Decentralized Settlement
Integrating Cash and Commodities Markets
The Background
The current mode of on and off ramping users, liquidity provision and ultimate market settlement in the cryptocurrency industry have become centralized. Mark Goodwin has termed this apparatus the Bitcoin Dollar, similar to the Petro Dollar, but rather than utilizing the properties of oil as collateral, the Bitcoin Dollar utilizes the properties of Bitcoin.
I described in the Romeo-Juliet framework how and why Bitcoin can be and was monopolized and how this gives rise to its counter-intuitive behavior that is now becoming much more widely recogized. Bitcoin is being utilized by Power Capital, as a power process, to sequester wealth, not to decentralize both power and wealth as initially envisaged.
Adam Curtis’ Bitter Lake documentary provides valuable background on the lessons of the probematic Petro Dollar experiment from which much can be gleaned about the Bitcoin Dollar while highlighting some key differences from first principles.
The Bitcoin Dollar augments the Petro Dollar, which is declining via the rise of the BRICS bloc. Trump’s AI investment deal with Saudi Arabia shows that the Petro Dollar is not dead, but rather oil producing nations can negotiate for more than just weapons, they can negotiate for important cutting edge strategic technology and expertise.
The Bitcoin Dollar is primarily about the expansion of dollar hegemony by providing digital payment rails, very much in the original Paypal Mafia spirit.
This, in turn, facilitates US government deficit spending, as the Bitcoin Dollar network expands globally according to Metcalfe’s Law, the payment network itself, outside the United States, underpins the debt.
This will accelerate the onshoring of the Phoenix Program and the erosion of rights in the USA, as the CIA affiliated Bitcoin Dollar apparatus is primarily concerned with dollar dependency, not the United States constitution.
This explains why the Bitcoin price spiked to a new all time high of $122 500 on July 14 and started rising rapidly after the Epstein Client list was delcared by the FBI and DOJ to be non existent on July 8.
Both Epstein and Maxwell are strongly linked to the current Bitcoin Dollar apparatus, as is the money laundering network that was under their protection via blackmail and extortion.
The primary mechanism of issuance of Stablecoins, the digital dollars the Bitcoin Dollar apparatus, is the the issuance of zero coupon bonds.
These instruments pre-date Bitcoin by at least 14 years and were invented by Ian Grigg, alongside the centrally controlled exchanges that dominate the market such as Binance.
Primary issuers of these zero coupon bonds are based in offshore tax havens such as the Cayman Islands.
This makes them tightly intertwined with Pandora Papers money laundering, just as Bitcoin has been since its inception via the Free State Project and New Hampshire.
This also means that, rather than dis-intermediating the Federal Reserve, the Bitcoin Dollar has put the apparatus further beyond domestic American accountability.
With the Paypal Mafia’s existing links to Palantir and several social media platforms, the anti-CBDC Surveillance Act becomes largely a moat for Tether’s business model. precluding domestic competition and regulation.
Back to Basics
Previous Technology Truth posts have covered three fundamental principles with respect to recapturing the initiative:
Darkweave: adjudication between the digital and the physical with respect to material facts and material risks using the engineering digital signature.
Nether: a fully private and anonymous Stablecoin with private and anonymous collateral.
Physical gold (and commodities in general): settlement for physical product of a certified quality, quantity and variance, not centrally issued and controlled numbers on computers and pieces of paper.
Bitcoin Dollar System D
The Bitcoin Dollar only works if those dollars can ultimately settle for physical goods, and their primary mode of settlement as a mode of power is resource colonialism. Geo-strategically the Bitcoin Dollar will aim to expand its network where there is most population growth (ability to take advantage of Metcalfe’s Law); most natural resources (to redeem those network effects for physical raw materials) and currently immature and fragmented payment rails that limit market network effects. Just according to the numbers: Africa will, therefore, become the key battleground.
The nature of jobs and work that will be promoted by this Bitcoin Dollar network will likely be low-medium skilled service economy gig work, as is the current mode of Silicon Valley labor markets, overseen by surveillance capital and used for AI training. It will not be the sort of work that promotes the integration of the national commodities and materials supply chain, which will be performed by engineering oligopolies, such as Bechtel, Hallburton, Booz Allen Hamilton, Glencore et cetera. This Bitcoin Dollar System D then lays the groundwork for Military Industrial Complex occupation, while the mass population are pre-occupied in their gig work hamster wheel and without the education and systems to compete.
The Bitcoin Dollar apparatus is therefore a continuation of the process of erosion of civic accountability, imperialism and, ultimately, desertification. In order to understand the process of Reforestation and the Dark Forest, this must be recognized as the most pressing current threat to that vision.
Strategic Agorism
In order to understand why DAOs did not take off and why state censorship has enclosed the imagination of the internet, of cryptocurrency and blockchain technology, Amir Taaki highlights one important root cause of failure: that privacy was not implemented as a core feature.
There is one other well described and reasonably well understood core feature, which is Object Capability Security Patterns. This allows authority to scale alongside network growth and smart contract interaction and therefore allows for complex orchestration of users and code. Incorporating OCaps into privacy tech is an unsolved problem beyond the scope of this article, but it is important to mention, and that just as stablecoins currently have no private and anonymous analogues, so do Object Capabilities.
The third important reason for the under-performance and containment of the cypherpunk decentralization narrative is that the Bitcoin Dollar has monopolized the on and off ramping and the fundamental settlement mechanism by which cryptocurrency is valued and cleared.
Show Me The Money
That the cryptocurrency industry has not been able to produce a gold Stablecoin of note, much less one that operates according to principles of decentralization and not the principles of Fort Knox, which D.O.G.E still has not audited and probably never will, is a sign of this third major failure of cryptocurrency governance. Cryptocurrency networks have not been able to create their own settlement mechanisms beyond the pre-established zero coupon bond and centralized exchange mechanisms of the 1990s.
Measuring success according to dollar value is both a conscious and an unconscious bias. When projects make money, founders attribute success to themselves, when projects fail the make money the entrepreneurs are labelled as ‘losers’ and learning from the failure is rarely valued appropriately.
One anecdote from Uganda, however, proves and important counterfactual premise with regards to the consideration of this failure mode and its true value:
Bitcoin-based payment and remittance provider sets up in Uganda
Achieves modest growth, fails to reach profitability
Established remittance and payment provider pays the failed startup $20 million for its user data
The failed startup had gathered a highly statistically significant dataset for an under-served demographic in Uganda which greatly improved the ability of the established provider to send and loan money at lower risk and therefore greater profit
The Economy of Value Propositions
It is not just in the financial industry where actuarial statistics, machine learning and artificial intelligence aid in market making. This can additionally see from the energy and logistics to the transport and supermarket industries.
What surveillance capitalism does is turn human obedience, through behavior modification, and consumption into the value proposition for itself. The people themselves are tokenized by proxy of tokenizing the means of life and production and placing them in the middle of it. What engineers and the engineering digital signature do is turn the physical world into a defined value proposition for humanity.
The cryptocurrency bull market thus far has largely been a capitulation and surrender to the very same forces that early Bitcoin adopters and coders sought to overthrow and replace.
They key to winning is to re-commodify the commodity itself and de-commodify the people. If users can exchange Nether for physical product, whether it be gold, silver, oil, heads of sheep or cattle, then this hits two birds with one stone
It dis-intermediates Tether and the US Treasury as the central clearing mechanism, pushing clearance and settlement to the fringes and the process of direct adjudication between physical and digital.
It de-commodifies the public data of the human on the public ledger, and re-commodifies the commodity with certification of the properties of its value proposition via the engineering digital signature.
Trust and Accountability
Thus users gain control back from the Bitcoin Dollar precarious gig work economy, and their own value propositions with respect to coordinating and building infrastructure for themselves and each other.
This takes back ownership of the means of production from not only the Bitcoin Dollar apparatus but also unaccountable corporations and faceless bureaucrats, and puts it into the hands of engineers with reputations upon which they and civilization mutually depend.
We have to measure what is currently not being measured and we have to have the courage to meet the market in the physical realm and get out of the habit of using the Bitcoin Dollar as a crutch and a proxy measure of success.
Until next time, TTFN.