Be Prepared: Bitcoin’s Elite Will Fundamentally Alter the World
Bitcoin’s price rise over the last decade has started to mint a new class of elite.
This is an elite that is on the precipice of owning some serious “fuck you money” — an amount of capital that makes the holder entirely unbeholden to anyone or anything. Bitcoiners are mercenary rogues: they’re un-hirable, un-cancellable, un-censorable, and enormously skeptical of the modern world.
A continuing price increase in bitcoin will make these people some of the most powerful individuals on the planet.
On top of that, the bitcoin elite will be ideologically predisposed to using bitcoin as their unit of account and savings vehicle (instead of cash). As this new elite class begins to look at ways in which they can diversify their wealth into other domains and industries, they’ll be looking for investments that can outperform bitcoin’s growth.
Consider what kinds of investments can both increase on average 200% a year AND provide significant protection against asset devaluation and seizure. If a potential investment can’t provide a viable narrative for why it’s worth investing in over just maintaining an investment in bitcoin, bitcoiners will not make the investment.
It’s unlikely that many bitcoiners with significant capital will be turning to the stock market for an average 10% annual return, or the bond market, or even have a substantial real estate portfolio. Against bitcoin, almost every other asset is getting cheaper. On top of that, none of these markets provide the safety and assurance that a limited bitcoin supply with no jurisdictional risk provides.
Individuals with smaller bitcoin allocations will carry this mental model forward at a more local level, causing them to cut back on consumerism and reduce their exposure to any asset that does not provide an improvement to their bitcoin savings. Debauchery and gambling will be supplanted by a more wholesome and long-term mindset.
The end result is the deleveraging and definancialization of many asset markets. Against bitcoin the value of art, real-estate, stocks, trading cards, exotic vehicles, antiques, etc are all dropping in price. Non-investments are seeing more extreme discounts, like vacations, furniture, and entertainment. The flood of money that is currently supporting sky-high asset prices will eventually move away from these assets and into bitcoin.
As this trend continues we will reach a paradigm shift where every bitcoin holder will willingly forgo unnecessary spending in order to accumulate more bitcoin.
This will make bitcoin holders the most conservative group of investors the world has possibly ever seen.
Think of it in terms of this simple question:
Why would you buy a house with 1 bitcoin if you can wait a year and buy a house with half a bitcoin?
What if you waited five years?
Since most investments won’t be financially competitive with bitcoin, they’ll have to compete in an increasingly competitive cultural domain. Bitcoiners might forgo financial reward if spending their bitcoin allows them to fulfill personal ideological goals. This harkens a return to the ages where societies built profound cultural monuments in an attempt to transcend their limited time on Earth and create a legacy that lasted for generations.
In this environment, spending money isn’t about making money, it’s about changing the world.
The bitcoin elite may exclusively invest in ideas that fulfill one of two criteria: extraordinary innovations that promise significantly outsized returns OR cultural investments that have the potential to outlive the investor. Things like profound artistry, architectural monuments, community building, spiritual movements, or scientific advancements.
The fairest critique of bitcoin is that it does not inherently create anything. It is, for better or worse, an ethereal asset that exists within the confines of a digital ecosystem.
Selling bitcoin, acquiring bitcoin, mining bitcoin — none of this directly leads to a prosperous economy. For a prosperous economy to emerge, you need REAL goods and services. You need buildings, clothing, roads, airplanes, food — real world capital. And bitcoin, no matter how high it goes in value, will never be something that you can eat.
This is a critique lobbed by most of bitcoin’s detractors: What’s the use of something I can’t see or touch? How do I buy food with bitcoin if no one is making food?
This criticism is largely an extreme trend extrapolation of our current economic environment, wherein our fiat-subsidized economy in the United States has exported nearly all manufacturing out of the country. The subsequent result has been a decline in the production of real goods and innovations within the United States, and a lack of talent that can actually build things.
In this world, most investments today are an attempt to preserve capital in the face of monetary debasement. If this trend is taken to its utmost extreme you are eventually left with a skill-less society that is reliant on the labor of other countries to sustain its standard of living. Money becomes, well, valueless.
Unlike today’s elite, who are able to manipulate the world through close access to infinite monetary production, a bitcoiner’s investment in innovation will be tied to bitcoin’s finite monetary supply.
If bitcoiners fund innovations that are not sustainable or desired by the public, their investment will eventually bankrupt the bitcoiner. Unsuccessful cultural movements will meet up against a funding environment that trends towards zero.
What many bitcoin detractors refuse to fully concede is that our fiat money printing is a predominant driver of societal “unlearning”. Why would you learn a new skill if you can print money and get that skill at a discount from other countries? In the current environment the United States is incentivized to outsource real capital production until our dollar is completely useless.
But if we moved away from government manipulation of currency then we might fundamentally change societal behavior in a way that brings jobs and growth back to the United States and turns our economy back into a productive one. A world running on bitcoin is a world that incentivizes individuals to learn new skills in order to earn the scarcest asset on planet Earth: bitcoin.
While bitcoin is not something you can eat, bitcoin is the foundation for an economy that can provide true societal growth.
Investors will no longer be incentivized to bid up the value of a city’s real estate in order to earn “inflation beating returns”. Neither will they be looking at investing in government bonds that earn a close to 0% interest rate. And neither will they be investing in a cabal of zombified S&P 500 companies that provide very little value to their local city.
Further, the bitcoin elite, by virtue of their financial independence, will be able to live wherever they want, and they will go where they are treated best. Governments will find themselves in competition with one another to provide good incentives for the bitcoin elite to set up shop within their jurisdictions.
Ultimately, bitcoiners will chose to live in areas that make them feel the most connected to their surroundings. This active choice will ingrain them within their community and lead them to investing in these localities. Cities with the largest population of wealthy bitcoiners will be seen as the new hubs for innovation and cultural leadership.
But what about those individuals, communities, and nations who are not exposed to bitcoin?
They will be left behind. As their assets drop in value they become increasingly harder to trade for bitcoin. The “fiat rich” will be “bitcoin poor”. And in an ecosystem run on top of bitcoin, they will be equivalent to today’s lower class.
The overconfident and comfortable bitcoin detractors will become the peasants of the next generation, taking whatever menial jobs possible to scrape together enough savings to get ahead. Their suits will be soiled.
It is the largest wealth transfer in human history, and nobody is fully prepared.