NEET INTEL's Bitcoin Thesis
Bitcoin as a store-of-value, or else Bitcoin as a quantum-canary-in-the-coalmine
It’s a stretch, but if you’ve enjoyed any of my posts about Emergency Action Messages, you might humor me writing an article about a cryptographic currency.
Everyone’s favorite guy Curtis Yarvin has been writing some thoughtful posts about Bitcoin in the last few months. He says he has no vested interest in it, but whether he does or not, he’s never been a big shill (and still isn’t) and you may find his posts on it interesting whatever your opinion on what he’s better known for (i.e. his politicsposting).
I have some thoughts in response to this specific post;
This is a straight-forward explanation of Bitcoin valuation. If, like me, you’ve heard a lot of people say “Bitcoin is the world’s future currency” when advocating it the past 15+ years, you’ve been listening to people who never quite knew what they were talking about. All the old posts from people who really “got” Bitcoin positioned it not as a currency but as a store of value – i.e. while skepticism of USD might inform the creation and adoption of Bitcoin, it does not follow that it means BTC supplants USD. That skepticism alongside an actual understanding of BTC would mean it follows that BTC supplants gold and other ‘stable’ things that are appropriate for long-term and scaled storage or backup of ‘value’.
I’d like to respond to this in two ways. First, I’d like to respond in a way that accept’s Curtis’s thesis that Bitcoin either goes to infinity or to zero, depending on whether or not people accept Bitcoin as a store of value. I’d then like to respond in a second, separate way that reject’s Curtis’s thesis – that Bitcoin is by its design eventually going to go to zero.
On Bitcoin as an option on hyperbitcoinization
Bitcoin is shilled hardest by people who want to be rewarded for being early to Bitcoin. This is made obvious by the contradiction of their most frequent statements – “we’re so early” (in reference to being among some fractional percentage of global population that holds it) vs. “Bitcoin’s value is in its 15+ year social consensus as a store of value”.
Bitcoin is a proof-of-work system, with contributions from people that’ve had their GPUs burning electricity through the 10s and 20s. It’s an expensive and difficult endeavor to replicate, but the end result is not a productive asset, but a ledger. A ledger that points to guys that’ve had GPUs running. (Okay? Why is it in our interest to value that?)
Bitcoin’s position is based on provenance, but if the powers that be decide tomorrow that provenance should point to a different chain (whether that’s Ethereum, a central bank digital currency, or some yet-to-be-created protocol with better energy efficiency or privacy or programmability) then Bitcoin’s 15-year head start means nothing. Provenance is only valuable if people continue to care about that specific provenance.
The guys who Bitcoin’s ledgers point to keep telling us we need to care about that provenance, but they’re only a fractional percentage of the global population. They assume that when USD crashes, we’ll all suddenly accept their insight and the provenance of Bitcoin will become our new foundation. But if they fancy themselves as the successors to those who forced the world to adopt gold as a store of value, they fundamentally misunderstand history: nobody willfully conceded to those with more gold as superior. The world was coerced to accept gold over centuries. They were coerced by armies and by empires and by men with weapons who demanded taxes in gold and killed those who refused.
Bitcoin’s early adopters have provenance. They have a ledger. They have cryptographic proof. What they don’t have, and what actually mattered for every successful monetary system in history, is the power to force anyone to care.
On Bitcoin as an intelligence trap
Ultimately, I disagree with Curtis's posts because I think framing BTC as "it's either a store-of-value if people accept it, or eventually goes to zero if they don't" is too naive. It ignores the elephant in the room – that Bitcoin was created by the NSA as a simple trap meant to coerce adversaries to reveal when they've 'cracked' quantum computing. Refer to Exhibit A (Satoshi’s wallets are the cheese);
Of course, “the NSA created bitcoin” sounds like a ludicrous conspiracy theory but it’s a conspiracy theory that is validated the higher the price of BTC goes and the longer Satoshi’s wallets remain dormant in spite of it.
If we accept this, then bitcoin is by virtue of its design and intention eventually going to go to zero. That doesn’t mean it’s going to go to zero – not because we can safely assume no one has ‘cracked’ Bitcoin yet, but because even if we accept they have, they may not want to grab the cheese from the NSA’s cheese trap.
Anyone holding Bitcoin is playing a relatively difficult game of game theory.
Suppose China has already achieved quantum computing capability sufficient to crack Bitcoin's elliptic curve cryptography. They face a choice: steal Satoshi's 1.1 million coins, worth roughly $110 billion1, and reveal their quantum capability to the world, or maintain strategic silence and preserve that capability for higher-value targets. The calculus is straightforward. Among other things, military communications, nuclear command and control systems, financial infrastructure, and satellite encryption all of these rely on cryptography that quantum computing could potentially break. The intelligence value of secretly possessing this capability while adversaries remain unaware of it isn’t easy to figure out. On the other hand, $110 billion is pretty simple math – it’s less than a percent of China’s GDP. Imagine revealing you have a nuclear weapon nobody knew about by using it to rob a bank.
Russia faces similar incentives, though their threshold is lower given economic desperation under sanctions. At current prices, Satoshi's coins represent about 5% of Russia's GDP. It’s meaningful, but would still not worth be worth burning their quantum advantage if they have one.
We’ve mentioned China and Russia, and now we might as well mention North Korea? Probably not. North Korea is having agents pose as IT workers for American companies to steal salaries, and draining cryptobro wallets with rather uncomplicated schemes. If they’re engaged in these sorts of games, we can safely conclude the current price of BTC is already several times over worth it for North Korea to reveal any quantum capability they had. They are optimizing for immediate cashflow, not R&D moonshots.
The threshold where rational state actors actually worth talking about might be tempted to steal Satoshi’s wallets likely sits somewhere around $400-500 billion for Russia (requiring Bitcoin to reach roughly $400,000 per coin) and several trillion for China (requiring Bitcoin to reach $2-3 million per coin).
Bitcoin is a piece of cheese designed for these guys to grab it. Whatever your thought on either or both of these countries, it seems unreasonable to assume neither of them will ever be capable of it, and while they’d generally be incentivized not to reveal that capability, Satoshi’s wallets are a bounty that’s also incentivizing to them, and there are prices where they’ll admit they can claim it.
But focusing on foreign adversaries misses the more immediate domestic threat. If you’re holding or interested in buying Bitcoin, you should not take the above analysis to mean “Bitcoin can safely run to at least $399,999 per coin, or even $1.9 million if we dismiss the idea Russia will ever be capable of it.” Google, IBM, and every quantum computing startup are all credible threats incentivized to crack Bitcoin, and there’s no mechanism for coordination with the NSA on this matter. Even if these companies wanted to cooperate, the individual engineers working on quantum computing have their own incentives entirely.
Consider IBM’s position if they achieve a breakthrough tomorrow. They could short Bitcoin through every available instrument, crack Satoshi’s wallets, and be done by close of business. The NSA won’t stop them. It’s not worth revealing or admitting whether they invented Bitcoin, and even if they didn’t, everyone is better served if the cheese remains in place for adversarial states to eventually grab anyway. And if somehow the NSA did try to stop IBM as a company, the engineers who figured it out would simply go rogue. Or more likely, they’d have quit two weeks earlier to do exactly that.
Russia. China. Israel2(!) IBM. Google. Individual engineers past and present in any of these countries and/or at any of these organizations. All of them are incentivized to work on this, all of them are capable of it to varying degrees, all have different price points at which revelation makes sense. The game theory gets exponentially more complex and unpredictable with each additional actor.
Right now, as you read this, someone is probably working on cracking Bitcoin. They might succeed tomorrow. They might have succeeded yesterday. At current prices around $100,000 per Bitcoin, if Satoshi’s wallets drain while you’re holding, you won’t get a warning. The price would crash instantly, exchanges would halt trading, and you’d be left holding a bag that just became worthless.
Conclusion
Both of my responses to Curtis lead to the same conclusion, just through different paths:
The provenance argument: Bitcoin has no coercive power to force acceptance. Its value depends entirely on voluntary consensus that could shift to any alternative at any time. Early adopters mistake documented scarcity for inevitable value, when monetary systems have historically required armies to enforce acceptance, not just good record-keeping. They’re not just asking the rest of us to voluntarily make them rich for having good GPUs that are really good at record-keeping, they’re asking us to voluntarily concede they’re our new superiors. This would be without precedent in the entire history of monetary systems.
The intelligence trap argument: Bitcoin has a cryptographic expiration date determined by quantum computing advancement. That date is unknown but approaching, creating a time-bomb that rational actors should want to exit before it detonates. The fact that it hasn’t exploded yet tells us nothing about whether it will explode tomorrow.
It is a general, cringe-y practice online to conclude posts like these with “this is not financial advice, do your own research”. Well of course it isn’t and of course you should. I will note that I believe a lot of people who’ve made a lot of money speculating on Bitcoin have done so with no correct understanding of Bitcoin and correctly incorrect theses about what it is or what it could be, and a lot of people have probably lost money to the same end despite a better understanding. Michael Burry of “The Big Short” fame made a lot of money sanely betting against the markets – a lot of other people made the same bet and lost money, because the market stayed irrational longer than they could stay solvent. (While I am fairly confident Bitcoin will go to zero, that doesn’t mean I have the slightest idea when it will.)
This is being generous at the present moment. It was ~$130 billion at last years ATH, and is down to about $76 billion at time of writing. Check in real time c/o https://intel.arkm.com/explorer/entity/satoshi-nakamoto
Hint: If you ever see anything in ‘outflow’, it’s over.)
Israel and/or any other allied nation is as incentivized as anyone else; but any shortlist of allies put together would have Israel near or at the top when ranked by capability to this end, so merits specific mention.