The alternative society27 Oct 2021
Bitcoin is not just an alternative form of money and not just a monetary network. Bitcoin is an alternative society that is emerging naturally as a result of the said monetary network.
Unlike societies of the past, which were highly localized, and unlike the current highly globalized society, this new society will be akin to a global network of highly localized “nodes”.
We could define a society as a group of people that
- communicate using a common language
- share common values
- have a system in place for sharing goods and services so that individuals can specialize (a medium of exchange)
- also, in order for a society to flourish, it needs a way for its members to store wealth for the long term (a store of value)
In reality however, the first two attributes really follow from the third one.
As long as individuals can share goods and services with each other, we can pretty much see this as them speaking the same language. It is a simple language; it may not be enough to write poetry or debate philosophy in, but it is a language nevertheless. If you’ve ever traveled to a place where you didn’t speak the local language nor did the locals speak English you know what I mean.
The common values are really something developed over time. You can’t just move a bunch of people from around the country in a newly built ghost town and expect they will get along in the same way they did in their ancestral villages! But as long as people can share goods and services with each other, some common values will naturally emerge over time. What exactly these common values will be, however, is directly correlated to the time preference of the individuals.
The final point is a very interesting one. If, and only if, a society possesses not only a medium of exchange (the common language required for it to even function) but also a reliable store of value can it really flourish. This is because the quality of the store of value has a direct influence over the time preference of the individuals. And because low time preference yields high quality goods and services as opposed to the single-use tools or cheap entertainment we are seeing today, for example.
Given that Bitcoin is both a medium of exchange and a reliable store of value, we are now already witnessing this new society emerging.
This is definitely not an utopia, although it may sound like one.
Utopias are societies designed and implemented in a top-down manner. And that is why they all fail.
Bitcoin as an alternative society is emerging from the bottom-up. People in El Salvador are using Bitcoin to buy food directly from local farmers rather than from centrally planned economies (whether you call these kolkhozes or multinationals) and this will soon happen everywhere, as the global supply chains are collapsing. There is absolutely no reason to buy canned food from the other side of the globe when you can buy it from a local farmer. The only reason we do this is because local farmers have been impoverished by the current monetary system. Farming is an ultra-low time preference activity which requires a solid buffer of stored value in order to be profitable, something which regular people did not have access to for the past 50 years.
So are we all going back to the middle ages and become farmers?
Definitely not, because we don’t need to. We now have powerful machines as well as a better understanding of farming techniques such as permaculture or regenerative grazing, which were only partially understood by some societies in the past, but we can now all learn about thanks to the Internet.
And it is also thanks to the Internet that we are able to use the same medium of exchange to trade goods and services with people all around the world, who all have the same reliable store of value and thus a lower time preference. Except, again, we don’t need to ship food across the globe, so that will happen less and less. And the less that happens the more we will trade other things.