the real risk in Bitcoin

There is one argument against bitcoin that continues to scare me, and that is the argument that ideals crumble very quickly when applied to the real world. The bitcoin ideal of decentralization sounds like exclusively a benefit to humanity, but it is important to consider how this will play out in practice.

The analogy that I like to draw is Marxism. Marxism describes the philosophy that there should be no separation between the rich and the poor, and society should be a collection of equals. This philosophy gained so much traction in history because of course it sounds fantastic. We would all surely benefit from living in a society that emphasizes actual human connection and experience rather than the battle for status, fame, wealth, and power that capitalism provides us.

However this philosophy failed catastrophically in practice. Every single adoption of communism (the Marxist-prescribed political system) resulted in turmoil and suffering. Whether this is due to actual flaws in the theory or due to flaws in the adoption can be debated, but the results remain the same. Even if a new implementation of Marxism were to be drawn up in the future I’m sure there would be a lot of pushback. And for good reason.

Decentralization, similarly, is a philosophy that sounds fantastic. How incredible would it be to seamlessly coordinate with others all over the world, tweak the incentives of life into a positive sum game, and operate outside of a corruptible central party?

It is a valid concern that the path to that end-game would involve a lot of turmoil if we are not careful. Central banking and the fiat system have a lot of safety measures in place that some might not be properly acknowledging. It’s easy to overlook those safety measures that go on behind the scenes, but the fact that they are occurring behind the scenes is a testament to how effective they are.

One of the most valuable things the feds could do is commit to having open discussions about bitcoin and develop a plan to move it forward. The benefits bitcoin could provide for the world are unimaginable. Unfortunately history doesn’t often play out that way.