Denuclearization, but on the Blockchain

Last last week, an Ethereum researcher got busted for traveling to North Korea to give a talk on blockchain.

I’m inclined to believe his intentions were charitable (generally my default assumption for every person), but traveling to North Korea happens to be a violation of OFAC sanctions, which is Bad.

The Ethereum talk was titled “Blockchain and Peace”, and while I have no knowledge of its contents, that got me thinking. Can blockchain precipitate world peace? Take our current situation with North Korea. The US demands that North Korea hand over its nuclear arsenal before we lift any sanctions. Kim Jong-un remembers that time we pulled a bait-and-switch on Gaddafi after offering Libya the same deal, thus refuses to go first. Bitcoin fixes this.

What if North Korea denuclearizes on the blockchain??? Not in the sense of provenance, where a fallible human records some real-world event on the blockchain. I mean, instead of shipping its nuclear warheads to the US, North Korea could provably denuclearize by converting all its nuclear fuel to bitcoin.

North Korea has stockpiled enough fissile material to build approximately 60 nuclear warheads, which translates to 2400 kilograms of weapons-grade uranium. This can be blended down to about 50 tons of low-enriched uranium, enough to fuel two 1000 MWe nuclear reactors for one year. If that power is entirely devoted to running bitcoin miners, it could generate 20,000 PH/s (2e10 GH/s) resulting in an estimated block reward of 320.92 bitcoin per day, or 117,140 bitcoin per year.

(This is roughly 20% of Bitcoin’s total network hashrate, which could potentially skew the market.)

The private key corresponding to the block rewards should then be used to sign a message indicating disarmament. North Korea doesn’t need to trust the US to uphold its end of the deal because they can use the newly mined bitcoins to render sanctions obsolete.

And that’s how we get World Peace. Nobel Prize, please.

Democratic Corporatism

Is there such a thing as Too Much Democracy? That’s what The Economist determined about California ten years ago, pointing out that when every voice counts, nothing gets done. We can’t build housing because that would infringe on the rights of owls. We can’t clear fire hazards because that infringes on the rights of oak trees. We can’t build high speed rail because that infringes on the rights of eels. I’m beginning to see the appeal of autocracy.

Direct democracy tends to be the pet paradigm of left-coast utopians who have no idea how government works. Most corporations are authoritarian, but Google, Facebook, and many other tech companies have a culture of radical transparency where every employee has an opportunity to voice concerns. That’s manageable when a company is small and homogenous, not so much when it’s big and global. Facebook execs can’t meet with Taiwan’s president without offending thousands of Chinese employees, and Google can’t sign a defense contract without half the office walking out in protest.

Compare to Apple, a company that dispenses with democratic ideals and embraces tyranny. Remember that time Apple fired an employee after his daughter inadvertently uploaded a video clip of an iPhone X? That’s the type of company that has no qualms entering China.

As Google and Facebook have realized, it’s time to scale back participation. The best way to reduce input from the masses is to keep them in the dark. My former classmate works for Apple designing LCD screens, but he’s not allowed to know what device the screens attach to. The LCDs might display the countdown timer for nuclear warheads for all he knows. Radical secrecy keeps people from questioning corporate strategy.

The US government has mastered this well. After the Vietnam War, the Trilateral Commission determined that we suffered an excess of democracy. People knew too much, and protesters tanked our war efforts. We can’t stop the masses from protesting, but we can stop them from knowing what to protest. That’s why the press is no longer allowed to publish photos of war casualties, or even report on what countries we invade. That’s why we had to prosecute Chelsea Manning.

Democracy thrives in darkness.

Free Speech Isn’t Free

There’s a common misconception that China does not afford its citizens the protections of free speech. Totally false! Chinese citizens can say whatever they want, they just need to find a licensed publisher or licensed Internet Content Provider (aka, a website) to distribute their words.

The Speech is Free, but it can’t be too subversive, because licensed publishers won’t print material that speaks unfavorably of the government. Hey, private companies are allowed to make their own rules. Don’t like Weibo’s content moderation policies? Go start your own social media platform!

Perhaps you’ve heard of Gab. It’s a Twitter-ish platform that was created as a free (as in speech) alternative to BigTech social media. But the site keeps getting banished by service providers — Apple, Google, Amazon AWS, Microsoft Azure, Paypal, Stripe, Coinbase, Square, CashApp, have all deplatformed Gab. Private companies are allowed to enforce private rules, but it’s odd how independent tech companies dutifully fall in line with the establishment.

We hear stories about Chinese dissidents who get “disappeared” and sold for parts, but those cases are not the norm. It’s far more common for the government to employ a softer form of power. These days, those who publish subversive material might be “taken in for questioning”. Maybe their family members will get “taken in for questioning” too. A long night of “questioning” is usually enough to intimidate the critics.

Here in the US, law enforcement issues a subpoena. To receive a subpoena does not indicate guilt of a crime; it’s just the government’s way of “asking questions”. The questions typically demand multiple years’ worth of written communication and metadata, in a structured format prepared for Concordance, Bates numbered, with a searchable index. Failure to comply is a criminal offense.

That compliance is burdensome and expensive is one of the best features of our legal system. For the government, that is. If the government wants to shut down a nonconformist, just mire them in legal sludge. For example, here’s multiple attorneys general demanding a decade’s worth of communications, emails, and financial statements from those who have published climate change skepticism. Here’s that time a federal grand jury issued a subpoena to Reason.com after site commenters posted offensive remarks about the judge who sentenced Ross Ulbricht. Here’s the professional shakedown racket known as SPLC gloating about “massive legal fees” Gab will incur as a result of a subpoena issued by the Pennsylvania Attorney General.

The government is basically doing what Peter Thiel did to Gawker — dragging them through litigation until they run out of money and give up. Thiel incurred significant capital expenditure to subdue his opponent, but our government can do it For Free.

On the bright side, we do have something China doesn’t have: Capitalism. Our Department of Justice doesn’t choose its investigation targets in a vacuum. It has partnerships with nonprofits like the ADL, the NAACP, the SPLC, and other advocacy groups, who help inform law enforcement decisions in a totally unbiased way. Tech companies lavish donations on these groups to keep legal attention at bay. Or they simply put these advocacy groups on payroll as Trusted Flaggers and consultants, along with a cushy salary.

Consider it a form of tithe. After all, freedom isn’t free.

Addendum.

Another example. Operation Chokepoint was a DoJ initiative to investigate banks who did business with firearm dealers, payday lenders, and other politically incorrect companies. As a result, many financial institutions terminated service to legitimate businesses to avoid the hassle of investigation.

Bitcoin and Inflation

Bitcoin has an odd meme where people who lose significant amounts of money are praised for their contribution to scarcity. The world is a zero sum game, and if you burn your bitcoins then my own coins are worth more!

The greatest tragedy for any Bitcoin HODLer is to outlive his bitcoins. But you know what’s even more tragic? Having your bitcoins outlive YOU.

In the late Middle Ages, material wealth had a way of outliving its HODLers. The bubonic plague wiped out at least a third of the European population, with the death toll as high as 80% in places like Tuscany. As people died off, gold and silver consolidated into fewer hands and per capita wealth increased. At the same time, lack of farm labor led to poor harvests and higher prices. Mass inflation ensued.

Human labor was the biggest source of capital in the Middle Ages; today fiat is the biggest source of capital. Bitcoin-as-a-deflationary-asset assumes the continued growth of the economy, but this assumption is already false. Labor productivity hasn’t grown in a decade, and our ongoing asset price inflation has been largely the result of financialization.

The impending fiat collapse won’t directly kill off any humans, but huge amounts capital will vaporize. People won’t be fleeing into bitcoin; they’ll have nothing to flee *from*.

After the Black Death, it took a couple generations for demographic restructuring to lead to new economic growth. People shifted from agriculture to pastoralism, which was a less labor-intensive use of land. And the Bitcoin carnivory rabbit hole is endless.

Bitcoin is for Stackers

There’s a common myth that Bitcoin allows anyone to spend money anywhere. That’s incorrect — Very few merchants accept bitcoin. Bitcoin is useful because anyone can receive money, anywhere.

As consumers, we don’t often think about what it takes to receive payments from strangers on the internet. Wanna sell firearms, fireworks, pharmaceuticals, tobacco, vapes, or any other target of Operation Choke Point? Good luck finding a payment processor. That’s where Bitcoin comes in.

The distinction between spenders and receivers may seem trivial, but it’s literally how the protocol gets decided (see also: Economic Nodes). Bitcoin’s value comes from those willing to offer things in exchange for bitcoin. That’s true of any money: The US dollar is valuable because the government accepts it in exchange for a promise not to imprison you this fiscal year. Value comes from acceptance for value.

Americans sometimes have trouble with the idea of acceptance value. As the world’s biggest consumers, we believe that others value whatever we have to spend.

Nope, it took a lot of work for the USD to become the world’s reserve currency. After Bretton Woods, nobody wanted our unbacked dollars. With his brilliant negotiation skills, Henry Kissinger convinced Saudi Arabia to accept dollars for oil, and in return we would grant them billions worth of arms deals, our undying military support, and the souls of our children. Iraq tried to sell their oil for euros, but we set them straight with a good ol’ fashioned dose of Freedom and Democracy. They’re back to taking dollars only now.

Under ordinary circumstances, Gresham’s Law dictates that bad money drives out good — spenders always dump their most worthless asset. Americans don’t spend their bitcoins, or even their actual dollars. We pay for everything with credit, most often the credit card that gives us airline miles while sticking it to the merchant. Or maybe we spend that Starbucks gift card we got for filling out surveys on the internet. That’s why spenders don’t determine the value of money.

The lack of Bitcoin-Only services is perhaps the biggest obstacle to broader adoption. No one voluntarily spends bitcoin. As long as services still accept credit cards, bad money will always drive out good.