A Critical Review: Hijacking Bitcoin by Roger Ver
Or The Confessions of a Bitcoin Narcissist: I am a victim, Bitcoin is unfair, Bitcoin is not Bitcoin, Bitcoin Cash is Bitcoin, I have a monopoly on Austrain Economics, I have been censored, social media is against me. Nevertheless, Roger does have a point about Lightning Network, but then misses the point.
I have been out of Bitcoin for the past year due to personal circumstances and health reasons. I only learned of Roger Ver’s book after he had been arrested and jailed in Spain by U.S. authorities for mail fraud and tax evasion and saw the incredibly nasty tweet by Dan Held, due to some allegedly equally nasty shenanigans by Roger Ver during the block size wars.
As an 11-year veteran of the Federal Bureau of Prisons with nearly two years in solitary confinement and a Doctorate Jailhouse Law Degree, my heart goes out to Roger Ver’s predicament.
It does not seem Roger Ver will be getting the kid glove treatment given by the United States Government to Arthur Hayes from Bitmex (who stopped bribing with coconuts and started using Bitcoin) and CZ from Binance (who never tried coconuts.)
Roger Ver’s arrest and indictment are not about business but are personal and center around his renouncing his citizenship without a big enough exit payment and his strong beliefs that all taxation is theft. Big governments severely punish those who voice such public views. Just ask Peter Schiff.
Further, what most people do not understand is the laws are one thing. Prosecution is entirely a different matter. Prosecutors have what is called prosecutorial discretion. There is a reason for this. It is not possible to prosecute every violation of the law. And this is where politics comes into play in the judicial system. Americans are waking up to this great truth with the prosecutions of Presidential Candidate Donald Trump.
At one time long ago I liked and admired Roger Ver for his libertarian ideals, as did many other Bitcoiners. But that admiration quickly disappeared when he instigated the Bitcoin war for bigger blocks with his childish antics to hijack Bitcoin.
Hope against hope, I thought Roger might address the very real, present, and ongoing hijack of Bitcoin through the disturbing trend toward Bitcoin Crony Capitalism.
Unfortunately, this is not the case. Rather than address the real hijacking issues Bitcoin faces today, Roger Ver simply rehashes his same old tired arguments about the blocksize war he lost due to a plethora of equally passionate Bitcoiners determined to preserve Bitcoin by securing it as the longest chain with proof of work.
Turns out, Roger Ver rails against Dan Held in his book because Dan is a small blocker persuaded that Bitcoin is a store of value while praising Brian Armstrong from Coinbase because he is a large block supporter.
Bitcoin is lousy cash and sucks as a store of value but is a worthy speculation. What needs to be addressed is the disturbing trend toward Bitcoin Crony Capitalism.
Yet Ver, Held, and Armstrong are three examples of this disturbing trend by their common goal to blend Bitcoin into the legacy fiat system.
The forward is written by Jeffrey Tucker, formerly with the American Institute for Economic Research (AIER) and who recently founded his own think tank The Brownstone Institute.
Jeffrey Tucker has endorsed this diatribe as a “hugely important documentary history” which is laughable. It will be interesting to see just who is funding this newly formed Brownstone Institute. It is doubtful AIER would allow such an endorsement.
There is a “hugely important documentary history” I can recommend, The Blocksize War: The Battle for Control Over Bitcoin Protocol Rules by Jonathan Bier which has no forward and is without an agenda.
Had Jeffrey Tucker read E. C. Harwood while working at AIER he would not have made such a blunder.
Yes, Roger Ver is correct. The original white paper indeed envisioned Bitcoin as a Peer-To-Peer Electronic Cash System. It also envisioned Bitcoin as digital gold.
But few today understand the limits of cash or how the gold standard emerged in the 19th Century with sound commercial banking or a.k.a. self-liquidating commercial paper resulting in The Gilded Age.
Except in rare situations, such as the California gold rush, gold has never circulated as cash. Rather gold substitutes based on the gold standard circulated as cash through copper, nickel, and silver coinage, banknotes, and company store scripts.
Any money that emerges as The Standard becomes a yardstick and ceases to be used widely as cash. Rather it is money substitutes that emerge as cash. In the emerging gold standard, silver, nickel, and copper coinage, small banknotes, and company scripts emerged as cash. This is the very nature and structure of becoming The Standard.
This is outlined thoroughly in October 2018 in my article entitled The Gold Standard VS. Gold Cash.
And to a greater degree in my book How to Put Yourself on The Bitcoin Standard In One Easy Lesson.
If Bitcoin Cash, or any digital currency becomes The Standard it will no longer act as cash except in rare circumstances like the California Gold Rush.
It is the emergence of the store of value that creates cash substitutes based on The Standard of that store of value. If cash becomes the store of value it ceases to circulate as cash and money substitutes based on the new standard emerge.
Roger Ver simply does not understand this. Or if he does, then he is lying about his altruistic vision for Bitcoin to act as a peer-to-peer electronic cash system.
As the gold standard developed in the United States very few people owned gold. Gold coins never circulated widely. Rather it was silver, nickel, and copper coins minted by the U.S. government, small banknotes, and company scripts with a face value based on the dollar gold standard that circulated as cash. This worked because issuers earned seigniorage and on the float for offering the service. This included the United States government which earned revenue without taxation by minting silver, nickel, and copper coinage redeemable at the face value of gold. The difference between the face value and the lower intrinsic value is the seigniorage.
Bitcoin Protocol is Unfair, Bitcoin is not Bitcoin, Bitcoin Cash is Bitcoin
During the first third of the book Roger Ver repeatedly refers to Bitcoin as Bitcoin Core.
Bitcoin Core is not Bitcoin. Bitcoin Core is the software that enables the creation and distribution of Bitcoin.
It is this software protocol that Roger Ver wants to replace and control through the hard-fork Bitcoin Cash in one of many attempts to hijack Bitcoin by big blockers. When the Bitcoin Cash hard fork was created many people referred to it as B-Cash to distinguish it from the longest proof of work chain which is Bitcoin.
And, it is this feature of being the longest chain with proof of work that makes Bitcoin so valuable as The Standard of value according to F. A. Hayek. Roger Ver does not have a monopoly on Austrian economics.
B-Cash highly offended Roger, yet he uses the same tactics in his book by referring to Bitcoin as Bitcoin Core deliberately offending those who protect The Bitcoin Standard.
Roger Ver Is Shunned, Not Censored
Roger Ver repeats a similar hypocritical scam by crying about “censorship” by those who refuse to allow his views and the views of other big blockers to promote a hard fork on Bitcoin forums or platforms. These proposed hard forks are not Bitcoin, they are all wannabe bitcoins that become shitcoins if they consummate the fork.
As Dan Held accurately tweeted about Roger Ver, “He misaligned expectations around Bitcoin so much that it led to a civil war.” Source: Dan Held
This is not censorship. This is shunning. Roger Ver is free to make a case for his big block preference and eventually, he helped create the hardfork BCH. This is how a free market works. And this is how free speech works. Shunning ideas is a vital part of free speech. No one is required to provide Roger with a platform or audience.
What is not mentioned in the book is that Roger Ver purchased the domain www.bitcoin.com to confuse the unwary that his hard fork Bitcoin Cash is Bitcoin.
It is not social media that conspired against Roger Ver and Bitcoin Cash, rather it was Roger Ver using social media in a conspiracy with many others to hijack Bitcoin, which is the longest chain with proof of work and is preserved through small blocks. It is Roger Ver and other big blockers who were determined to hijack and destroy if they could. The marketplace delivered the verdict, a verdict not to Roger Ver’s liking.
The title Hijacking Bitcoin by Roger Ver on the cover of the book is appropriate and true! But to blame small blockers with hijacking Bitcoin is like calling the black kettle white. Roger Ver is neither Bitcoin Jesus or Bitcoin Judas, but he is and remains a Bitcoin Pharisee.
Roger Ver Does Have A Point About Lightning Network But Then Misses The Point
I almost found one redeeming feature in the book. Roger Ver noted the shortcomings of the Lightning Network and referred specifically to this Tone Vays episode. Page 88 reads as follows:
Online Nodes
The Lightning Network requires users to run their own
nodes. This fact famously perplexed Tone Vays, the popular
Bitcoin personality. He apparently did not understand this
basic feature, despite relentlessly promoting Lightning as an
alternative to blocksize increases. In a YouTube conversation
with Jimmy Song, he starts by fielding a question from the
audience:Vays: Here’s a good question for you, Jimmy. Someone says
“What benefit do I get from setting up my own Lightning
node?”
Song: Uh, you can go and pay people, like in Lightning…
Vays: Wait a minute, I need clarification on that. Do I need
to have a Lightning node in order to pay people through
Lightning?
Song: Yes.
Vays: Really?
Song: Yes, because the only way you can pay anyone is by
having a channel, and you can’t have a channel unless you
have anode.Vays: But, do you need your own node, or do you need
someone else’s?Song: You need your own node…
Vays: Oh wow, so every single person might need their own
Lightning node?Song: Yeah…
Roger Ver omitted the comment by Jimmy Song on why having your own node is a good thing, nevertheless, LN remains very clunky and cumbersome. Lightning is a secure way to use Bitcoin as a medium of exchange but why would you want to?
Jimmy Song has pointed out it is silly to use Bitcoin as a medium of exchange.
Jimmy Song makes clear the obvious. . . so obvious he simply outlines what I, and other prudent men, have been doing for years! It is just plain stupid to use Bitcoin in retail trade!
Frankly, I was flabbergasted that such an article needs to be written! It is a reflection of the sad state within the crypto space and the fact is that Jimmy Song has been castigated for it by the Bitcoin Pharisees for exposing them for the frauds they are.
In an April 1986 article entitled Market Standards for Money F.A. Hayek refined his thinking of his notable work The Denationalisation Of Money and suggested that a private ‘store of value’ — the standard — would be more likely to overcome the political obstruction to the wholesale denationalisation of currencies, but would be immune from use as a political tool. The article can be found on this link.
F. A. Hayek anticipated the current situation, and wanted to make clear that free market money (like The Gold Standard) will succeed from competition on one accepted standard, and not competition on what that standard might be. . . Hayek envisioned an index of a basket of commodities as the emerging standard because it would have implicit stability as a store of value from the get-go. He even named it!
“The ideal name for the new unit of account, clearly making its function universally intelligible, would be the proverbial term Standard, a rather obvious name which, however, has so far never been used as the designation of a particular monetary unit.” (emphasis in original)
But even with such implicit stability, Hayek did not anticipate its usage in retail trade.
“ . . . It seems probable that for a long time the use of such a common international unit of exchange, at least, be used chiefly in wholesale or other large-scale transactions (although including also much expenditure on travel). I do not contemplate that the Standard will be used as pricing in retail trade. For local business coins and notes, and even some cheques or credit cards, a local currency may well remain indefinitely preferred. But I would anticipate that once such a unit exists it will become increasingly the unit of long-term business contracts. Contracts will begin to be made in Standards, the future value of which I suggested in Denationalisation of Money that gradually the courts would come to interpret all contracts as intended to be expressed in a stable monetary unit, so that the difficulty of uncertain value of contracts disappears.” (emphasis in original)
The point is that whatever becomes the standard is rarely used as cash. We are seeing this in Bitcoin today. Just as gold started as a medium of change, as it became the standard it ceased being cash except in specific times and places like the 1849 California Gold Rush.
Roger Ver does not understand that if he achieves his objective of replacing Bitcoin with Bitcoin Cash, Bitcoin Cash will no longer function as cash but will be held as a store of value.
Fiat Is Not Necessarily Evil
In my review of Jimmy Song’s book Fiat Ruins Everything my lone major criticism is the title.
The truth is not that Fiat Ruins Everything, the truth is Sin Ruins Everything. But this title cannot appear on a book cover, only on critical reviews.
The truth is man-made decrees cause tremendous hurt when they are contrary to God’s just decrees given to us in The Ten Commandments.
There are right decrees and wrong decrees. Our Nation was founded on the decree of sound honest money. It is not a fiat decree that only gold and silver shall be legal tender that ruins things. The United States had sound honest money for over a century.
The Failed Lightning Network Bitcoin Bailout in El Salvador Highlights The Rothbardian 100% Reserve Fallacy
Lightning Network is a 100% reserve bitcoin base money that improves bitcoin base money fungibility and scalability. It makes the base money or standard available to a much larger audience, but not to the common man.
Sound base money is a prerequisite for sound fiduciary money. All fiduciary money is banking, But just because fiduciary money is nominally redeemable in sound base money does not make the fiduciary money sound. Sound fiduciary money is only as sound as the promise to pay.
Sound fiduciary money (sound banking) solves the problem of regulating the money supply through market forces and does not rest on technology alone but relies on human action by men with integrity applying the technology with sound banking practices.
The failed LN Bitcoin Bailout in El Salvador has highlighted base money shortcomings. The bailout is largely influenced by the Rothbardian idea that base money 100% Reserves should be imposed on a nation.
Not only was the Lightning Network forced on the nation but the equivalent of nearly 2.5 days’ wages was provided to each citizen on a Bitcoin wallet to jump-start the program.
Yet despite these incentives, the government program has failed to gain traction. Just as Murray Rothbard was a Gold Socialist in his day, his modern disciples are Bitcoin Socialists with a nation-state imposing the 100% in-kind reserve fallacy at the expense of the public. (Ad Hominem arguments like Bitcoin Socialists are valid so long as they are both relevant and true.)
Few, if any Rothbardians, have acknowledged the failure of imposing a subsidized Lightning Network. It exposes the hypocrisy of their Austrian free-market narrative.
The Future Success of Bitcoin Depends on Developing Sound Bitcoin Banking
F. A. Hayek recognized that Denationalisation of Money goes hand in hand with free-market banking. So what the future of Bitcoin Banking should look like cannot be ignored.
F. A. Hayek
Within the sound money bitcoin movement, there is a wide variety of opinions on how we should proceed.
Perhaps the best way to begin is to examine what E. C. Harwood described nearly 50 years ago as The Lost Art Of Commercial Banking which was the organic innovation developed in the marketplace leading to what is known in the United States as “The Gilded Age.”
While the new innovation of bitcoin has somewhat lessened the need for Harwood’s “wise and honest men” by replacing the integrity of gold with the integrity of a secure code and network, without a change in human values and advancement of sound commercial banking, bitcoin will likely remain stuck in the loop of a lousy store of value, suck as cash, and yet continue as worthy speculation.
While this may protect the individual somewhat from confiscation of personal wealth, it falls far short of what Harwood observed as a basic problem that must be solved.
“Clearly, one basic problem that must be solved, if the flow is to continue uninterrupted and without either accumulations of surpluses or serious scarcities in the markets, is to provide for potential claimants or buyers the claim checks or purchasing media that will enable them continuously to buy what is offered. Enough, but neither an excess nor a deficiency of claim checks, must be provided.”
The Origins Of Sound Commercial Banking On The Gold Standard
This problem was resolved organically on the gold standard through the development of self-liquidating commercial paper.
More than once I have been asked to distinguish Bitcoin from the Bitcoin Standard.
The distinction is simple. Bitcoin is static.
It is secured by the longest chain with proof of work and has a fixed supply. This is the innovation of Bitcoin. This is why Bitcoin and Bitcoin alone is The Standard. This is the feature, uniqueness, and strength of Bitcoin, not a shortcoming or bug.
This is what Roger Ver simply fails to grasp as well as the implications if Bitcoin or Bitcoin Cash emerges as Hayek’s Standard.
The Development of The Bitcoin Standard Makes Bitcoin Boring Again
And it is for this reason The Bitcoin Standard is dynamic. This parallels the emergence of the gold standard. This history of gold, the commodity, is that once it was adopted as The Standard, it ceased being used as cash except in the rare times and places when gold was plentiful and basic necessities like coffee, hardtack, picks, shovels, and jeans, were hard to come by, ie. The California Gold Rush
The opportunity exists for 10,000 or even 100,000 micro-banks to emerge spontaneously at swap meets operating solely on the Bitcoin STANDARD for those with the courage to act quickly.
The underlying issue is not the legitimate function of government to provide the citizenry with honest weights and measures by minting gold and silver coinage thereby generating legitimate revenue through seignorage without taxation, but rather, once this legitimate function is accomplished what should be the reserve requirement in banking?
While the use of gold as money is hardly an innovation, the gold standard was an innovation that emerged in an era of relatively free-market banking. And while gold cannot be traced to an anonymous discoverer, the gold standard can be traced to Adam Smith’s “invisible hand” of the marketplace.
The Adam Smith 1/10th ounce gold piece
As the gold standard emerged there was no fractional-reserve gold standard decreed by governments. The money supply was determined by banks creating a non-inflationary self-liquidating commercial paper that represented an estimate of all production (including gold) coming into the marketplace. Gold simply acted as a governor when the market participants perceived that individual banks over-estimated the value of the specific underlying production. It was only later when the gold standard was nationalized that governments decreed fractional gold reserves creating the business cycle by perverting sound commercial banking that organically evolved in the marketplace.
In the case of non-bank money, the script can be created in company stores or a federation of stores in exchange for labor.
Conclusion
No one has more empathy for Roger Ver, the man, than I do. Sitting in prison is not fun. This young man has an enthusiasm for freedom and sound money that is contagious but misguided. Yet looking back I now regard my stint in prison as a positive. I saw the very best things and very worst things in prison. It opened my eyes to reality and I pray it may have a similar positive effect on Roger Ver.
UGLY OLD GOAT
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