You Get To Choose [Your Network]

Good Morning Everyone,

Toward the end of my letter on Friday I touched on a point that I believe is extremely important to bring to the surface, and largely goes un-noticed by most at present.

That in order to survive in the world you must choose a monetary network.

Let me quickly recap for anyone that missed it:

“For centuries fiat currencies have been created and destroyed, and many lives along with them. Never in our civilizations history was there a viable alternative that would sustain through time. Until now.

No one is going to force you to adopt bitcoin. Thats the beauty of it. It’s a peaceful resistance, and you can choose to opt-in to the network - or not; and when you consider the fact that in life, you have to be a node in a monetary network of some kind in order to be able to survive, and your choice is between one where admins have special privileges compared with you - like in fiat, or you can choose a neutral network of only users - no admins. Where no user in the network has any power over another, with a cryptographically fixed supply that can not be changed. Compared with a system where some admin who lies to the population like it’s a sport, can just arbitrarily create more at the flick of a switch, stripping value from you and your family at will.

Once you frame it up, It becomes increasingly bizarre to consider that many people are actively choosing the fiat network as their preferred monetary network at present.”

When you realise this it changes everything.

Whether you actively choose or not, you are going to be a node in a monetary network. So it would seem somewhat obvious that it is absolutely within your interest to choose; and to choose wisely. If you appreciate the significance the technology of money has on your life, the gravity of this decision can not be over-stated.

Think about it. You likely interact with money everyday. Directly and indirectly. If you are turning on lights or running an appliance - energy is needed, which you will need to pay for. Money determines where you can afford to live, and of equal importance - where you can’t. It effects where you can go to school. These factors effect which other people you are likely to interact with. So there is a direct impact and relationship between money and the people you associate with and very likely your closest relationships are impacted by the technology of money. It effects the clothes you can buy. It determines whether or not you can travel beyond your local municipality. It impacts what food you can eat. Which is how many nutrients you can consume, and the quality of said nutrients. This impacts your state of being in a very direct way. The list goes on and on, but what becomes apparent, is that if you think of society as a technology stack, then money is the base layer of society, above the hardware layer of our bodies and the environment. ie Meatspace.

So if our monetary network impacts our lives so significantly - and it does - it stands to mind, that making a choice between which network we wish to be a node within is an extremely important one and certainly one we should make with a clear intention, and with our eyes open as to the implications of our decision. In many respects it could be the most critical decision you make in your life and many other occurrences will be down stream of this choice.

So how do we choose? What properties do we value? What makes one system preferable over another?

I shared the below table in an earlier article. It outlines the key properties needed to perform the role of a monetary good, and helps to clarify how gold, fiat and bitcoin compare.

This chart is looking at the fundamental properties of what makes a good money. Clearly given the fact that we’re on a fiat standard at present, what makes a good money doesn’t necessarily determine which money will be adopted over a short period of time, If it did we would never be on a fiat standard. So there is a layer of complexity beyond the monetary properties alone and the length of time we consider.

Something that this chart doesn’t capture is transferability and the level of acceptance of a monetary good. This property, which could loosely be represented by the number of users of the network, has a significant effect on the ease to which someone can exchange a monetary good, for a good or service. The smaller the network, the less people that are likely to accept the monetary good. The larger the network the more people that will accept it. If the network is growing, this creates a network effect. Meaning as more users join the network, the value of the network increases, attracting more users, and creating somewhat of a flywheel effect.

At present given how young the bitcoin network is, its definitely early days as a medium-of-exchange. There is little doubt in my mind however that over time as the network effect continues to compound and the number of users grow, that this will change. The lightning network is the mechanism that enables bitcoin as a medium of exchange in the 21st century.

The other factor that stands out in my mind, is force. The fiat network accumulates users by force. The word fiat literally means “by decree”. Which means, by force. It is a system you have not been able to opt-out of, and in fairness we haven’t really had a better system to opt-out too, prior to bitcoin.

While nation states, and the powerful among us are going to attempt to keep everyone trapped within the fiat system, i believe the human community can subvert that by having a clear recognition that we have a choice to make. That we get to decide which monetary system best serves us. That we get to decide how we store and save our wealth across time, and this is beyond the scope of any framework of governance. If the market adopts a superior monetary network, the others will simply fade into the background. Whether or not they continue to operate is less important compared with whether or not the network can continue to attract and grow users.

Realising we are a node in a network. That we have a choice as to which network we operate as a node within, is step one. Step two is choosing wisely.

I do not believe, if armed with all the information and the facts about these systems, and a clear understanding of what the different properties enable and incentivise, that anyone would knowingly choose the fiat network.

One system enslaves you. The other empowers you.

Hope you all have a great day. I’ll talk to you tomorrow.

AK

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