dic­tion, and human mind. Tax author­i­ties, which criti­cally depend on their ability to restrict finan­cial option­ality for citizens, will now be forced to render ever-more valuable services to retain any revenue whatso­ever. The power of individ­uals to “vote with their feet’’ by exiting fiat currency complexes leads to a world with a much greater emphasis on free choice and, there­fore, smaller and less coercive govern­ments and gover­nance models. By re-local­izing respon­si­bility, sover­eignism will result in a wide expan­sion of the sole human right: choice.

Conven­tional wisdom of the 20th century conceives of money as a monopoly product of the nation-state. Such tradi­tional thought deteri­o­rates in propor­tion to the differ­ences of condi­tions between past and present. History is written as misfit­ness accumu­lates between the prevailing and the possible, eventu­ally erupting into revolu­tions against the conven­tional. Nation-state monop­o­lies on money are unques­tion­ably misfit to a digital society capable of highly efficient self-organi­za­tion (and contin­uous re-organi­za­tion) as condi­tions warrant. Like metal filings near a magnet, socioe­co­nomic organi­za­tions are shaped along the field lines of trust and security emanating from the prevailing techno­log­ical reali­ties in any given era. Trust-minimized money and encryp­tion radically change the roles of trust and security in human affairs. Whereas analog insti­tu­tions are expen­sive means of approx­i­mate verifi­ca­tion, digital tools are an inexpen­sive means of absolute verifi­ca­tion. Princi­pally centered on the “don’t trust, verify” ethos of Bitcoin, economic forces will ensure that trust-laden analog insti­tu­tions die while verifi­ca­tion-focused digital organi­za­tions thrive in the 21st century. Sover­eignism is a distinct fork in the winding road of human history that starts with the money.

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Money is an instru­ment of pure option­ality in the market­place. In physics terms, money is the manifes­ta­tion of power: in this case, the capacity to command the work of others over time. All systems of socioe­co­nomic authority in the world are deriv­a­tive of this primeval tool for channeling meta-energy across space­time. Said another way: money commands most human creative energies. By monop­o­lizing gold and issuing debt-based money in its place, central banking became the co-option of market actor option­ality. Born of Bitcoin, sover­eignism is the resur­rec­tion of individual option­ality in a world of nation-state dominion. By equip­ping 21st century citizens with the power to accom­plish more with less, to disap­pear into the digital ether whenever neces­sary, and to perma­nently disso­ciate themselves from command-and-control fiat currency complexes if they so choose, the digital age promises to be distin­guished by a new social class of cogni­tive elites: the sophis­ti­cated sover­eignists. As more and more sover­eignists “set sail” onto the digital high seas, the societies they form will become more wealthy, peaceful, moral, and (there­fore) attrac­tive to others, leading to a virtuous cycle of civiliza­tional advance.

Choice is the sole human right, and Bitcoin radically widens the spectrum of choice for market actors every­where. Those who recog­nize this new reality, and choose the proper courses of action first, will inherit the Earth.

Sover­eignism is a seemingly unstop­pable mega-polit­ical transi­tion: each market actor can either antic­i­pate and embrace it or be forced to when the global fiat currency complex inevitably collapses. Trying to control sover­eignists will be like trying to command a flock of starlings: a self-organizing swarm seamlessly split­ting and recom­bining itself around and diverting itself away from any imped­i­ments to its flight path. Or perhaps we can analo­gize sover­eignism to the ever-tempes­tuous seas: relent­less and unstop­pable tidal forces governed by the laws of gravity, rooted in princi­ples of physics beyond the grasp of politics — energies that sculpt the shape of socioe­co­nomic reality in spite of any central­ized entity’s wishes. When digital option­ality reigns, decen­tral­iza­tion is king. The indis­pens­able key to this self-organizing intel­li­gence of the rising social class called sover­eignists is the invio­lable offshore bank of Bitcoin.

Sover­eignism starts with Bitcoin, but where it ends no one knows. A study of similar histor­ical transi­tions can provide guidance by proxy. In Part 3, we will explore a history of mega-polit­ical transi­tions to isolate common variables and use them to envision the future of sovereignism.

Thank you for reading Sover­eignism Part 2: Bitcoin, The Ultimate Offshore Bank

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This blog offers thoughts and opinions on Bitcoin from the Swan Bitcoin team and friends. Swan Bitcoin is the easiest way to buy Bitcoin using your bank account automatically every week or month, starting with as little as $10. Sign up or learn more here.

Robert Breedlove

Robert Breedlove is founder, CEO, and CIO of Parallax Digital, a global Bitcoin-focused hedge fund and consultancy. He considers himself a freedom maximalist and believes he’s found his life’s work in Bitcoin.

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26565 Agoura Rd Ste 200
Calabasas, CA USA

Swan Bitcoin does not provide any investment, financial, tax, legal or other professional advice. We recommend that you consult with financial and tax advisors to understand the risks and consequences of buying, selling and holding Bitcoin.