Is Bitcoin A Government Project?

Is Bitcoin a government project? I make the argument.

Prelude

I am heavily invested in Bitcoin, and have minor investments in alternative cryptocurrencies. I believe in Bitcoin’s potential and am slightly skeptical about other coins, mostly holding them as investment pieces.

This is a conspiracy theory, and not one I believe in completely. I’m writing to give people another perspective on something that is taking the world by storm, and invite you, the reader, to consider this with an open mind and poke holes where you see them. As always: I hope I’m wrong.

The argument goes:

  • The US dollar won’t last forever as the global reserve currency
  • There is a strong incentive for superpowers to have control over the future of money
  • We don’t know who created Bitcoin, but it’s an impressive/historic engineering achievement
  • Governments have the technical capability and historic precedent to undertake such a project

The US Empire, Or How To Rule The World

To grossly oversimplify, America’s status as world hegemon rests on a few pillars:

  • Memetic superiority: the dominance of American culture and values worldwide, including free-market capitalism, representative democracy, and American corporations
  • Resource superiority: the planet’s most powerful military, used to maintain control of things like trading routes and fossil fuel extraction
  • Economic/monetary superiority: the dominance of the US dollar in global monetary affairs, including its status as reserve currency

America works to maintain its dominance along each of these dimensions, and other nations attempt to increase their own power within them.

Reserve Currency & Monetary Superiority

The US dollar’s reserve currency status is a source of power for America, and a target for nations looking to increase their own power.

China has long been calling for a new reserve currency. Russia and China both are working on ways to bypass the US dollar, including collaboration.

Meanwhile, President Trump devoted significant time on the campaign trail to talking about China’s currency manipulation, and has flip-flopped since. Nonetheless, there’s discussion all the time about where the future of the ‘dollar standard’ lies, including from the President himself.

Monetary policy and global standards are not static. We moved from paying each other with barter, to simple currency, to the gold standard, to the current fiat-currency-and-US-dollar world monetary order.

The US dollar won’t hold as the global standard forever. Other nations, including budding superpowers, are trying to find ways to work around it. And there isn’t universal appetite to keep the current system in the US, for various reasons.

The Future Of Money

For any current or budding superpower, there is a strong incentive to own or control whatever the next step in world monetary standards will be. It has long been a source of power for the US, but the dollar standard won’t hold forever. Smart government operatives will be looking at the next step, and trying to be one step ahead of their competition.

For the future of money that such governments would hope to control, there would be some requirements:

  • Difference from fiat: replacing the US dollar with another fiat currency wouldn’t solve the issues with the dollar. One proposal to mitigate such issues is to use a basket of multiple fiat currencies. But whatever the next step is, we shouldn’t expect it to be a single, vanilla, fiat currency, else change would be pointless
  • No association with the US: part of the gripes nations have with the dollar are that it’s entwined with the US government, particularly the Treasury. This is particularly acute for Russia and China. For global acceptance of the ‘next step’ in money, it should be, at least initially, divorced from American government control
  • Decentralized and consensus-based: replacing US monetary hegemony with another nation’s monetary hegemony would just move the throne of empire from Washington to somewhere else. Ideally, the next step of money would be decentralized, with consensus-based decision making, for it to be adopted

Enter Bitcoin

Bitcoin is a prime contender for the ‘future of money’. This is why I believe in it, along with millions of others.

  • Bitcoin is not a fiat currency. Proponents often compare it to gold, but without many of the problems gold brings along with it.
  • Bitcoin is not associated with the US. It was invented by Satoshi Nakamoto.
  • Bitcoin is decentralized and consensus-based.

So Bitcoin looks a good candidate for the next step in money, and its rapidly increasing market cap shows the growth of this viewpoint. Now let’s say a government wanted to have control of that next step in money. Where are the attack/control opportunities?

Bitcoin, by design, is not a fiat currency. You can’t just turn it into one. It is also, by design, decentralized and consensus-based. There are some controversies around whether this factor is weakening through certain miners dominating, but for now it remains a central characteristic of the currency. So that’s not an option.

What does that leave us with? Satoshi Nakamoto.

Who The Fuck Is Satoshi Nakamoto?

It is absurd that we still do not know who invented a technology with a market cap, at time of writing, above $29 billion.

“Satoshi Nakamoto” is an unidentified individual, or group of individuals, that invented Bitcoin. Nakamoto published a highly technical white paper in late 2008, on a cryptography mailing list, called “Bitcoin: A Peer-to-Peer Electronic Cash System”. He mined the very first bitcoin, and accumulated over a million coins in its first stages. Nakamoto is estimated to own over 7% of all bitcoins in existence.

Bitcoin has a fixed limit for how many coins can be mined in its lifetime: 21 million. Many coins were lost in the early days of the technology, by punters and hackers who came in to mess around with it, then lost the wallets holding the coins assuming they had no value.

Whoever invented bitcoin will own ~7% or more of all Bitcoin that will ever exist. If Bitcoin really is the future of money, then that will make “Satoshi” one of the richest men in history.

Is Satoshi Really A Government?

Governments have both the incentive and the technical capability to have designed Bitcoin.

Technically, Bitcoin (and the blockchain) are extraordinary engineering achievements. Many speak of blockchains as “Web 3.0” – something that will have as much impact on our society and economy as the internet did. As we’ve examined, you have plenty of people (and reasoning) claiming Bitcoin will be the future of money.

We’re expected to believe this was cooked up by somebody in their bedroom? Anonymously published on a mailing list? Satoshi’s on track to become one of the richest people in the world, and 9 years later we’re still no closer to identifying who he is?

The internet grew out of the US Military’s DARPAnet. Web 1.0 and 2.0 originate with the US government. Wouldn’t it make sense that “Web 3.0” does?

World governments are no stranger to using secretive software to achieve their ambitions. Look at the Stuxnet virus, used to attack Iran; attributed to the United States and/or Israel. Snowden and WikiLeaks have revealed to us the extraordinary reach and capabilities of the NSA and CIA, including backdoors/exploits for pretty much every connected system we use. Hi NSA!

If Satoshi was really a nation state, or an intelligence service:

  • It would solve for the question of how such an impressive, and potentially historic, technical achievement was supposedly cooked up by a lone individual.
  • It would also solve for the question of how such an intriguing and potentially powerful individual has managed to avoid detection for what is approaching a decade since the white paper was first published.

Which Government?

The incentive is there for any government to ‘be Satoshi’ and invent/control Bitcoin. The prime candidate must be the US government, but potential others include Russia and China.

If Satoshi was the US government, it would solve for the “no US association” condition we identified as a prerequisite for the future of money. Assigning credit to a Japanese hacker removes the taint of US government involvement that would have instantly killed any prospect of Bitcoin growing the way it has. Assigning credit to an anonymous individual removes a block to growth among the techno-libertarians that were such enthusiastic early adopters of Bitcoin.

Bitcoin also grew with enthusiasm from Silicon Valley and the US hacker community, with which the government is deeply integrated. Its growth through Silk Road and similar black markets is would not trouble a government that has had no qualms about using drugs and drug trafficking to achieve its objectives. It may well have been encouraged, as the obvious way to grow an anonymous cryptocurrency to widespread adoption.

Russia and China could also be behind Bitcoin: they certainly have the technical capability. And as we examined, they are the prime agitators trying to move away from the dollar standard.

Conclusion: Incentives Align

All the incentives align for a government to be behind Bitcoin. And it would explain away many questions behind its origin.

I see three possible scenarios:

  • The US government is behind Bitcoin: America would be a step ahead, once again, of every other nation. It would solidify its monetary supremacy for a new era, with a massive share of the next world currency and all the understanding behind its creation.
  • Another government is behind Bitcoin: they are well-positioned for the next phase in world monetary dynamics, as the US would have been. And they can credibly claim that it was decentralized and made consensus-based to avoid any country ever taking the dominant monetary position the US currently enjoys. The ownership of such a large chunk is just their reward for creating the system.
  • Satoshi is really is not connected to government: whether Satoshi is a real person, or a moniker for a group of individuals, their achievement would be absolutely extraordinary. And they would be well on the way to becoming one (or some) of the most powerful and wealthy people in the world.

Keep the tin-foil cap on. Why are so few politicians questioned about Bitcoin? The future of money is highly relevant to the future of geopolitics, yet we got no questions at the Presidential debates. No questions from the White House press corps, in years. Very little mainstream media attention: all the news is about the price, not about the origin. For something of such significance, the blind spot is very conspicuous.

Regardless of whether governments invented Bitcoin, the incentives for its control remain. Power available is power seized.

Looking at our three scenarios: the first two are conspiracy theories. The latter will be one of the human interest stories of the century. Either way, the topic of Bitcoin’s provenance deserves orders of magnitude more attention than it’s currently getting.


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One comment Add yours
  1. Hat tip to this. A few years go I did some work for a man with an extremely impressive background in tech. Long story short, when he first learned of Bitcoin, he was convinced it was actually a decentralized decryption operation by a gov entity like China or Israel. In other words an encryption-computing-power leech network essentially. Mind you at that point he hadn’t looked into blockchain and the intricacies of how it works – but when he said that it made MUCH more sense to me than some random genius inventing it, and YAY! its a non-government controlled currency. Let’s really stick it to the bankers huh?

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