The Bitcoin Lining
A mental model for the frontier
I. 🔑
Every cloud has a silver lining. But everything else does not have a Bitcoin Lining.
The Bitcoin Lining represents the ability of something to do either one or ideally, all of the following actions -
open-source (so that it can be self-hosted on your machine if it’s software)
decentralize (meaning there isn’t a handful of entities that totally control it)
adopt tokenisation (usually as a means to confer ownership to users)
become permissionless (by removing guardrails & gates that prevent widespread usage without explicit permission from the creators)
and censorship resistant. (by either aligning incentives that favor truth-seeking behavior or explicitly committing to do so & proving their commitment through actions).
This applies to all every app you use, every website you visit, and everything run by a collective group of people in the middle. It extends in the physical world for everything for which there is an intermediary, for example, companies, agencies, corporations and firms.
It even extends to governments, and nation states, but that is an essay for another day.
Today, let’s talk about why you should look for the Bitcoin Lining, why it matters and how to look for it effectively.
We’ll start with the why first.
II. 💡
Everything that has a Bitcoin lining has the potential to disrupt existing systems or organizations that act as an intermediary and profit from it. To care about disrupting such middlemen is important, as they’re directly profiting from being in the center and acting as an arbiter of trust and safety, in a society that is increasingly choosing trustless alternatives. Human beings are inherently fallible over long periods of time.
Everything that you think can’t be hacked, even giants like Facebook, has been and will be. On the other hand, on-chain systems are battle tested, have large bounties for hacks, and move billions of dollars - so it might not be a stretch to assume that the most secure backends of the future would be transparent on-chain structures.
If a software is open source today, you can take a look at the code and judge for yourself whether to be an user for it. It does not matter if you know how to code or not. Someone somewhere who can, will verify it if it’s an important piece of software & they will be quick to point out any existing vulnerabilities.
If something is decentralized, you can be certain that there are no centralized authorities with the capacity to look at your data. If you use an android, you can be certain that your data is being used by Google for profit. What’s tragic however, is that “Google” isn’t just a name. It’s run by people just like you and me. What happens if someone sufficiently higher up chooses to see what’s in your drive, or backed up on your photos app? What happens if the company you’re supporting with your data, decides to manipulate the elections of a nation state for corporate benefit?
We usually don’t think about these things and we don’t ask such questions until it’s too late. Decentralization will be thought of as unimportant, as it is thought of right now among the masses, until it suddenly becomes a necessity.
If a software is tokenized, you will own a piece of the software you use. The success of the software will not only benefit those who started it (and probably have a significant % of the whole supply of tokens), but they will also benefit you- regardless of when you arrive to the scene. If you arrive early, find the conviction to invest in it and hold-long term, you might be disproportionately rewarded for your early conviction.
In this way, adding monetary value to our vote of confidence in something, allows us consumers to not be treated as free data and content creators. We’ll no longer be used by big tech firms for data, allowing us to focus our attention to worthwhile pursuits. Instead, we’ll be owners- owning pieces of the web that we use and profiting from our conviction and research.
It is often said that wealth beyond a certain point, say 60k USD a year, stops mattering. While that may be true, for those of us trying to be immortal, trying to support the bleeding edge of tech, hoping to be free from our flesh vessels in an age of robotics and advances in transhumanism, we’ll need a significant amount of wealth to participate in this.
Over time, it’ll get cheaper and affordable for everyone. Just like you can now own the same phone that the richest man on Earth uses, these innovations in life extension and other related domains would get significantly cheaper and scale to billions of billions of people. But if we’re just old enough to be at the time when these are available, but not old enough to wait for them to get cheaper, or even just to support those at the frontier building and researching these, we’ll need a high amount of disposable wealth.
Fortunately, being early at the frontier will provide us all with ample opportunities to take advantage of this, and by looking for the bitcoin lining, we’ll be economically better off.
The Bitcoin Lining extends to current services and products you use too. If there isn’t a Bitcoin Lining in them, which is their potential to decentralize / adopt tokenisation / go open source, try to search for alternatives. Even if those alternatives are clunky and less user friendly right now, all that will change in a few years.
There can also be a counter-argument that some things just don’t have a Bitcoin Lining. It’s impossible to decentralize something like Amazon, right? It’s impossible to have a decentralized Netflix, and they won’t ever choose to do that to themselves.
You might be right in the short term, but alternatives can soon exist. As DAO tooling improvs, DAOs could delegate funds and produce the originals, while independent filmmakers can submit their titles, just like YouTube, but curated by the DAO. A decentralized earning platform, similar to the vision of Earn.com, is a few steps from making the labour market fully liquid and allowing the transfer of online tasks to the physical realm. Yes, these are lofty ideas. It seems impossible right now.
But in technology, what seems impossible today seems outdated tomorrow.
If you look for the Bitcoin Lining and wisely research about what you choose to support, you will not regret it and the world will be a better place for it.
Thus, looking for the Bitcoin Lining will help increase both our privacy and wealth. I can give you two examples of these-
III. 💰
Here’s an example of what having conviction at the frontier and -
Solana is the fastest blockchain in the world, with a TPS that can scale to 64000 and beyond. It is also decentralized, with a Nakamoto coefficient of 19, and censorship resistant.
Those few who invested at seed rounds got each Sol at 0.03 USD. Solana is currently trading at $ 107. While that seems like a huge profit for those seed investors who were early, here’s a tweet from when Solana was trading at 3 USD-
If you had enough conviction to double down on your bet and buy Sol at 3 USD, you’d be sitting on a 30x profit right now. Sam-Bankman Fried, an “effective altruist” with questionable utilitarian morals, did offer exactly that-
A case can be made that Solana can still 10x right now, since it does all the things that ETH does but faster with almost negligible fees, and its market cap is 10x less than Ethereum.
Here’s a tweet from the Founder of Arweave, on how good VCs helped him. Remember that just like these good VCs, you had the chance of buying AR tokens at 0.10 too.
You can still do that. If you’re reading this in 2021, you’re early. Bitcoin isn’t a 100 trillion dollar asset yet, so there are a lot of tides left to cover.
This is the promise of the frontier, should you choose to embrace it.
IV. 💾
Finally, looking for the Bitcoin Lining in everything isn’t just about increasing your own wealth and privacy. Even Bitcoin doesn’t have the perfect bitcoin lining since you always need someone’s permission to buy it. You can earn it, yes, but you individually cannot mine it in this day & age - which may have been why it was started in the first place. So, you do require some permission.
However, in seeking the bitcoin lining, an interesting thing increases which the majority of the people don’t immediately care about-
Your freedom.
If you want to send some Bitcoin to me, you can do that without any middlemen knowing about it. No one can stop you from doing that. Not even governments. No one can take the Bitcoin network down.
In this way, Bitcoin is the first time in human history that humans have access to censorship resistant ownership. It’s an open-source protocol that was started without any fan-fare. There were no marketers who “promoted” Bitcoin and no fed that unanimously called for its adoption. It was organically adopted and spread by the community of users, starting from the market cap of 0 to a few hundred billion dollars today.
As the price of Bitcoin increases and continues increases, let us not forget that it also represents an increase in freedom. Bitcoin is a litmus test for governments around the world. Those that try to stop it will fail, but they’ll also show that they don’t stand for freedom. An asset that no one can seize, no one controls, but everyone can verify.
Similar projects are starting every day, and the Bitcoin Lining can guide us towards what to support, adopt and own. If not today, but definitely tomorrow, self custody will win over middlemen. From web3 to DAOs to network states, decentralization will win over centralization. The ownership model will win over free predatory advertising models. The world will be a better place for it.
Every cloud has a silver lining. But everything else does not have a Bitcoin Lining.
Looking for it, analysing it, supporting it and spreading it is how we make the frontier accessible to all.
That is how we’ll all win.