bitcoinmagazine.com
The Dystopian Present – Fiat Has Made Us All Digit Addicts
Everyone wants to make you an addict. Some people sell illicit drugs on the black market and want you to become addicted to them so they can profit from you. The dealers naturally focus on drugs that are physically addictive because they are often the hardest to kick. When they do manage to addict you to them that becomes harder and harder over time. For drug lords and dealers, this is heaven. This virtually guarantees that all customers will be regulars, at least for as long as they survive. For the addict, it depletes the quality of their life. They start to live from one fix to the next. The problem for the dealers is the illegality of the product. Staying in business as a dealer requires a lot of care, caution, and expense. Additionally, much of the total addressable market (TAM) is turned off by drugs’ bad reputation. So what do you do?
If the problem is legality, make legal drugs. The drugs sold in pharmacies are legal and in many cases no less addictive. There’s a drug for every complaint and three dozen for the common cold viruses. Some, like a simple nasal spray, are addictive and can lead to a chronic condition which “locks” you in for life. It’s the same basic business model as the street dealer but with less friction, lower risk, and much better optics. The barrier to entry is that the clients have to be "sick".
Now consider supermarkets, where the market is perhaps saturated, but the TAM is almost 100% of the population – everyone eats. Junk food can be quite addictive and can make its users sick. Sick junk food junkies might turn to pharmaceuticals without changing their habits, compounding the problem. Now the cycle is complete. As bad as such addictions might sound, and as widespread as they are, the current global addiction is yet worse: the addiction to digits pandemic.
The first case of addiction to digits is in terms of fiat currencies. They have the benefit of transacting with everyone in a particular country. It is very convenient to use those digits as a medium of exchange. Those digit addicts usually say: "I can't buy anything with bitcoin, so I am not going to buy any." They are saying, “I am addicted to the benefit of a convenient medium of exchange even though my purchasing power will deteriorate.”
Some people realise that money is usually static. It’s active when people are transacting and passive when they’re just keeping it for later. To be an effective store of value, money needs to preserve (or grow!) its purchasing power over time. A person should not earn the same money twice. When I have savings I should not be forced to actively manage it. So whole market segments focus on the passive use of money. It is strange how the system forces you to actively use your money to solve the passive use - it kind of defeats the purpose. Still, you can't let it degrade because of inflation. Here there are a few main categories - bonds, real estate, equities, gold, and art.
The bond's benefit is its promise to return more digits after some period. “Guaranteed” by the state. And they truly do! They give you the benefit of increased digits and at the end of the period even with the more digits, your purchasing power is less than when you started. Still, it beats the ones that just saved. The bond digit addicts will not buy bitcoin because bitcoin in cold storage pays no interest.
The real estate benefit is a digit "yield" in the form of rent and the digit value of the property will be higher. The value of the real estate is a function of the returns it generates every month. The digit value of the building increases because the degrading of the fiat digits happens faster than the degradation of the physical structure. Real-estate addicts will not buy bitcoin because it is not physical and does not pay any digits for rent.
Financial “engineers” invent products for people to bet on against each other. The whole premise of a stock market is that you sell something you have for another thing that may increase in digit value. Each trade has a winner and a loser, but like in a casino, the house always wins in the end. Just another addiction with another kind of dealer. The Bitcoin system is unifying everything into one. In a bitcoin economy, there are no losers because one person’s profit is not necessarily a loss for another. Those addicts would not buy Bitcoin because there is no betting system in Bitcoin and can't do call or put options or other illusionary "engineering" things so the insiders benefit. If you just buy Bitcoin and HODL for when you need it then all the dealers of that addiction will be out of business.
Gold addicts are addicted to the metal without realizing how it can be used against them. How can anyone tell us how much the market cap of gold is if no one can tell us the exact weight digits of gold that it is found? This is the true Schrödinger's cat these days. Now owning gold is represented only by a number on a screen, reducing it to the same status as fiat. With fiat currencies, one piece of paper has the number 1 on top and the other has the number 100 on top. We do not care that they are on the same paper value but we value the digits that are written on the paper. The gold digit addiction is the same, but it took longer to foster because everyone can measure its weight rather than rely on arbitrary numbers. Nobody can put 100 on top of 1 kilo of gold and tell you that it is 100 kilos. But since digital displays of gold ownership have largely replaced physical possession, it follows the exact same mechanism as paper. Gold addicts say that bitcoin does not have any physical (metal) properties, so it has no value, and they won’t buy it.
How about the art digit addicts? Their views on bitcoin aren’t very well known since they aren’t very active in the discourse. The benefit of art is in the emotions it evokes. When Bitcoin starts to demonetize the art industry, we will see art digit addicThe Digit Addiction Pandemicts defending its value. Art should be art, it should not be a method for a store of value.
The next digit addiction dominating today's societies is loyalty programs, like air miles, and loyalty points for discounts, promotions, and exclusive offers. Even to this day, my grandma is looking through the brochure of EVERY store in the area to find a discount of 10 cents cheaper bananas per kilo. Because the companies can't print currency digits they print loyalty digits. They not only have much greater purchasing power inflation than currencies (most of the time) but they also have much greater controls over when, where and how to actively use them. The addicts of the loyalty digits start orienting their lives around the loyalty program digits and the dealers love it.
The next digit addiction is social media. People get addicted to subscribers, likes, views, etc. The benefit they provide is the platform, the ability to reach a far greater audience than through face-to-face interactions. This addiction is not directly connected to money, but all those digits are what promoters, sponsors and everyone is looking at sponsors and subscribers automatically convert metrics into value to assign worth in fiat.
The next digit addiction is to video games. Gamers get addicted to the tokens needed to "unlock" the "special" item. They start chasing those token digits so hard in the virtual world that they forget to live in the real one. As young players age, their addictions often graduate from game tokens to other digit dealer systems.
The current FOMO digit addiction is to blockchains. Their benefits include faster transactions, more anonymity, and smart contracts to get you hooked. If the creator is not a direct scammer and truly wants to give those benefits to people he is essentially saying that the benefit that he gives is more important than incorruptible money. The benefit of smart contracts is greater than incorruptibility. That is probably a misunderstanding that secure and decentralised money is the base that gives you certainty to build everything on top. If you want to launch rockets into space you do not change gravity to make your use case easier to achieve. If you do, you will destroy all the sports where people need to jump. All the tall buildings and trees will be collapsing because for winds it will be much easier to tilt them. You destroy the way of life on earth but it is nice that we can go to space. If you believe that the benefit is worth it then do the work and build it on Earth without destroying it. Build on Bitcoin!
The next addiction is to the digits of the custodians. Bitcoin ETFs were hotly anticipated and have received plenty of acclaim. But their custodians are getting the punters hooked on convenience. Give me your bitcoin in my custody because you are inadequate to hold it yourself. Give me your Bitcoin, and I will give you digits.
The common trait among all of these digit addictions is that they offer some benefit in return for dependence on certain digit lords. Once people experience the benefit, it becomes that is the thing that traps them. That is one of the struggles of the Bitcoiners to accept that there are benefits to all of the addictions mentioned above. Bitcoin has its benefits and limitations, but the benefits of Bitcoin do not negate the benefits of other things.
This is the source of the greatest conflict between bitcoiners and crypto bros. Bitcoiners should not dismiss other crypto just because they are shitcoins. Instead, we should enter the arena and out-compete them just like we have been for the past 15 years. Some of them do provide nice benefits to get people hooked to their blockchain digits. When we as bitcoiners do not compete with them and learn what we can, we are going to deprive Bitcoin of those benefits. Bitcoin probably shouldn’t adopt every feature that emerges somewhere in the cryptosphere, but competition fosters improvement. As a former professional athlete, I can say that my skills improved the most after losing to a weaker opponent. When a weaker opponent defeats a stronger one, it only means that he revealed a weak spot. Just because the weaker opponent won does not imply that the rules are unfair and need to be changed or the weakling should be disqualified. That is the tactic of the fiat digit lords. If we want to beat more powerful opponents (i.e. fiat currencies), we must also face the weaker ones. Bitcoin’s obvious weak spot was, until recently, its throughput. Enter Lightning Network.. Privacy? Welcome to eCash on top of Bitcoin.
The Battle for Control Continues in a New Domain – The Digit Lords Are Capturing Bitcoin Digit Addicts
The addiction is so ingrained in all of us that even when someone understands Bitcoin and its implications, they transfer their digit addiction onto Bitcoin. For them, the addiction manifests in HODLing, and the object of their obsession is "How much do I have??" and “Is the number going up??” I HODL and want the digit value to rise to give me the "fix" that I need. Still intoxicated by other digits, they are the easiest prey for the custodian digit platforms. By contrast, real Bitcoin maximalists value proof of work above all. Their primary goal is to build a better life for everyone through Bitcoin. Unless you’re building, you’re just a digit addict chasing your high with Bitcoin.
Different people get addicted to different digits. But even if someone benefits a lot from their addiction, that does not mean it is right for you. Michael Saylor was instrumental in helping me recover from my fiat addiction and going clean on Bitcoin. At the same time, he’s hooked on the custodians’ digits. After all, he has billions in the custodians’ digit ecosystem. He preaches to people that it is better to have more custodians of bitcoin. Let's go ask all the “gold bugs” how that thing turned out for them. Do not get me wrong all the benefits that he is saying are right and they are benefits so what is the difference?
The difference is in the control. In the addictions described above, the users get the high, but they also get hooked. At the same time, a small group keeps control over the digits the addicts use and claims themselves as digit lords. In all those digit addictions, the mechanism is the same. Fiat digits are controlled by fiat digit lords. Air miles digits are controlled by the airline digit lords. Crypto bros are producing ever more blockchain digits with benefits that Bitcoin does not have (yet) to become the blockchain digit lords. The custodian's digits are controlled by the screen digits lords. They all control the addicts through the digits.
Another reason why the addiction analogy fits so well is that detoxing is so hard. Wonder why "Orange Pilling" is a struggle? Have you tried to take the cocaine away from an addict, or the insulin of a diabetic, or the chocolate from a fat kid? Resistance is natural. A real estate mogul who has spent decades mastering his trade and amassing a fortune is naturally going to resist any force that could demonetise his industry. The HODLer junkies profiting from BlackRock’s ETFs and similar custodians will naturally resist any threat to the number-go-up fix. That is a marriage made in heaven. For the HODL digit addicts, you can see what infrastructure the custodians are setting up to capture you. Check the work of #WhitneyWebb and #MarkGoodwin in their collaborative articles about that topic.
Gold provides a clear example of how the digit custodians work. To analyse gold, you go to a goldsmith who can assess the gold’s weight and purity, not an ETF dealer. The ETF dealer is just the street pusher for the ETF digit lords. They can describe the imaginary trend lines on top of their imaginary digits that are disconnected from the metal. Unless that particular ETF dealer has a direct line to the gold digit lords, his opinion is absolutely worthless. He is just the digit addiction dealer pushing someone else’s product to get his cut. Bitcoin ETFs are no different. Bitcoin can be used as a real store of value! In the fiat system, it is mainly “You store my value!”
The digit lords’ model has its weaknesses. Some try to exploit the model’s mechanics for their own benefit and to avoid becoming addicts. For example:
- counterfeiting fiat
- insider trading in the store of value digits
- hard and soft nepotism in the loyalty digit programs
- hacks in games
- all of the above in blockchains
Even though they are not obeying expected addiction behavior, they are still addicts by chasing the same digits. The difference is that if they succeed they are branded criminals (hackers) by the digit lords. They are using the control system as designed and demonstrating that the whole system is exploitable. The exploiters can attain enormous power by those actions but that is not the intention of the system. The digit lords need control to remain a privilege and guard it jealously so that no one else can own the digits but them. That is why they need us to be hooked: no single person’s effort can overcome control over the digits. That is why any system that is disconnected from work will fail in the Bitcoin era.
Bitcoin is the panacea able to cure all addictions. There is no free lunch in Bitcoin. Once connected to the open and permissionless Bitcoin network, all wallets, all investments, all loyalty promotions, all social media, all gaming tokens, and all blockchains will benefit from bitcoin and their first-mover advantage.
First Look at The Addiction The Right Way - Then Take Responsibility to Break It and Be Free
Beyond the number go up addicts, analysts are also addicted to the models evaluating all the addiction digits. If Bitcoin is something genuinely new, then why are we using the same old modeling principles? The power-law model fits a number of real-world phenomena, including bitcoin through most of its history. From the growth of cities to metabolic rates and many other correlations relating to energy expenditure, the power law applies in a surprising number of cases. The power law is a functional relationship between two quantities, where a relative change in one quantity results in a relative change in the other quantity proportional to a power of the change, independent of the initial size of those quantities. In other words one quantity varies as a power of another. Funny how the name of the model coincidentally (or not) suggests using it for things connected to power. Bitcoin is inseparable from energy (power), so the power law is probably the proper tool. That is why the power law of the hash rate will never break even if the fiat price power law might.
Since engineers have built Bitcoin, their models explain the technology best. But when it comes, to financial analysts they are not modeling reality - they are trying to model the collective psychology about particular digits. Elon Musk is not going to land a rocket on Mars powered by likes or fanboys. The only way is to model reality and then build it. Reality is uncompromising, and inspiration only takes you so far. Either the model is accurate and the execution works, or the rocket explodes. Over time, reality will defy even the best financial models, but they can accurately capture what the collective psychology values in the short term. That’s why the financial “engeneers” hypnotize the digital addicts and get them hooked. In the meantime, Bitcoin continues to do its thing regardless of what any of us think about its future - it is an uncompromising force of nature.
Perhaps there’s a less fickle way to evaluate companies. Let's take NVIDIA, the current FOMO stock. The digit value unit of a stock is connected to a digit unit of the share. Neither quantity is directly connected to energy and, therefore, can be created at will. But what if someone maps the produced GPUs by NVIDIA? It is just a hunch but it probably follows a power law - the production capacity of the chips is limited by physics. The production of the company can’t break reality to scale but when you cross-reference it with the stock price, you may see when those digits are driven by the current psychology of the “market” or by fundamental value. #GiovaniSantostasi is the person to do the math on that and say if he can innovate a new way of evaluating stocks with the power law model. I may be talking out of my ass for the stocks valuation application of the model but he proved that this is the only model that maps the journey to hyperbitcoinisation.
And what about digits that no one controls? Some digits are connected to reality, which is very useful: the digits for time, the digits for length, the digits for weight, and the digits for temperature. Reality does not care about what we think about it. Reality just is, and we use digits to understand it. That is the language of the engineers, not economists. The numbers not connected to physical energy are numbers backed by a group's opinion. They can be captured and controlled. Engineers’ digits are free. They resist control. Even those who haven’t mastered them can benefit from those who have. They are the ones building the roads, the computers, and everything else we need in modern life. The difference between open digits and controlled digits is that the addicts of the controlled digits depend on the digit lords for where, when, and how they can benefit. You can't use the digits of one country outside its borders freely. You can't use one company’s loyalty digit points with its competitors. You can't use the token digits from a game to buy a coffee. You can't buy MicroStrategy stock digits without a bank account.
Michael Saylor always says that there is nothing worth buying in Africa even if you had a billion dollars to spend. That is grossly biassed towards the passive use of money – saving their purchasing power. If you are a billionaire it sure is a problem. But if you want humanity to flourish, the most important thing is to build stuff! Africa is a very important part of humanity, and we need to figure out what to build and how to facilitate spending, so they can get to the point of caring about store of value billionaire digit addiction problems and even beyond the addicion. Saving is just a partial view of that one store-of-value use case. My point is not that Saylor is wrong to protect his castle. Rather, we need to build castles for everyone and then they can start protecting them. His blind spot is that the custodians now want to co-opt Bitcoin as a store of value so they can continue the 2% inflation game and remain digit lords. The difference is that with Bitcoin the 2% inflation game runs on a decentralised global standard. Different countries and banks can connect to it and profit, but that attracts the degenerate custodians (companies, banks, and states) that will print digits on top of Bitcoin. At some point, a bank run on the most degenerate custodian digit lord is inevitable. Then the domino effect of bankruptcies that they can stop in the fiat system is not something that they can do in the Bitcoin system. So buckle up! The biggest volatility may lie ahead. The people that we call poor do not have access to custodian institutions, but now they can run their own Bitcoin nodes. For the first time ever, unprivileged societies have the tools to take back all the purchasing power that was stolen from them by the digit lords without spilling blood.
Take control of the math you use, and take control over the money you use, so you can take control of the life you lead. Otherwise, there will come a time when you will beg someone in control to come and save you. This message is addressed to those without control, but this message is also relevant to those who already realise what Bitcoin is and need to prepare for the day when the addicts come and beg us to save them. We need to start working on becoming people of virtue #Alex Svetski. We must not become digit lords, but actually detoxify people effectively and cooperate. Do not sit on your hands, just HODLing. Build that future. Anyone who’s been in Bitcoin for more than 4 years (one cycle) should be running a node and taking more control into their hands. Anyone who has profited from Bitcoin’s appreciation should be thinking about what they want and how to integrate Bitcoin into those goals. No coding or technical expertise is required. All the analog infrastructures need to be integrated with the Bitcoin infrastructure. Barbers need to start accepting Bitcoin and telling the community. The barber infrastructure has to be connected to the Bitcoin infrastructure along with all the others.
The digit lord companies should consider replacing air miles with sats? Replace in-game tokens with milisats? The digit lords could do this immediately. This is Bitcoin’s ultimate, imminent network effect. Inflation in all the addiction digits will accelerate. The digit lords will do everything they can to keep addicts in their digit drug ecosystem. At the same time, companies that have already adopted Bitcoin will actually save them from bankruptcy. The digit lords will then serve all of us, and whoever gives the most benefits will be the one that WE choose, and they will fight for our vote and support.
Until you drop the digit addiction, you will never be free. Reality is uncompromising for those (companies or countries) who do not navigate its rules/laws properly. This is exactly the problem that the digit lords face as long as the digits are connected to reality. Someone can always verify the accuracy of the digits. I can lie about today’s date, but you can verify. I can lie about the weight of something, but you can verify - maybe not applicable for gold :). I can lie about your height, but you can verify. I can lie about the temperature, but you can verify. Now, for the first time ever, money digits are connected to reality through Bitcoin, and everyone can verify! Lies won’t last long. Just ask the FTX, Celsius, and Terra Luna digit lords. They may control their closed-digit systems, but no one controls reality. That is exactly why we will win #MartyBent! The digit lords are addicted to that control, but people are building solutions to transfer control from the digit lords to individuals. Whether the digit lords realise it or not, they are losing ever more digit addicts to a system that is detoxing them. Losing addicts is fine if you can get them hooked on another substance. Referring back to the chemical drugs mentioned above, that we looked at at the beginning of the article. This is why digit lords will do anything to keep their addicts hooked on the next digits. Now that people have Bitcoin – money inseparable from reality – we have clear detoxified heads. We will never go back to the addiction. The current dynamic is that the digit lords will chase our attention, but we will never give them back the control. I will happily take a discount on a vacation flight, but I will not serve the digits lords’ agenda. I will not obey the digit lords’ vacation plans for me whatever loyalty digits they offer. They will serve my plans and orient their services around my needs.
One of my favorite phrases from #JeffBooth: There is no they; there is only we! It is incumbent on all of us to take control and become "we". The digit lords are the "they" people usually refer to. In the current system, there are digit lords, digit dealers, and digit addicts. In the Bitcoin system, addicts detox, dealers build detoxing tools, and no one is a digit lord. And brings us back to Jeff’s statement there is only we in the Bitcoin system!
Congratulations on reaching the end of this article! Few people take any time to digest anything more demanding than a meme, but not you. If these ideas are worth spreading, please share the link. If you think that they are worth discussing on a podcast, tell the podcasters to hit me up, and I would be happy to chat with them. May we all live without addiction and build what we want for ourselves and for the kids #GregFoss.
P. S. Love to all the orange brothers and sisters out there. Godspeed!
This is a guest post by Ivan Makedonski. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.