The Church of Bitcoin

Jacob Harper  |

Since the programmer (or programmers) named Satoshi Nakamoto released the bitcoin protocol into the world in 2009, the cryptocurrency has grown in status at an explosive, exponential rate. Originally adopted by just a handful of technologically-inclined amateur traders, it’s now evangelized by thousands upon thousands of devoted acolytes from a wide swath of the global population.

As bitcoin has grown in popularity so has the militancy of its champions, who envision their untraceable tender spurring an entire revolution that would unravel the prevailing centralized economic system, in which Central Banks are free to manipulate currencies as they please. And every revolution, every religion has a leader. Or in this case, a prophet.

Like any messiah, the story of the prophet Satoshi is mysterious and simple, yet the few messages he left behind are rife with ideological conviction.

Here’s what we know about Satoshi. Satoshi is presumed to be male, though this is based solely on the fact his name is masculine; and Satoshi is presumed to be one person, based solely on the fact that groups tend to have a harder time keeping their identity a secret than just a single person.

That’s about it. After turning bitcoin loose in 2009, Satoshi gave the address and all the source code to a confidant the following year, and then promptly disappeared.  His written legacy consists of a few posts on one cryptography website and other coding forums, the bitcoin code, and his nine-page whitepaper explaining how bitcoin works.

If bitcoin is a religion, Satoshi’s whitepaper is the closest thing it has to a bible. And like any bible, it has a message. The allure of bitcoin, according to the missive, was the elimination of the necessity of a third-party in value transfer. That is, the elimination of the need of banks and regulation in an economy.

As the idea spread, a digital wildfire first remaindered to the Deep Web before breaking the surface and spreading to millions of wallets. Code as humanity’s cleanest demonstration of a true free market, bereft of any and all government intervention and control.

Satoshi did not need to promote bitcoin, because its value quickly became self-evident. Its design did all the work, making early adherents progressively richer as more people bought in. And as more people bought in, and the market cap of bitcoin increased hundreds of times over, the libertarian idealism of the virtual currency, of thousands of millionaires manufactured via nothing save their own ingenious investing, grew more and more real.  

Commenting on bitcoin after its release, Satoshi copped to its ideological bent, saying “[Bitcoin is] very attractive to the libertarian viewpoint if we can explain it properly. I'm better with code than with words though.”

Satoshi is being modest, and does a pretty good job at laying out that libertarian viewpoint in his whitepaper. In a fairly understated yet clearly free market-championing conclusion, Satoshi writes:

“We have proposed a system for electronic transactions without relying on trust… Any needed rules and incentives can be enforced with this consensus mechanism.”

That is, with its proof-of-work and theoretical record of every transaction, bitcoin could be free from “needed rules and incentives”— that is, financial regulation. The protocol checks and balances itself. A perfect free market.

And a transparent one too. Though wallets are anonymous, every bitcoin transfer is noted on its giant ledger in the sky, the block chain.

The assurance of a self-governing economic ecosystem that does away with the necessity of the financial apparatus was the great promise of bitcoin. Currency free from banks, from government, from anything except the people.

For those who got into bitcoin on the ground floor, the promise was good old-fashioned money (or digital wealth, to be precise). By eliminating the banks and the plutocrats who ran them, the first bitcoin holders could become the kings of a new system.  When an investment can increase from less than a dollar to over $1,200 in less than two years, for many lucky investors (or smart ones, depending on your viewpoint) becoming part of a new and enlightened elite was no longer an intangible dream.

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Every religion has a sell. Salvation, clarity, nirvana. The ostensible sell of bitcoin is freedom from banks and government. But the real sell is power. When the new economy order comes, and bitcoin is the one true currency, the Golden Rule will become the Bitcoin Rule.

It’s the promise of a true meritocracy, where merit is embracing bitcoin the earliest, and the most passionately. And it’s the realization of a libertarian utopia in which the average person, gifted only with the foresight to recognize a good investment, could ascend to the upper echelons of wealth – and thus, power.

For many bitcoiners, that promise became quite real. When bitcoin exploded in October 2013, they got digital rich. "To the moon," as they say. 

For once, they – not Wall Street— felt like the big shots. They had the power.

Beginning with that late 2013 run, a lot of people started buying into the bitcoin dream, figuratively and literally. The rapid ascent of bitcoin’s value has been well-documented. It’s a pretty good assessment of the general morale of bitcoin. For if bitcoin is the true free market, its market value is its health.

Bitcoin hasn’t always been healthy, not has it been on an uninterrupted upward trajectory. Bitcoin has plenty of detractors. The reaction from bitcoin evangelists towards detractors has been predictably dismissive. As with anyone with a vested interest in anything, they have a stake to protect.

Take Erik Vorhees, a prominent bitcoin proponent who founded bitcoin gambling site Satoshi Dice. Vorhees comments regularly on the r/Bitcoin forum and has appeared on Bloomberg and other news organizations talking up the new currency. Like most prominent bitcoiners, he tows the party line. Hold your coins, or better yet, buy more.

When one user on the Bitcoin subreddit lamented the crash following the collapse of prominent exchange Mt. Gox, Vorhees reminded an amateur investor who was upset at being told by a skeptical father “I told you so,” that “In a year when you buy a new Porsche, you can say the same thing.”

Because ultimately, libertarian bent or no, the real desire of bitcoiners is to get rich. This certainly makes them no different than any other trader, but the question inevitably becomes: who’s really getting rich?

It’s not just the early adopters, but the earliest. The big holders, who are most invested in keeping bitcoiners from withdrawing, and thus collapsing the pyramid.

Dr. Stephen Mason wrote in Psychology Today that perhaps most important aspect of keeping the faithful devoted to a cult is to “keep (the) flock fixated on the carrot. The payoff is just around the corner and only they will be the ones paid off.”

The promise of bitcoin is obvious. In a year, or sooner, you will be the one who ascends. You will be the one with the Porsche.

Additionally, Mason stresses the need of religious leaders to “create your own reality.” Disparage not just the existing world order, but especially splinter factions offering the same promises, ones in which the leaders have no vested interest. On the bitcoin alternative Litecoin, Vorhees wrote in an open letter to bitcoiners, “Speculating on altcoins (like Litecoin), in general, is pure greater fool theory in action.” The irony appeared to be lost on him.

Predictably, Vorhees has a lot of bitcoins. A whole hell of a lot. But he’s not at the apex of the pyramid. Most likely, Satoshi himself is.

While no one knows Satoshi’s identity, thanks to the block chain, they know the computer that mined the first bitcoin. And after that, a million more – or roughly eight percent of bitcoins in existence.

Cryptocurrency is an incredibly fascinating concept, and there’s certainly a place in this world for decentralized P2P methods of transferring value. But when 98 percent of bitcoin is held by no more than half a percent of its users, it’s clear that the returns will clearly favor the early adopters, the ones who have an interest in preventing the innovation of alternative coins, the ones who have an interest in keeping people from selling out, the ones who need an ever-increasing number of people to buy in to survive.

The inventor of the religion Scientology, L. Ron Hubbard, famously said “If you want to get rich, start a religion.” With bitcoin, Satoshi has started a religion of the free market. He, and those spreading his word, are getting very rich indeed.

That is, unless the bottom falls out.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not necessarily represent the views of Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to:

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