On June 4, 12,000 people from across the globe came together in Miami, FL for what was by far the largest Bitcoin conference in history. Attending on behalf of the Canadian Blockchain Consortium, with a mandate to promote Canada’s blockchain ecosystem to the international community, by the end of the event my perceptions of the technology’s importance and impact were, in some ways, radically different.
Since Bitcoin’s genesis block was mined in 2009, the world’s first cryptocurrency has been transforming the way we view value – of energy, time and money. Like a living ecosystem, its decentralized, encrypted network has spread rapidly across borders and industries, evolving new abilities and scaling to more than one million miners supporting its growth.
According to encryption pioneer Ralph Merkle, Bitcoin’s life-like qualities can be taken literally. “Bitcoin is the first example of a new form of life,” he said. “It lives and breathes on the internet.” What I find fascinating – and what Bitcoin 2021 demonstrated in a powerful way – is this organism’s intersection with human culture and economic systems, a unique symbiosis that could shift humanity onto a new path.
Bitcoin 2021 was full of ideas about those potential changes. The day before the official conference, the Canadian Blockchain Consortium team attended a day-long seminar given by Dr. Saifedean Ammous, the community’s leading economic theorist and author of The Bitcoin Standard: The Decentralized Alternative to Central Banking.
His lesson covered the historical and financial rationales for Bitcoin adoption, along with some new insights about its effect on human behaviour.
In one of his slides, he pointed to Bitcoin’s algorithmically set quantity as the first time in history that human demand had no impact on an asset’s production – more gold can be mined, and fiat can be quantitatively eased into existence, but BTC will never total more than 21 million coins.
In his view, this programmed scarcity, and Bitcoin’s close price alignment with stock-to-flow models that divide the current float by annual BTC production, results in the world’s first “economic constant” – a mechanical measure of value that leaves humans, with all our unpredictability and irrationality, out of the equation.
He depicted fiat money as the financial equivalent of sugar. Eroding at 10 per cent a year due to inflation, it has become a “recipe for instant gratification” that encourages debt, rabid consumerism, and bad investment decisions. In an interview after the seminar, I asked Saifedean what he thought the future would look like if Bitcoin became the global standard.
“Everyone is wealthier and able to save the wealth they create,” he said. “This results in people with a much lower time preference, and a far greater ability to care about the future.” As for Bitcoin’s environmental critics, he said that all human progress requires energy, and in his opinion, secure and inflation-proof savings were worth many multiples of BTC’s energy consumption.
Time preference, or the relative value of money now to money in the future, is a major determiner of human behaviour and a huge indicator of success. As shown in the famous Stanford “Marshmallow Test”, where children were given the option to have one marshmallow now or two treats in the future, people who are able to delay gratification have better long-term results in life, work and relationships.
He made an intriguing point – can Bitcoin’s intrinsic properties shift humanity towards a future orientation, a mindset that pushes value out into the next five, 10 and 20 years, as opposed to our current culture of instant gratification?
Considerations on a global scale
This very human focus was echoed throughout the first day of the conference – many of the panels and discussions were more focused on the technology’s benefits to global problems like the 2 billion unbanked than its investment potential.
This must have come as a surprise to the many investors in the crowd – easily spotted by their business casual dress, rather than t-shirts and shorts – who were trying to figure out where the opportunities were in this new market. In the discussions I had with them, Bitcoin’s environmental criticisms were a major focus – and something the conference continually tried to address.
In a fireside chat between long time BTC champion Max Keiser and MicroStrategy CEO Michael Saylor, who recently announced his whale status has reached 100,000 coins, the discussion focussed on Bitcoin as the highest value use of renewable energy like solar, and, along the lines of the recent Square whitepaper, as an incentive for the development of new projects.
Many in the community, however, disagree with attempts to appease criticisms of Bitcoin’s carbon footprint. The second day featured one of the most controversial panels of the conference – entitled “Toxic Maximalism: A Feature Not a Bug”, it brought together some of the most zealous voices in support of Bitcoin as the exclusive global currency.
Defending the intolerance of maximalists to changes to BTC or the use of other currencies, Aleksander Svetsky described their role as the “immune system of the network”; the white blood cells that fight off pathogens and attacks on the organism’s integrity.
One of the “maxis” on stage, BTC Lerk, made a point that echoed Saifedean’s belief in Bitcoiners as people better capable of passing the Marshmallow Test. Prior to Bitcoin, he spent money on things he didn’t really need or want – but investing in BTC transformed this mindset towards a lower time preference, a belief that the future was worth saving for. “If it doesn’t change your life, you’re doing it wrong,” he said.
“Stacking sats” rather than spending spare cash is a mantra in the community. The right kind of time preference – the ability to have faith in future value – is a defining quality of freedom for Bitcoiners, and a major element of their conviction that it is the solution to some of the biggest challenges facing developing nations, like the wealth-destroying forces of government corruption and hyperinflation.
A crypto economy in the works
The conference’s MC had been hinting at a major announcement to come in the last panel of the second day, and I was lucky enough to have kept my seat in the overflowing hall. Jack Mallers, CEO of crypto payments company Zap, was in tears as he talked about the struggles of the 70 per cent of citizens without access to banking services, and its underdevelopment crypto economy as a solution to widespread poverty.
When the country’s President, Nayib Bukele, joined him on stage via webcam to announce that El Salvador had a bill pending that would make it the world’s first country to accept Bitcoin as legal tender, the crowd erupted into cheers. There is genuine faith in the community that BTC really does “fix everything”, and despite plenty of international criticism, countries like Tanzania are reportedly considering following in El Salvador’s footsteps.
If the Bitcoin network is an organism, it’s growing deeper roots, and finding fertile ground across the world, both in unstable developing countries and people disillusioned with the value-erosion of the conventional financial system. The dialectic between its mechanical, programmed nature and impact on human behaviour has fascinating potential.
Could, like BTC Lerk and many others in the community have experienced, Bitcoin catalyze a shift towards a preference for the future – a kind of long-term thinking that could benefit our personal security, our environment and global economic stability? While I’m not a dedicated Bitcoiner, disruptive ideas are always important to consider – and this would be a shift that could truly create a new world.