Even with a Bitcoin Standard, Governments could still rob money and energy from their citizens.

This editorial is by Will Szamosszegi. He is the founder and CEO of Sazmining, a bitcoin mining hosting service. Energy is needed to transform raw materials into final consumer goods or services. To store wealth, calculate revenue and loss, and trade goods and services you can’t get through barter, money is necessary. Although Bitcoin has made our relationship with money and energy much more pleasant, the problems that plague money and energy will likely continue to exist, even if Bitcoin is adopted as the standard. Government regulations, subsidies, and bans will continue swaying energy. Government Regulations, subsidies, and bans will continue to have a significant impact on the money sector. The United States government has tried to centrally plan the country’s energy sector since 1789. This was well before fiat currency became its “final form” in 1971. DBL Investors managing partner Nancy Pfund, and economics graduate student Ben Healey conducted extensive research to discover the history of the U.S. government subsidizing the energy industry. This was two years after the Constitutional Convention delegates had fought for the inclusion of the “gold-and-silver clause” in the U.S. Constitution. This clause was included in Article One of the founding document. It states that individual states could not “make any Thing other than gold and silver coins a tender in payment of debts.” This means that the political apparatus at the time was more financially constrained than the present-day Leviathan State. However, it was still able exert its will over the sector. Article One of the founding document included this clause. It stated that individual states were not allowed to “make any Thing but gold and silver Coin a Tender in Payment of Debts.” History shows that subsidies were also available before the fiat standard was fully implemented in 1971. The Price-Anderson Act of 1957, for example, required the federal government to subsidize nuclear energy by covering the costs of a nuclear accident. Hydropower has also been federally subsidised since at least 1890s. However, it is difficult to quantify the amount of these subsidies. Earth Track, an organization that standardizes data on energy subsidies, estimates that the U.S. government has provided approximately $2.7 billion in 2010 dollars to hydropower since the nation’s inception. This time period covers a variety of monetary regimes. The global economic order will surely have changed dramatically by then. However, governments may still use violence and/or imprisonment to collect taxes. They simply need to mandate that taxes are paid in Layer 2 fiat currency in order to keep it alive. This will force people to get the currency to pay taxes. There are many reasons why such a scheme might not work. One reason is that governments may be pressured to relax their fiat currency requirements for citizens who use Bitcoin and Bitcoin-based Layer 2 technology in their daily lives. Second, citizens may put pressure on politicians to stop creating their own fiat currencies out of fear of career suicide. Finally, governments may consider such a scheme more trouble than it is worthwhile, as a Bitcoin-based economy can grow at a much faster rate than a Bitcoin hybrid economy. We must remain vigilant in both energy and money. After bitcoin has become the next global reserve currency and after Bitcoin mining has forever improved the relationship with money, the government might still intervene. Bitcoin’s inevitable victory is just the beginning. We may still need to fight meddling bureaucrats. Freedom-loving Bitcoiners will, without a doubt, be in a better position to do this than they are now. We must not rest on our laurels. What can we do to exorcize the state from money and energy? We must do the same thing as we are doing now: communicate our ideas. We want a free energy market so that the most efficient forms of energy can be discovered and made more profitable than inefficient alternatives. Subventions, tariffs, and regulations in the energy industry hinder innovation. We know that without so much intervention over the centuries, our world would be powered now by nuclear energy, cold fusion, and oceans. Even if it was backed by bitcoin or other cryptocurrency, government-imposed money would cause economic calculation and capital accumulation to be thrown off track. Because we would need to keep some money in the back for tax season, the cost of accumulating capital will rise. Because they are no longer affordable, all kinds of goods and services could not be produced. Entrepreneurs’ ability to calculate profits and losses becomes more difficult as there is no single immutable measurement stick (bitcoin), and also a volatile fiat currency trading alongside Satoshi Nakamoto. Governments won’t stop us from continuing our work. However, our ideas will be much easier to sell by this point. This is Will Szamosszegi’s guest post. These opinions are not necessarily those of Bitcoin Magazine or BTC Inc.

 

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