Note: I published an early, less fleshed post on similar themes here. But I’ve added enough new content to warrant a separate post.
“Money is beautiful only when it’s flowing; when it piles up it’s a hang-up.” — an advertising manager for the San Francisco Oracle in 1967
Satoshi Nakamoto is dead. Although his wife would say he’s just hibernating. His body suspended in time and space in a vat of liquid nitrogen, topped off weekly to offset evaporation.
Satoshi, of course, is a pseudonym for the anonymous creator of Bitcoin, who posted their creation on the cypherpunks mailing list on Halloween night, 2008. Cypherpunks embrace the future with their entire beings, cryogenically freezing themselves to be resurrected in the impending age of immortality; a medical breakthrough that presumably will be attended by the ability to revive frozen souls who, in turn, will drink greedily from the elixir of youth.
While we don’t know if Hal Finney is actually Satoshi, he was the first person on the cypherpunks’ mailing list to not roll his eyes at the invention. Finney was on the receiving end of the first Bitcoin transaction, and he worked closely with Satoshi to improve Bitcoin’s rough early software. When Lou Gehrig’s disease evicted Finney from his first flesh-and-blood home in 2014, a cryogenics team was standing by, and the moment Finney was declared legally dead, they vampired his blood — setting his body on a cooling course to 320 degrees below zero.
Who were the cypherpunks? And what led them to develop Bitcoin, a form of money that torched the earth in 2017, replacing government currencies as an Economic identity for millions? To begin, we have to understand the role [im]mortality played in the creation of a form of money that surveys show is held by as many as 40 million Americans.
Our lives bound forward through time, and since money is a human institution, time is inextricably linked to money. This brings us to one of the most important ideas in economics: the time value of money. When someone hands you a $10 bill, you suddenly have a fist full of power. You are iron man — capable of commanding the forces of the universe to deliver Pad Thai to your front door. In a healthy economy, you use your power, otherwise, it wastes away: “A decade ago you could get Pad Thai delivered with that. Today, it’ll buy you a tablespoon of crushed peanuts, but only if you pick it up. And crush the peanuts.”
That’s inflation. Inflation occurs in an economy where the demand for things exceeds supply, and prices go up. If you hide your money under your mattress (like my great grandfather did after the bank lost his savings in 1929) as the price of stuff goes up, the amount of power stored under your bed drops. The economy is like one giant auction where one buyer yells: “I’ll pay $1.98 for eggs” and another shouts: “I’ll pay $1.99” and so on, slowly but steadily.
Inflation is a force as powerful and inexorable as the wind and the waves. To manage it, we anointed a money god, the central bank. The United States central bank has two goals: the first is getting everyone a job who wants one and the second is making everything 2 percent more expensive every year.
The central bank slowly pulls the rug out from under the miser, implicitly taxing him 2 percent year after year if he hoards his stash instead of spending or investing it. Time is precious, and the central bank gives us a collective kick in the ass to get moving. For reference, at 2 percent inflation, $10,000 in 50 years is worth $3,715 in today’s spending power.
Inflation is distressing enough if you need your savings to last a couple decades while you sip martinis and work toward retirement’s androgynys ideal. But it’s catastrophic if your plan is to rise from the dead sometime in the mid-2100s. Bitcoin rejects the economic model of inflation, declaring: “to hell with time-value!” Inventing digital money with a fixed issuance (no inflation) was critical to ensuring the resurrection of the body would also resurrect a similar level of economic security enjoyed at the moment of freezing (cypherpunks do not use the word “death”). Cryogenically frozen cypherpunks need to trust their net worth will stay relatively fixed for perpetuity. Bitcoin is the perfect solution — the Fort Knox of digital cash — a super safe built out of mathematical guarantees.
One Bitcoin today is at least as valuable as one Bitcoin tomorrow: or so the theory goes. For this reason, the cypherpunks rejected one of the tenets of modern money theory: death is optional and therefore money is no longer worth more today than it is tomorrow. A monetary system based on steady inflation to stimulate hot-potato spending — even if it lubricates the gears of the economic machine — will not do when time itself stops.
The cypherpunks believed they would live forever, and so they built a monetary system based on this philosophy. Bitcoin is god money. This is one reason why it can be hard for those of us still resigned to mortality to embrace Bitcoin. Most of us think of technology as something that makes our lives easier. The cypherpunks believe that the advancements of technology will not stop until they make man a deity, an understanding that is critical to reconciling the world of Bitcoin with the world of stocks and bonds.
