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The role of ideology in Bitcoin. Which side do you belong to?

October 24, 2020

It is not a secret to anyone that the crypto community is full of ideology. There is a very special narrative. And they all seem to speak the same language. You could say that the Bitcoin community shares a common vision of life. Well, to say “life” may go too far, but it could be said to have a shared vision of money and business. If we take the most popular names in this field as a reference, they all seem to read from the same script. But do all bitcoiners think the same way?

For simplicity, one could say that the Bitcoin community is divided into three main camps. In this piece I will take the liberty of giving each side a name. I have to say that I have chosen these names arbitrarily as, to the best of my knowledge, we do not yet have an official dictionary of terms on the matter. The three camps: the militants, the mercenaries and the utilitarians.

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The role of ideology in Bitcoin. Which side do you belong to?
The role of ideology in Bitcoin. Which side do you belong to?

Of course, they are more than perfectly defined groups, they are actually ordinary. So we could see these three streams as spaces in a circular spectrum. Each Bitcoiner chooses a point within this spectrum. Some are moving closer to the “militant” area. Others are closer to the other two areas. Some can be found in the middle of two streams. Others may go a bit in the middle, which means their posture is a bit more moderate. Others, however, can choose the extremes, which means their positions are more radical.

The militants are the oldest and loudest group. But I very much doubt they are the largest group. I would say that the mercenaries and utilitarians are the real majority. However, the militants are very present in the press and in the networks. In fact, the vast majority of so-called “influencers” belong to this site. And they practically have a monopoly on storytelling. However, if we analyze the fundamentals of Bitcoin in detail, we will see that not everything is ideology.

The militants adopted the old Liberatorial ideology, particularly the branch that promotes the return to the gold standard and the spirit of the Austrian business school. The only thing is that you have to replace gold with bitcoin. And we should also add the technological component of cryptography and computing. This is a kind of anarcho-techno-capitalist utopia. So the enemy here is the government, the central banks, the traditional financial system and the fiat currency. Here we have two subgroups. The “maximalists” who defend Bitcoin’s supremacy. And the technonerds who believe that blockchain technology has other uses than Bitcoin.

The militants don’t trust anyone. They don’t even trust their own mother. Everything has to be decentralized. And the individual has to take care of himself. Which means our money has to be under the mattress. Because intermediaries are not trustworthy. Only we can keep our money. More than wealth, fame or power, the freedom of the individual is the most important thing in an autonomous and decentralized system. The free market is wise and self-regulating. The government damages everything.

This group views Bitcoin as a political movement. That said, Bitcoin is a living proposition. The idea is to separate the economy from the state and get rid of central banks and fiat currency once and for all to use bitcoin only. In this way, the economy will work like a charm because the state can no longer damage everything. Here is the importance of adoption. The goal is for all of us to use bitcoin as a means of payment to gradually erase fiat money from the card. It’s like an evangelization process.

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Now let’s talk about the mercenaries. This group sees Bitcoin as an opportunity for enrichment. At some point, they heard that there was some “magic money” on the Internet that was an excellent investment. They searched for information and decided to put money in Bitcoin to speculate on the price. The main goal here is to make money. Most of the miners, traders, funds, and crypto firms belong to this camp. Here the focus is on Bitcoin as an investment. More than a form of payment, it is a speculative asset. As simple as that.

Then we have the utilitarians. This is the quietest group of all. But in my opinion it is one of the most important. This is the group that Bitcoin uses for its usefulness. The gaming industry, which cannot use credit cards in some countries, uses Bitcoin. The dark web uses Bitcoin to hide from the authorities. The gig economy uses Bitcoin to pay employees without bank details in other countries. The forex market uses Bitcoin to move capital. This group may not accept the ideology of the militants or they may not have the capital or intent to invest in Bitcoin, but use Bitcoin for their practical purposes, taking advantage of the lack of regulation and the advantages of technology.

However, the militants accuse the mercenaries of being greedy or immoral. The mercenaries accuse the militants of being unrealistic, hypocritical or fanatical. The utilitarians are ignored by the militants and mercenaries. And utilitarians, on the other hand, do not bother to engage in sterile debates because they are busy doing what they are doing.

All groups are important. And it is important to belong to one of these pages. There is one caveat here, however. The militants hijacked the narrative. And one might be tempted to believe that being a bitcoiner automatically means being militant, even though they are actually a minority within the community. In other words, there are more crypto investors in this area than crypto libertarians. And that is perfectly demonstrable. The activity of exchanges is an example of this. It shows that the main activity within the crypto space is speculation. In addition, the popularity of the phrase “bitcoin price” could suggest that the balance is leaning toward investment rather than ideology.

Why is it a problem that the crypto-libertarian voice prevails so disproportionately in this room? Well, because many Bitcoiners are hungry for financial advice, and the only thing that can be read in the trade press is that the Federal Reserve is undermining many freedoms and that the dollar is destined to die. And I fear that many are not very interested in starting a libertarian struggle against the system. Many just want to be better investors.

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It is a danger to listen to the financial advice of the militants, because in their passion they present reality with its very pronounced bias. For example, there is talk of “hyperinflation” in the worst deflationary crisis in our recent history. Bitcoin is known as a safe haven when in reality it is a very volatile asset. Knowing whether we have inflation or deflation is important as it may or may not affect our financial decisions when buying an asset. Objective information is very important to the design of a smart investment portfolio because a safe asset should receive very different treatment than a high risk asset.

There is room for everyone here. But to survive in this community we need to understand very well the role of ideology in this space. With that in mind, it’s easier to invest on Wall Street. But crypto is the wild west. It is possible to be victorious if we learn to live among the three great parties of the Bitcoin family (Adams).