In January 2009, as the stock markets were in the midst of clawing their way chaotically and blindly towards an uncertain bottom, while people all over America and Europe were being tossed out of their offices without a paycheck and forced to abandon their homes after a single month’s missed mortgage payment, the instigators of these heinous events were getting bailed out with money the same individuals losing all they had worked for had paid in taxes over decades of compliant labor.
The beneficiaries of the government funds included the biggest financial institutions in the world — the same ones that had brought about this economic Armageddon in the first place. Citigroup, Bank of America, Barclays, Lloyds Bank, Royal Bank of Scotland, to name only the most famous of them, were getting more than a trillion dollars of cash from their sovereign governments to tide them over the rough patch while their chief executives were in many cases still getting multi-million dollar salaries, or would be again after a token annual pay hiatus purely for PR purposes.
What is more, in order to facilitate these grandiose sums, central monetary institutions were printing money in previously unprecedented quantities, flooding their own economies with huge potential inflationary pressure.
For the anonymous programmer who had spent two years formulating the conceptual rules of and writing lines of groundbreaking new code for the world’s first digital currency, the timing could not have been more opportune to test his product out on the market. Thus, one cold winter day early that year Satoshi Nakomoto — a pseudo name for the anonymous programmer known affectionately among geeks simply as “Satoshi” — put up the first of many paginations of open source code for his new currency bitcoin with a simple one-line observation: “Chancellor on brink of second bailout for banks.”
Satoshi’s comment might have been short, and might not have been particularly poetic (“I’m better with code than words,” he once admitted) but accompanied as it was with a whole string of code for what looked like the first ever serious attempt to design a unit of financially usable value outside of the existing mainstream monetary product base, and coming as it did right in the eye of the most reprehensible lack of action on the part of major governments to provide for their individual people and small businesses versus their most powerful and prestigious international institutions, the message rang out louder than if Satoshi had climbed to the top of Big Ben, London’s centuries-old clock tower, and had locked his arms around the rope and swung the gong against the bell with the force of his whole body weight.
Indeed, the message that Satoshi was sending that day to the whole market along with his source code for bitcoin’s currency was clear as the bright spring morning that lit up London’s four century old spiral towers as their steeples reflected and then disappeared in the yellow-white sunlit glare of the River Thames.
That message went something like this:
If there’s a multi-trillion dollar bailout for the plutocracy going on right now, then here is a multi-trillion dollar bailout for the people.
Bitcoin was everyone’s bailout, and it was a multi-purpose bailout, too. It was a financial bailout, a political bailout, a bailout from the culture of institutionalization in general in which the vast majority of all generations since the industrial revolution had before now been compelled to enlist as part of the convention of professional and personal improvement, but who now found themselves poorer off in return for their participation.
If you thought that it was only the rich who got perks in life, then you were wrong. Bitcoin was your bailout, was what Satoshi seemed to be saying. You just had to come and get it.
In time, when an increasing number of market participants realized that this was the case, while others rose up in a call-to-arms to embrace its economic merits, it would collectively be worth billions of dollars. Bitcoin will in all likelihood probably be worth trillions of dollars given more time to disseminate throughout the financial system.
But on that day at the beginning of 2009, it was cheaper than a single share of any of the bankrupt institutions that the governments of superpowers across the west were bailing out. It was free.
Bitcoin is not free any more, but it’s still the people’s bailout from the regimen of the political and economic paradigm of the post-industrial revolution era. It is also a tip of the cap towards the oncoming force and consequent values of the technological revolution that shepherds us more emphatically every day into the world we are inevitably headed.
It’s a bailout from the economy of the past, and a pass into the economy of the future.
Two Economic Revolutions
It is no a coincidence that Bitcoin was born right in the eye of the storm of the subprime crisis. When economic chaos strikes, it’s not uncommon for new monetary trends to emerge. That is, after all, how the gold standard came into being.
During 1873–1879, hundreds of businesses folded, banks shuttered their doors penniless, and ten states declared bankruptcy, in a half-decade long period permeated by several violent economic shocks that was known, until the 1930s, colloquially as the Great Depression.
While the crisis of 1873–1879 was in a way the first international monetary crisis, it actually generated a net growth of money supply of 2.6% per year in the United States of somewhere in region of $40 million annually. How that happened amid such apparent cyclical turbulence has a lot to do with the economy we now find ourselves becoming a part of.
Before the late 1800s, the monetary conditions of sovereign economies were more or less unconnected from one another (or even, in many cases, conversely connected, with one country’s loss being very much the source of another’s windfalls). But with American industrialization fuelling the growth of Western Europe, market-based economics had begun to take hold. And so, when on May 8, the Vienna stock exchange collapsed, and was closed for a 3 day long period, it started in motion a series of panics and busts all over the western world, ultimately culminating in a lethargic deflation that threatened to stifle growth altogether.
What happened was that the prices of goods fell even as the money supply grew in value. Meanwhile, wages rose over 20%, but unemployment rose steadily.
Economic historians are often puzzled by this conflicting set of events. Was it a depression, given that unemployment was on the rise for over half a decade? If so, then what kind of recession results in increased wages?
Murray Rothbard, an American libertarian economist, gives the most revealing explanation for events during the years leading up to the implementation of the gold standard. In his 2002 book A History of Money And Banking In The United States, Rothbard claimed that there was no economic depression in the 1873–1879 period, just a realignment of economic forces, ones that ultimately generated huge productivity in the form of massive infrastructural growth such as real estate development constructions and the introduction of the railroads. This infrastructural productivity in turn promoted an increase in both net national output and net capita output, he explains:
[Economists] have overlooked the fact that in the natural course of events, when government and banking system do not increase the money supply very rapidly, free-market capitalism will result in an increase of production and economic growth so great as to swamp the increase of money supply. Prices will fall, and the consequences will be not depression or stagnation, but prosperity (since costs are falling, too) economic growth, and the spread of the increased living standard to all the consumers.
Rothbard hit on a point that beforehand, went largely overlooked: specifically, that production could be more aggressive in terms of growth than the supply of money. In recent history, we have tended to think of periods of a lack of liquidity as a bad thing and an overflow of it as good. But the period of 2008–2013 showed us a somewhat different version of events. During this period, for most people it felt as if liquidity had come to a complete breaking point, and for a short while, that was the case.
But very quickly, from around the mid-point of 2010 onwards, it became clear that major corporations were sitting on piles of cash. In August 2010, the Federal Reserve reported that U.S. companies had stored away $1.84 trillion of cash and liquid securities. By March 2013, nearly a full three years later, they were still hoarding a stunning $1.45 trillion on their balance sheets. Clearly, there was lots of liquidity in the financial system, but given that these companies were in a mode of caution, very little of it was being fed back into the system in the form of employment or investment: in fact, the unemployment rate for graduates was 5% lower than it had been more than 10 years ago.
Naturally, during this time the activities of technology entrepreneurs were pretty much the last thing on the minds of government officials, who had a macro-economic meltdown to focus on correcting. And because the largest companies weren’t hiring, they didn’t get much of a glimpse into the seismic innovative developments that were happening in people’s basements around the country, and more widely, the world. But surely enough, even while economic conditions remained superficially bad, at the same time, an innovative environment of sorts was bubbling up. Cities not regularly associated with innovative development but which had been hit hard by the subprime crisis began to shine: in 2012, Chicago tech firms raised just under half a billion dollars as a new start-up got founded every 24 hours. The amount raised by those companies doubled to more than $1 billion in 2013.
Many of those companies, such as CoinMap.org and 7Bucktees, were focused on providing services to bitcoin, which was steadily rising in value. In Seattle, CoinLab, a bitcoin mining technology, got half a million dollars in venture funding in 2012. Innovative deals were getting funded; it seemed, just not in the traditional exchanges and markets.
This brings us to a potentially powerful observation when considered in context of Rothbard’s statement about productivity growth outmatching the money supply, for it seems that this is exactly what was going on here during the period of the recent economic recovery. Only the underlying currency being swamped by productivity wasn’t the dollar, but rather it was bitcoin. This explains why despite a dearth of liquidity in the wider system, and despite the gruesome employment growth in that period, there was in fact a surge in the value of bitcoin, which jumped in price more than any other asset in history in a comparable time period. This poses a serious question about the role of sovereign currencies in terms of stimulating growth in and recuperating gains derived from innovations associated with venture currency innovations. In fact, there is reasonable evidence that the dollar has a lesser impact on value production in venture currencies than does bitcoin.
If you compare the universe of 400 or so currencies to the value of bitcoin on a daily basis, and then make the same comparisons of these currencies to the dollar, it becomes clear that the currencies far outperform the dollar in growth terms than they do comparatively in bitcoin.
While much of this is undoubtedly due to the fact that many of these currencies, by virtue of their construct, will tend to be classified according to bitcoin’s headline value and trade in a way that is somehow pegged to the bitcoin, it is notable that in periods when bitcoin underperforms the dollar in terms of percentage gains (i.e. it falls in value), competing venture currencies still outperform the dollar on an increasing basis even if bitcoin has remained substantially unchanged for long periods preceding the move downwards.
This suggests the dollar is not the benchmark unit against which innovative productivity is revolving or acting, but rather that some other, more central force of economic gravity is guiding the pattern of disruption, since the venture currencies are rather referencing the time-averaged stabilization of the bitcoin price as opposed to the immediate movement of its headline value.
In a sense then it’s possible to see that perhaps one of the conditions for innovative productivity — the type that transforms cultures via an onslaught of radical technologies (such as railroads and new financial systems, for example) — is in fact that it is increasing at a faster rate than the growth of the monetary economy.
It’s possible to see more clearly how the lack of government and big corporation interference might have provided the ideal harvesting ground for alternative currencies by looking a little closer at the events in the period that followed the 1873–1879 economic anomaly.
When the gold standard came into being in 1879, for a decade afterwards, prices continued to fall and wages soared yet higher, over 23%. But it also had another, more comforting effect on society: there was an abrupt halt to the tide of unemployment that climbed throughout the 1873–1879 period. In fact, the labor market began to grow fairly aggressively.
Still, aside from 1873, which was several years before the gold standard was put in place, the years 1884, 1893 and 1907 all represent years of banking crises and economic panics that nearly destabilized the system on a number of occasions during those years and in their immediate aftermaths.
The economist George Selgin has pointed out that these shocks were the direct result of the massive increase in excess demand for monetary surplus in an environment that was inadequately tight as a result of banking regulation. In other words, it appears that both the introduction of the gold standard and as a result a drive towards increased regulation, while stabilizing unemployment and simultaneously maintaining growth in the economy, did as a result cause periods of intense speculative panic.
When we think of how the price trajectory of bitcoin has fared since its inception in 2009, it’s possible to see that in some ways, the more pervasive it becomes, the more it stabilizes in value while at the same time, the more vulnerable it seems to exogenous shocks.
In one respect then it looks very much like bitcoin is acting almost exactly the same way in terms of being a piece of supporting infrastructure for a whole new branch of venture capital initiatives today as gold did for the development of railroad and real estate project developments during the late 1880s. Except there’s a key difference: the President of the historical period, Ulysses S. Grant, was a libertarian thinker. It was second nature to him and his party to embrace a pegged dollar economy in such a radically evolving time if only to ride out the pursuant growth period and decisively steer the course of the whole economy upwards. The same cannot be said for the approach of governments since, however.
During the period of 1933–1971, the dollar was not a FIAT currency: it was technically backed by a quantifiable amount of gold. However, the gold standard was abandoned partially by Franklin D. Roosevelt on June 5, 1933.
By then, the innovation and disruption brought about in the economy via the industrial revolution had long set in and fizzled out, and Roosevelt wisely feared that the domestic economy’s growth prospects of the day might be hampered by such an onerous weight around the neck of what was something at best hyper fragile. He chose to partly unpeg the precious metal from the dollar, fixing it at $35 per ounce.
In 1971, on August 5, nearly a century after the strange debacles of the industrial revolution had caused surging unemployment and rising productivity side-by-side in the days of President Grant, the task fell to President Richard Nixon to abolish the gold standard altogether. It was still just thirty-five bucks an ounce.
Immediately afterwards, unemployment rose, to around 8%, but so did inflation, driving down the value of the dollar and creating hellish social conditions as a result. Meanwhile, the price of gold, now available to buy in the midst of a fear-stricken market economy, skyrocketed to $850 per ounce.
This financial deadlock that the U.S. found itself stuck in was in many ways the reverse crisis of the half-decade of the 1870s: wages kept getting higher and higher, and in turn the money supply was getting sucked up as prices exploded. Productivity all but fizzled out. You could forget about innovation altogether — people were practically living on the streets.
Fast-forward in time to 1980. Ronald Reagan’s brand of hard-hitting deregulation took the wind out of the sails of the gold price, which came back down to earth, while stock markets surged and wages increased.
Employment sprung up from the midst of the economy like water from a high-pressure tap that’s turned on right to full. From 1982 to 1987, the United States added 18.7 million jobs, the highest ever in a comparable time period. Unemployment, which fell to just over 5%, was the lowest it had been in 15 years.
As a result of all this, the stock market during the 1980s tripled in value, after a decade of barely moving a tick.
The United States is the world’s leading laboratory of economic social experimentation. It has given rise to two separate scientifically generated economic mega-cycles within a century and a half: first, the industrial revolution, and more recently, the technological revolution.
Every time it does so, it harnesses power and bleeds a little of it away at the same time as it experiments with just the perfect policy mix to foster innovation and growth. Because every world’s economy is in some way powerfully tied to the progress or decline of the United States, the impacts of its legislative and economic changes are felt in every country around the world.
Over the years, it’s fair to say that economic conditions have steadily gotten more stable, while exogenous shocks created by speculators have become less threatening. You don’t feel it every time a hedge fund collapses, whereas you most certainly would have if one of the country’s biggest sea merchants were washed ashore with all its homeward-bound loot back in 1814.
But that has come at a steep cost, one that has in effect been ongoing since the introduction of the gold standard in 1879. The cost of stability has been increased regulation. That is to say: more rules. And more supervision to enforce the increased number of rules.
With the gradually rising tide of rule-based economics came a kind of hyper-centralization of power at the expense of the sort of free market capitalism that once spurred an economy into an unprecedented state of innovation.
An institutionalization of cultural values set in firmly during the 1950’s-1980’s, even as the technological revolution began to sprout up in its midst, calling out for a shift back towards pre-Roosevelt era economics.
The sweeping progress of regulation and centralized governance was a hard nut to crack once it was put in place, however. So much so that it ended up cracking all the other nuts once it got a little fire in its belly.
Thus, instead of passively guiding economic policy in accordance with the principle market actors, as central bankers were originally supposed to, during the era of President Clinton administration Federal Reserve Chairman Alan Greenspan effectively began to speculate on the likely outcomes of various policy implementations that he took in accordance with the executive office.
Essentially, Greenspan bet big on the direction of market behavior, no differently to the way a day trader sizes up a series of stock positions. Figuring that low interest rates prolonged over decades would not lead to irresponsible borrowing but rather, to a sort of self-regulation that would in turn guide more prosperity and responsible lending, he would tweak U.S. borrowing rates very slightly depending upon the financial quarter, always trimming them back when they crept a certain amount higher than their one-year average increase.
Since policymakers had become investment bankers all of a sudden, corporations began to treat them as such, pitching them lucrative lobbying and special interest contracts like red-hot IPO deals.
This strange private-public hybrid, all held in place by a series of laws and rules which permitted huge personal self-enrichment while holding government office at the expense of objective policymaking, was ultimately sold to the public as the best possible means of ensuring ongoing economic stability.
Which was a little boring, but most people went along with it. Then, the economy blew up in 2008. People were turfed out of their homes onto the streets by burly private security contractors, while those who had worked for the past 40 years and diligently plied their savings into their stock portfolios every month found their retirements in jeopardy, or at the very least, delayed indefinitely.
Instead of breaking tradition with hyper-centralized policymaking, however, the newly-elected President Barack Obama did the opposite: he latched onto the side of the broken banks, automakers, insurers and health care providers. He firmly bolted the fate of himself and his government to America’s corporations, buying them up and regulating them to the maximum.
This suited the modern Democrat political agenda, which longed for something of the taste of the Clinton days again.
Americans got promised change, but in fact they got much more of the same: increased centralization and the restoration and rebuilding of economic regulatory order. (Like I say, centralization is a hard nut to crack. It’s made of something much more resilient than gold, that’s for sure.)
But the economic crack had created an opening, a chasm in a system wherein there was something much more powerful building up. The United States was now connected up with two huge, socialists outposts: China and Russia. Much like North Americans, Chinese and Russian citizens were weary of the expanding centralized order dominating their daily lives. They were more interested in making personal connections and impacts upon the world in which they lived.
Instead of allowing for free-market economics to take its course and to push productivity into overdrive around the money supply, however, as Ulysses S. Grant had done in 1873, Obama rigidly held the free-market animal in his grip even as it roared and clapped its jaws around his hands and wrists in an attempt to break free. Attempts to snoop on Americans’ every-day phone calls in the name of security and a zealous desire to prosecute would-be do-gooders around the world such as Julian Assange and CIA whistleblower Edward Snowden only fuelled the anger of an increasingly disaffected public which had found fellow sympathizers all over the world, in communist tyrannies. As with most new alliances, the personal bonds created between minds strengthened the resolve of those who lay outside mainstream economic participation.
The fact was, in some ways the White House should have seen this coming, given that the Democrats put technology’s network evolution in play a decade ago. Technology had long gone from being an obscure science to being something that now embodied an innate and unique set of creative possibilities and functions, and those effects were widespread and varied enough to catch on when given the impetus and means to do so.
Thus, in the midst of this last desperate attempt to micro-supervise the populace while macro-centralizing the financial system, the animus at the center of a new global libertarian order gnawed hard until it ripped the chain off its neck and ran into the codified underworld to initiate its own monetary order.
Governments today do not function as slimmed-down policy guidance councils, the way they did at the turn of the century. That’s why bitcoin sprouted a venture capital movement all on its own, despite government help, as opposed to with its backing.
The monetary agenda of governments today, big and small, all over the world, is total control. This micromanagement of the global fiscal and social policy agenda is the single approach that more than any other, threatens to erode the superior status of the sovereign superpower more than anything else.
It’s possible to see some of this erosion of power already taking place. Julian Assange, the founder of Wikileaks, resides for now in the midst of the capital of the United States’ closest ally.
Based in the heart of London, U.K., while technically being on Ecuadorian diplomatic territory, neither superpower can do anything to get their wanted man. Ecuador, a country with less than a tenth of the GDP of either country, is dictating events to the superpowers on their own turf.
This sort of farcical legal run-around is an obvious sign that superpower governments have tied up their growth up so concretely in the rigidity their legal mechanics, on the basis that 99% of the time such engineering favors the outcome of the sovereign. Absolute power all of the time has made them powerless in the face of global political humiliation.
To rub salt in the wound, when supporters donated millions of dollars to aid Julian Assange’s legal fees, many of them sent him bitcoin.
Byzantine General’s Problem
Given that the Wikileaks was receiving millions of pageviews a day by the end of 2010, and that Satoshi’s currency was still worth just 10 cents per bitcoin, one would have assumed that he would be highly agreeable to seeing the news that Wikileaks was openly accepting donations in bitcoin after receiving a flood of inquiries to that affect.
But Satoshi Nakomoto, the anonymous programmer — or, some now speculated, consortium of programmers working together under a single assumed identity — was if anything, disappointed by all the attention. Most of all, Satoshi seems to have feared that the association of bitcoin with an operation such as that of Wikileaks would jeopardize the future survival of the currency which was just then beginning to gain something of a cult adoption online.
“It would have been nice to get this attention in any other context (rather than being associated with WikiLeaks). WikiLeaks has kicked the hornet’s nest, and the swarm is headed towards us,” fretted Satoshi, as the attention began to reach the outer edges of the mainstream media sites.
In an uncharacteristically demonstration of something bordering on hysteria, Satoshi even appealed to the founders of the covert news organization to stop the giving his innovation all the free advertising: “No, don’t bring it on.” He wrote: “The project needs to grow gradually so the software can be strengthened along the way. I make this appeal to WikiLeaks not to try to use Bitcoin. Bitcoin is a small beta community in its infancy. You would not stand to get more than pocket change, and the heat you would bring would likely destroy us at this stage.”
Satoshi was learning the first lesson of free-market economics: it doesn’t matter whether a commodity is “ready” or not for adoption: if its purpose fills a potential role, then more often than not, it will gravitate to the point of center of the fulfillment of that goal. Immediately.
This is why central banks, regulators and segregated types of market actors have gradually been introduced to the global financial system over the past century: for the most part because otherwise, stocks would climb irrationally high (indeed, they already do despite the involvement of mediating parties), sovereign currencies would zigzag against one another in value (as do those of venture currencies aside sovereign ones, although not against one another, as we shall see later) and commercial financing with stable interest rates would be all but impossible to come by.
Simply put, a market economy is rational only towards the objective of fulfilling its immediate requirements, not towards attending to its overall, long-term necessities. If people can realize a 100% return today right away at the potential expense of the company, as opposed to a 1000% return in five years to the benefit of its employees and customers, they will much more often pick the first option. Speculation and spending always prefers close-range action. That, after all, is how the subprime crisis got going.
But donations on a mass-scale to Wikileaks didn’t collapse bitcoin’s functionality or its value as Satoshi feared, nor did bitcoin get its plug pulled out from the wall by regulators, who were on the contrary, powerless to stop it and more than a little surprised by its ascending influence.
Instead, over the following 3 months, bitcoin posted its largest-ever quarterly gain. By the end of February 2011, one bitcoin had reached price parity with the U.S. dollar. By June the same year, even after the currency experienced another potentially destabilizing event in the form of a flash-crash on the (back then, only) public exchange server at Mt. Gox, where it was bought and sold, bitcoin was going for $17.50.
The massive increase in value despite the technological flaws inherent in the product and its surrounding architecture served as the first indication that financially, the currency was a viable long-term harbor and converter of economic value. Simply, its easily-transferable, low-cost characteristics clearly made it preferable to a sovereign-issued alternative for payment, at least by a growing niche of adopters for a certain specific sort of payment.
It is hard to overstate the significance of this. That the currency might be appealing from a purely speculative standpoint is nothing new: after all, there are always gamblers in the global capital markets willing to take a risk on something untested on the basis that they might make an outsize return even if the potential downside is that they might also lose the entirety of their investment.
But the Wikileaks payments, which amounted to several million dollars, showed that a large number of bitcoin’s holders were using the currency for payment. The requests to Wikileaks to accept bitcoin as payment meant that a wide number of people actually chose to hold bitcoin in a serious quantity before they chose to hold their own sovereign currencies or even before they chose to hold stock of publicly-traded companies, both of which were far more reliable an investment and much easier to obtain at the time than was bitcoin. Something was shifting in the economic geology of the global market place.
The resilience of the currency’s price in the aftermath of the Mt. Gox flash crash indicated that rather than be the cause of over-buying or over-selling, the exchange’s servers were merely experiencing growing pains as a result of the increased volumes that had been accumulating steadily on both sides of the fence.
This early confidence that bitcoin’s owners accorded it seems to have attracted another group of buyers who were interested in using it for the same purposes — in other words, for making fast, easy, cheap payments for goods online.
All the evidence indicates that the gains in the period of December 2010 — mid-2011 were very likely then the result of this early adoption of the currency as a payment mechanism, rather than as a tool of speculative value, which was a later event.
Satoshi should have been popping the champagne cork open. For instead of instantly getting mauled in a thirst for sudden liquidity the minute it rose substantially in value, new units of the currency were being steadily generated into the market of owners who were snapping them up and sending them about the internet. Many stocks cannot experience more than five-fold gains over a period of one year before collapsing in value. The same is true of numerous other assets.
Bitcoin had risen nearly 200 times in value, had experienced a temporary blip in accessibility (in the Mt. Gox flash crash), and still showed signs of accumulating price stability even as it rose further all within less than 9 months. If you ask a market professional specializing in any other asset class to give you a comparable example without a price correction following more or less immediately they would be completely stumped.
Then there was the fact that despite having been embroiled in the Wikileaks scandal, it nevertheless had regulatory authorities completely so stumped and bewildered what to do or how to legally blunt its use that instead no one did anything. Rather than become the short-term arbiters of the currency’s fate, as market economics would commonly dictate in such a cross-section of events, it was instead a phenomenal achievement and a crucial early feather in the cap for bitcoin’s chances of long-term survival.
In addition to the fact that it defied what are common economic realities, the growth of bitcoin in its first years was a sign that the currency was indeed serving a type of purpose that its sovereign cousin was at the time neglecting or simply unable to. Instead of flooding towards purchases of HD TVs and iMacs, it seemed to be serving pockets of innovation and disruption, funding projects and initiatives either directly or indirectly that challenged the existing status quo of a particular industry convention, especially in the case where providing solutions to media and political governance practice had for a long time begun to stagnate (such as in the case of providing the bulk of donations to Wikileaks for its radical whistleblowing news service, which was simultaneously being given the cold shoulder by mainstream publications such as The New York Times and The Guardian after having initially entered into content syndication agreements with both).
Indeed — servicing innovation was the centrifugal spark that was lighting the innovative fire underneath the coals of the currency’s rapidly heating up price ascension against the dollar. For soon, a number of other copycat venture currencies such as Litecoin and Peercoin would come into being, all containing slight modifications and variations of the original bitcoin source code that were designed with specific purposes and alternate adopters in mind.
The innovative breakthrough as far as bitcoin as a peer-to-peer currency is concerned is in its solution to something known as the Byzantine Generals Problem. While Satoshi and other programmers have gone into great detail about the variations of this problem and its methods of being solved, suffice it to say that it is a problem, which has to do with the question of how to prevent counterfeit bitcoin. Counterfeit money is and inevitable and primary problem associated with establishing a currency, of course, especially with one such as bitcoin, which has no physical uniqueness to determine visually whether it is real or not.
The solution that Satoshi came up with to the Byzantine Generals Problem was, in a nutshell, to organize the network so that multiple numbers of “miners” — those who minted the digital currency units with computer hardware in order to sell them for profit — would have to validate every single miners’ newly-produced unit of currency. What is more, this validation process was fixed in computer code, so there was no possibility of miners conspiring to counterfeit units in an under-the-table collective bargaining agreement. Because bitcoin is all part of one great code, it is impossible for a single bitcoin to be counterfeit and accepted by a fellow miner, mathematically speaking.
In other words, the computer did the mathematics to create new currency units; while other miners had to do the processing to make sure that the mathematics was in accordance with the mathematics they had done themselves when minting the currency.
It was nothing short of genius, and it was for this realization foremost among any other that bitcoin — and its copy-cat venture currency counterparts — were rewarded early on with having a sustainable and genuine component of value. For if it was harder to counterfeit a bitcoin than it was to counterfeit a dollar, and if bitcoin was inherently deflationary versus a dollar market which had just been expanded several-fold as a result of government intervention in financial markets in recent years, then it stood to bear that one bitcoin was indeed worth more than one dollar. In fact, it was common sense.
By design, bitcoin’s environment is the antithesis of the modern monetary system that governments have painstakingly set out to build over past two decades in the era of highly identifiable electronic market transactions as an attempt to crack down on money laundering schemes. And yet at the same time it harnesses the most disruptive aspects of the global banking system in order to achieve this distinction while embracing a holistic transparency that is highly appealing. It is this combination that in part made bitcoin so pervasive so fast.
For a start, bitcoin is a peer-to-peer payment mechanism, meaning there is no middleman involved in broking the transfer between parties, and as such there are no transaction cost associated with moving it about. That in itself is disruptive to banking.
Then there is the fact that bitcoin itself doesn’t really exist at all: the only proof of it being held in a digital wallet where it resides as property of its owner is when it is moved about. A long, complex series of numbers, the results of irreversible and unalterable equations produced at the point when every block of 25 bitcoins is produced, or “mined”, by powerful computer hardware, represent the components of these various transactions between peers.
These computer codes together form something called the blockchain, and every bitcoin’s unique code must match up to its particular place in the equation there in order to determine its authenticity. Bitcoin miners, who run the computer hardware to generate new bitcoins for profit, are responsible for validating every code that is transacted. That of course means that bitcoin is completely dependent on its miners for the currency to have any peer-to-peer value at all, since if everyone stopped mining bitcoin tomorrow, no one would be there to validate the codes when a user sends a payment.
For the moment, the miners are content to mine new bitcoins and perform this service for free. But mining as an activity gets exponentially harder the more bitcoins are mined, and there are only ever 21 million of the coins that will be produced, supposedly by around 2040. What happens when the bitcoins all get mined, then? How will these authenticators get paid then? Simple: by that time, posited Satoshi, the miners will begin charging transaction fees for the process of validating peer-to-peer payments. It’s a truly free-market system in that sense, leaving the market itself to regulate its own activities and decide upon the appropriate price points as it evolves.
Ironically, that was exactly Fed Chairman Alan Greenspan’s same approach with leaving interest rates so low throughout the 1990s. He figured that market economies worked in their own best interests the majority of the time and as such were best left alone. The potential consequences of this type of free-market self-governance for bitcoin we will look at later in the book.
For now, imagine the block chain as one giant mathematical equation constantly being solved by millions of computer hard drives all over the world, which in turn produces more bitcoins, and think of all the individual peer-to-peer transactions as little chunks of the sum of that long equation in what appear to be individual SWIFT codes. And that is pretty much what a bitcoin is: essentially, it’s a SWIFT code that most previously delivered it into the account where it resides without being the monetary unit itself.
Redefining Intrinsic — And Legal — Value
For those who had tired of the order of an establishment that had become morally, intellectually, politically, and now monetarily, obsolete, the broader socio-economic potential of bitcoin’s innovative spring was nothing short of the great leap forward that their ancestors had once made in the 1800’s. It’s important to engage the political perspective that combined to create the reality of this new money in order to grasp the core consequences of its utility.
Despite his reticence about users sending the currency to Wikileaks as a form of donation towards Assange’s rising legal costs spent fighting the U.S. government on appeal of a classically bogus rape charge, many of the insights and messages that Satoshi shared with bitcoin’s community boil to the top with an unmistakable hyper-libertarian, anti-establishment zealotry. They also display the ideas of someone — of some group — that was very aware of the global context of economic development, not just the technical implications of cryptographic encoding as far as financial systems were concerned.
His observations about the central properties of currency hit a root nerve that few in the financial world are daring enough to acknowledge:
I think the traditional qualifications for money were written with the assumption that there are so many competing objects in the world that are scarce, an object with the automatic bootstrap of intrinsic value will surely win out over those without intrinsic value. But if there were nothing in the world with intrinsic value that could be used as money, only scarce but no intrinsic value, I think people would still take up something.
Indeed, people tend to adopt currencies where there is some sort of inherent end-user value there, depending on the community in which they are serving. This is, after all, why the U.S. dollar itself is so powerful: almost everyone in the world wants to come to America, given the opportunity to do so (even though they may not admit it). That fact alone gives the dollar so much global value.
By coming up with bitcoin, Satoshi was able to recognize two things about the evolving global marketplace that would inherently give a new unit of easily transferrable currency value regardless of its ultimate properties just so long as it was mobile and secure.
His first insight was to recognize that everyone in the world wants money for more or less the same end-purpose today: to pay the rent, to buy a car, to feed their kids, and so forth. Prior to the opening up of the world’s largest emerging markets, this was not necessarily assumed to be the case. Many farmers merely wanted a more abundant crop-season: they could not imagine wanting the sorts of material items such as an iPhone that their grandchildren in Shanghai today covet.
Secondly, he recognized that while this newly-widened base of middle class consumers continued to blossom, their means of establishing the sort of wealth that could ultimately purchase them these sorts of goods were likely to at some level require a form of innovation, or at least, initiative. And innovation, at its core, is scarce without having any sort of intrinsic value.
It is often remarked upon how much choice millennial consumers have over ones of previous generations. Part of the consequence of this increased choice is that the concept of job stability and a permanent physical community are rapidly disappearing. As a result, consumers’ worlds are becoming inherently more self-sufficient, at least on the level that requires them to make more complex decisions earlier on about their choices. No longer is it so common for example for a child anywhere in the world to rely on the basis of what one’s parents do to influence seriously their own career decisions. This is only recent: less than fifty years ago over 75% of middle-class Americans followed in one of their parents’ footsteps professionally.
Thus, in a world where increasing numbers of people are interacting with one another collectively while making ever-more individual choices and decisions for themselves, there is an enormous variation of decision-making going on in order to achieve what are essentially the same end-goals.
In such an environment, a currency is merely a means-to-an-end, as opposed to the means itself. This conceptual recognition of the changing function of monetary service was a crucial insight of Satoshi’s that before he came along, went either unnoticed or denied as being outlandish by mainstream economists.
It’s also clear that Satoshi understood a great deal about liquidity constraints and the dangers they posed on an environment of intense innovation. In one comment he refers to the actions of the Hunt brothers, two silver traders who got caught out in 1980 when they attempted to buy so much silver that short-sellers spotted an opportunity to make money when they realized that the brothers were buying much of the commodity on margin and could not possibly reduce the extent of their holding fast enough if the price collapsed, given the exorbitant amount that they held.
Given these sorts of considerations, and the deeply contemptuous suspicions that he held for government authorities, Satoshi seems to have gone deliberately out of his way to have designed a currency unit that was at once low-key (he discouraged immediate promotion of the currency, at least at first), well-secured, and below-the-radar of most peer-to-peer networks. This was all engineered to comply with an overriding political standpoint, as he explains in one of his final messages to the public:
Yes, (we will not find a solution to political problems in cryptography), but we can win a major battle in the arms race and gain a new territory of freedom for several years. Governments are good at cutting off the heads of a centrally controlled network like Napster, but pure P2P networks like Gnutella and Tor seem to be holding their own.
For a whole generation of up-and-coming millennial entrepreneurs, many of whom had watched their older brothers and sisters or even in cases, their own parents, contend with a dead-end poverty streak in return for a miserable decade spent slavishly following the edicts of baby-boomer corporate theology, Satoshi’s comments hit home at just the right moment.
Bitcoin represented an escape hatch into which they could dive just before they too found themselves sucked in by the same megacorporation con trick.
It was nothing less than gold before an ounce of precious metal had been corrupted by the dollar; it was the dollar long before a single greenback note had been tarnished with the brush of corporation politics. It was their own gold in a way, a unique source of value and eventual prosperity untethered to any of the burdens and grafts that the other world, that of wars they didn’t want and rules they didn’t need, nearly gobbled them up again.
And so what if no one approved? As Satoshi’s comments indicate, the early adopters held the view that there was little moral high ground left in the world now, after all.
Not even the edicts of the establishment held any source of credibility any more — most of the big time honchos had been caught completely blindsided by the credit crunch or worse, in the very act of stealing from their very friends and family. As for political regulation: if the policy wonks couldn’t figure out what a ponzi scheme was when they were alerted to one, well then it would take them half a generation to figure out how to code a new currency, let alone to regulate one. For to regulate something, you need to understand the rules first. And this time, there were an entirely new set of rules, but they were ones which the new pioneers had grown up teaching themselves and establishing by informal consensus and committee in the back-rooms of deceptively ordinary-looking websites. That’s where bitcoin got passed around.
In that sense, bitcoin new money wasn’t like the gaudy, greedy, trashy Ft. Lauderdaule, Florida money of ages past. At least not yet, it wasn’t. For the moment the early adopters found themselves hanging out in the same virtual locales, having the same theoretical discussions, posing to each another the same rhetorical questions. And then suddenly, somewhere in the midst of hanging out together and passing their new money about, they found out that their theories were actually practical possibilities while their questions were being answered.
All of a sudden, and virtually overnight, they found themselves rich beyond their wildest dreams, the direct beneficiaries of Satoshi’s community bail out thrown to the feeding frenzy of the global capital markets.
When in the last quarter of 2013 bitcoin went to $1000, reddit, an online forum popular with bitcoin fans, featured prominently one by a self-acclaimed bitcoin millionaire. “with today’s rise in bitcoin I’m officially a millionaire,” wrote the author, forgetting to punctuate his sentence in the excitement of the moment.
“I’m gonna cash out over the next 30 days. I’ll keep 50 % in bitcoin gold and silver for long-term and the remaining 50 % for a house and vanguard. Thank you bitcoin! You changed my life.”
Unusually for an online message board post, there was no reason to doubt the exuberant claim. Any asset that jumps to $1000 in value from 10 cents in a little over 24 months is likely to have its fair share of outsize profiteers.
Charlie Shrem was one of those prominent early bitcoin millionaires, who reaped huge returns when he was still at the tender age of 23. He started buying bitcoin at just $2 when he was a senior at Brooklyn College. At first he bought just 500 coins, but gradually he acquired thousands more as the price rose dramatically during 2010.
Like many early beneficiaries of the price rise in bitcoin, he invested his capital gains in a bitcoin start-up, which he called BitInstant. BitInstant lets holders of bitcoin spend their currency at major brand-name stores such as Wall Mart and Duane Reade for a small fee. Shrem keeps his bitcoin stashed away in an online wallet for which the access code is engraved on a ring he wears constantly around his finger.
But it wasn’t all celebrations for Shrem, who went through a period of legal hell. As if to illustrate the point about the antagonistic sovereign government agencies that millennials the likes of Shrem feel they are constantly up against, it wasn’t long before he was indicted on money laundering charges for his participation in a website called Silk Road, which trafficked in narcotics using bitcoin as its method of payment.
Finally in January 2014, Shrem was arrested after being indicted by a grand jury in NY. He pled guilty to a reduced charge of running an unlicensed money changing business, and ultimately got off with probation, but the point stuck: civil authorities were out for those who cashed in on this people’s bailout in a big way, potentially with the goal in mind of serving these upstarts with an intimidating retinue of criminal charges.
Indeed, at the end of 2013, federal authorities said that anyone who had purchased bitcoin at less than $80 that year and sold at $237 or higher within the same year was compelled to report the capital gain as a taxable element of their income, despite no official recognition of bitcoin as taxable asset class during the period in which it rose in value. With these sorts of legal ambiguities and potential threats hanging over the winners of tomorrow’s venture currency wars, many would-be entrepreneurs are discouraged from participating in the development process of the industry at all. Later on we’ll see how this is likely to play out in the evolution of venture currencies.
And yet there are signs that very credible individuals are pushing the way forward toward legitimate acceptance of bitcoin as unit of financial exchange. The Winklevoss twins, some of the online movements most established and respected figures, are some of the largest holders of bitcoin in the world, having been collectors in size of the currency since the early days.
In 2014, the twins, who are two of the co-founders of Facebook, were working with New York Stock Exchange chiefs to introduce to the market a bitcoin exchange-traded fund. It seems that while there is bureaucratic resistance to bitcoin then, as far as capital markets participants are concerned, it’s open game. Never has consensus been so divided on an asset that is so freely available for purchase, or so simplistic by design.
Herein are the signs of bitcoin’s innovative combustion-engines at work, creating widespread disruption. In cases of disruption, those who benefit from it are always passionate about its cause, while those who stand to lose resist it with all the might of a legislative military unit. The crucial difference is that this time, it is government bureaucracy that stands to lose the most as a result of the disruption. Hence the tumult even as huge gains materialize across the board in investor’s portfolios.
The story of bitcoin is one of the most unusual stories in recent history — and it’s only getting more unusual the longer it goes on. By May 2013, the price of bitcoin had climbed to $100 per bitcoin. Six months later, it had climbed another ten times still, to over $1000 per bitcoin.
As with anything that rises massively in value, bitcoin has gotten a lot of attention as a result of this, as has its underlying libertarian philosophy. This philosophy is in no small way a reflection of the world we are headed towards living in.
The concept of non-intervention by government authorities scares many who have become accustomed to a de facto establishment, but it has to be taken into context with the experience that most of these adopters have with the political and legal system, many of whom are 35 years old or younger. Indeed, it is worth institutions taking these contexts into serious consideration if in many cases they wish to promulgate their success in attracting the leading innovative peers of tomorrow, or else they risk becoming outmoded and uncompetitive.
For these individuals, the establishment is not a protector but an instigator of trouble. It regularly hunts them down and punishes them from their mid-teens onwards for petty actions such as parking violations, underage drinking, or smoking cannabis, while permitting powerful corporate lobbyists and financially-invested political leaders get away with mass-murdering millions of kids their own age the other side of the world in wars they repeatedly and in many cases, demonstrably, objected to their countries playing a role in or even initiating at all in the first place.
While winning wars may seem perfectly admirable a use of one’s time to someone from the old school mentality of sovereign forbearance first, to an increasing section of the population it is nothing less than revile. Libertarianism’s pacifist streak appeals to those for whom it stands to bear as a fundamental truth that God or no God standing by you, you don’t solve problems in the world by blowing up other kids.
In this way, from the standpoint of many of society’s new sector of the economic circle, in many ways, the dollar has less intrinsic value than does the bitcoin, untainted as the latter is by the blood of their fellow human beings or ugly ponzi schemes.
As if to prove this point, it is interesting to note that since 2009, when the currency was first launched, there have been surprisingly few of the typical white collar financial scams you typically associate with small, illiquid asset classes, with only one ponzi scheme prosecuted (in Texas) related to the currency to date. Nor have there been any incidences of murder or assassination associated with the currency.
Venture currencies then, more than most assets, reflect vividly the values of their holders. Whatever you have to say about their intrinsic value propositions, it’s hard to argue that the early adopters of the currencies have thus far been nefariously or maliciously inclined with respect to promoting their values in ways other than as a new suite of meritocratic financial products that in some way level the playing field a bit for their own purposes (which is a time-honored commendation when it comes to capital markets innovation).
In fact, on the contrary: they have in some ways achieved many of the aims that the Tea Party strove for until it became bogged down in the kind of religious and partisan rhetoric that so often disconnects a movement in North America from having an audience with the wider international social or political landscape.
And no one who has gotten filthy rich on bitcoin has tried yet to sell Goldman Sachs an algorithm that can break its back and rob it of a substantial amount of its value for them in the process.
So how have many of these same zealots of independent thinking justified the influx of hundreds of millions of dollars of venture capital, then? The answer is: the venture capitalists, many of whom are slightly more senior in age to the developers of the currencies, hang out in the same circles, and are proponents of the same themes.
Undoubtedly, the influx of venture capital has given rise to venture currencies’ huge surge to prominence in a way that without which, it never would have happened. But just like the speculators of railroad companies at the turn of the century, these capitalists need to beware they don’t bring the system down by flooding it with liquidity that stifles the rate of productivity at which innovation in the sector can realistically develop.
This is especially so given that many fund managers are not investing in the companies that service venture currencies so much as the underlying currencies themselves. Recently, this has been the case with entrepreneurs such as Richard Branson. The way that Virgin’s funds invest — and those of other similar traditional venture capital outfits — is by aggressively assuming stakes in companies regardless of their business models, only to insist that those companies convert their holdings into bitcoin upon investment and in many cases, lever those holdings up with margin.
In this way the venture capital funds are in many cases not investing in the business models that drive the alternate currency universe but are merely washing their investors’ capital through what amount to dummy shell companies making inflated bets on bitcoin without assuming underlying liability. These funds then proceed to ramp the price of the bitcoin up, while supporting it during its phases of weakness, with a portion of related funds from partnering broker dealer operations that they co-manage or partner with.
Naturally, price volatility doesn’t make for great business for the target companies in which the fund managers are invested, but it yields outstanding returns for the funds once they recoup their portion of the profits on the currency derived by special dividend payments.
We shall look at variations of these sorts of schemes and the participants in them later on. For now, suffice it to say that if fund managers continue to make what amount to these outsize bets in the hundreds of millions of dollars on bitcoin itself as opposed to on providing new transaction services to the currency’s community, then it is headed for sure decline. In which case: caveat emptor. These are nerds, and bitcoin is their gold. Take their gold away and they’ll make sure you never come back to play in their sandpit again.
The venture currency market is a kind of wild west dominated by political ideologues in their thirties and forties, kids in their twenties with computer science degrees, and a bunch of variably-aged stray cats of the finance and broking landscape who have reinvented themselves into fund managers. Many of this latter lot are looking to cash in not just on a financial windfall but also to some degree on the kind of ego-rubbing and pow-wow they were never accorded during the hedge fund boom of the 00’s.
In other words, the venture currency neighborhood is nothing short of a veritable melting pot of impressionable and yet outspoken amateurs-turned-pro in something they are all trying to define as they go along.
But when you put this crowd in the context of history’s significant innovative leaps forward, it doesn’t seem one so out of place to lead a revolution of generic magnitude. The railway men were hardly the most savory sort, or back at the start of the track-laying days, the most conventional ones, either. The oil barons of the Rockefeller era were hardly any different: they too came from all walks of life. Same with the guys who built our modern desktop software applications — before they grew up and started charities to cure African diseases or built oversized yachts with landing strips on the back of them, Bill Gates and Larry Ellison were not the conventional class of the 1970s — and neither were the entrepreneurs that hung out for the ride with them (and later moved into the private enclaves of their own self-made suburban havens).
It was bitcoin that gave the venture currencies a station on the international monetary highway. That’s why even today, bitcoin has a total market capitalization of around $6 billion, even as comparative venture currencies are much smaller. Litecoin, the second largest venture currency, has a market capitalization of just $150 million. Others have a total market size of around $20 million — $35 million, while the smallest virtual currencies are worth less than a million dollars when you add them all together.
But they are growing, and not by insignificant multiples. Bitcoin is glowing example of how value networks prosper via accumulating widespread niche platforms of users via a sort of early-stage philanthropic push into commercial acceptance.
It takes a crowded room to get a party going, and it takes a mix of personalities to start an evening that doesn’t finish up by ten. When it began, bitcoin’s night out was more a night in among like-minded friends. But all those early adopters — from Gavin Andresen, who worked with Satoshi Nakomoto on the code for the Bitcoin technology Blockchain, to Roger Ver, a tax exile who lives in Japan and maintains a St. Kitt’s citizenship and who will take any chance to subject the state to the very worst of his — somewhat scary — way of slicing and dicing the world’s biggest issues in straight, almost ill-conceoved ideas (were it not for his obviously good education background and decent upper-middle-class Jewish family upbringing). Even those who later landed themselves in deep end of the regulatory cauldron such as Shrem, despite claiming he always worked “high” as well as making a numcer of other such juvenile boasts, were settling in to the life of a well-off, maybe even multimillionaire, bitcoin apologist (as testament to this fact. Shrem at the time had raised some substantial capital from and was working closely in coordination with and with the full public backing of the Winklevoss Twins, hardly two people known for their happy-go-lucky friendships).
Effectively, right up through 2012 and most of 2013, getting into bitcoin was like the financial and conceptual equivalent to turning up at a pretty hip — if somewhat empty — party and getting slammed on the best stuff in time to enjoy the babes hit the strobes lights a couple hours later. That is in fact what bitcoin’s community was, back in the original days: an open bar. Anyone would pay anyone else some token bitcoin to start their “virtual wallets” off with if they showed an interested in starting to look at it as something of a serious financial unit.
And like any open bar, the fact that when you looked around, most of the others were your own age — which is to say, born somewhere between 1980–1995, helped a lot to get the conversations going, which were not so much dialogues as readers of chunky 1950s political romance thrillers are accustomed to, as so much what might be a portion of an Aaron Sorkin TV drama monologue, the soundbite — if that is what you can term affirmations such as “bitcoin will save the world!” still clearly bearing the scars of out-of-context quotation. This illustrious new generation of up-and-comers (or if you like, high-school kid-turned-bitcoin-hedge fund managers), so dubbed the millenials for their episodic late-to-work arrival in the wake of the elder baby boomers’ comfortable retirement settlements fast began to become a more crucial part of the adult economy during the five year period from 2009–2011.
These plugged-in, less pretentious heirs to the places their older brothers and sisters now left open for them at the end of the 90s feel in a sizeable majority of cases extremely misunderstood by anyone except their own age group. This itself is well-documented.
Such is the consequence of being the only group of kids who could always afford to take at least one vacation away every year, and whose minds it just never really crossed to have to work at some point doing something they hated (at least not for long): many millennials, even ones that are not well off, feel much more than their parents did that it’s their “option” and not necessarily their “duty” to bring home the bread for breakfast every day. Loss of responsibility is an unfortunate byproduct of increasing freedom. The trend does not suggest that we necessarily want much more of it too soon, either. Sometimes restrictions imposed upon us by our leading institutions and governments give us a pause for consideration as we rub our hands together and wait our turn like everyone else around us.
It was a whole fifty years away from the hard, dreary days of the mid-70s, when their parents chased scraps of jobs around the city or suburb, here and there, moonlighting for as long as they could until there wasn’t the cash in the employer’s bank account any more to justify any job, let alone a new hire. Today kids who were 25 were talking themselves not into a job but a business they could — and did — call their own. Soon, their contexts were about to get even more different still, as these early invested millennial adopters of bitcoin and other disruptive financial innovations began to define money — and even investment — slightly differently to everyone else.
The redefining of the process of making money — now that is something society would begin to hear, and its ringing sound would only get louder and more piercing; the dazzling face of the new technical complexity that has brought over 500 digital casino chips into being as hyper-mathematical programming equations becomes still more blinding by the day, so that we all — even the millennials — frequently feel in some way none the wiser on the occasions when freak storms pass by our office windows and mysteriously hoover up the other side of the side walk.
For the last of the baby boomers, walking outside in the early evening in a wide stroll and easy gaze, in what marks a cliché of the self-satisfied 20th century hunter-provider. At the end of one of these well spent days thinking and doing and completing it all and then some, the thunder claps like the violent applause of the spectators of some bullfight or gladiator match. When they find themselves a form of shelter, it has all the usual comfortable hallmarks of the specialist furtniture they are used to sitting on at home, so its some time before a whole portion of society realizes that the living room they are in is the is in fact somewhere no less than 50 kilometers away kilometers away, in what seems more like a ward for the sick than a family house. Outside among the birds, the unnatural garbles of so many their own age mixes the language up and their own version of English now sounds more like a random chorus of foreign-sounding emphases.
For the baby boomers who wake up in retirement homes, when they look back over the border of the country they built the financial foundations of and once ruled with an iron first, and they realize that they don’t actually know it that well anymore, theirs is such a self-punishing sense of duty that most of the time, it is not their kids who will be at fault, but their own. Out of some vague feeling of abandoning their duty as parents, which couldn’t be further from the truth, a vague pang will shoot through the hearts of these unfortunate veterans as millennial stars emerge from the technological innovations that yield a greater and mightier explosion of material accessories.
That can never be allowed to happen, for such a disgrace would it be to ourselves and such an ugly sign of our arrogance and narcissistic desire for self-satisfied sharing would it in turn leave our own children with the legacy of making sense of. Innovating is heroic, in a way, but only on a timeline of centuries.
Within out own lives, parenting is the real heroes task, whatever money we make and whatever great corruption we interfere with, and whatever name we make for our current lifetime. Parenting means being a good son or daughter as much as it does ushering in the next crowd of citizens with care. We can never afford to lose sight of that, even if everyone else around us does. If such a day does come when material excess is somehow more important than the small emotional requests of the ones who have struggled to give us a world without warfare and a city with skyscrapers we can dream ourselves of towering over, as it surely will at some point, then that is the point when the innovator in all of us will be tested. That is the point we will have to turn the careless advatanges we have spent our lives enjoying around so that they work in the favor of those members of our family and in accordance with the values we have been taught to hold most dear in our hearts.
For millennial children the real heroes will be the ones in society who at some point give up the possibility of winning, with the same self-serving discipline that our parents strove to diligently win themselves.
With so much choice and so many ways in which to go wrong so young springing up around us all the time, it is to our kids we will have to look to teach without controlling, to love without wanting. The real heroes in our society will the ones who manage to juggle the delicate and most crucial task there is: being parents.
The post is originally published here.