Obi Nwosu is the CEO and co-founder of Coinfloor, the UK's longest-running Bitcoin exchange. He has over 20 years’ experience building online marketplaces and bringing virtual currencies to tens of millions of people. Obi writes The Road to Bitcoin Hegemony, a weekly recap of some of the most impactful developments in Bitcoin.
In 1972, a small passenger plane crashed in the Andes, and the survivors’ only contact with the outside world was a small transistor radio. After battling intense hunger and freezing temperatures for 11 days, they heard the news they’d been dreading: the search for the aircraft had been called off.
As they started to cry in despair, one of the party spoke up. “At last, some good news!” he said. “Are you crazy? How can this possibly be good news?” the others angrily replied.
“Because it means we’re going to get out of here by ourselves.”
The story of Uruguayan Air Force Flight 571 has been recounted in numerous books, documentaries and even a hit feature film; it remains popular because it tells an eternal story about humanity’s indomitable spirit in the face of overwhelming odds. And it’s especially relevant to one of our civilization’s greatest technical and philosophical achievements: Bitcoin.
Like the survivors of that plane crash, Bitcoin faces many external enemies, not least those who want to freeze it out of the economy, or starve it of resources through mining bans. And like them, Bitcoin’s victory over the forces ranged against it will come from its inherent, internal strength.
This isn’t wishful thinking — it’s already occurred several times, and will happen every time an authority tries to ban Bitcoin. Plenty of people have talked about how China’s mining ban not only failed to dent Bitcoin, but made it stronger. Bitcoin travels light: it’s easy to up sticks and set up somewhere that has cheap, plentiful, green energy, and which actively encourages miners to set up shop. Meanwhile, the biggest downward difficulty adjustment in history incentivized even more people to start mining, bringing even more resilience and decentralization to the network.
Several months later, we can see the results, as Bitcoin’s hash rate, security, and overall strength continues to increase. This isn’t a fluke, it’s by design. It’s a law as old as economics that a decline in the availability of a product or service increases the reward for supplying it. Satoshi clearly anticipated how his/her invention would spook those who remain wedded to Money 1.0, and built highly effective countermeasures right into Bitcoin’s core.
This inner strength has been pointed out by many commentators, but there’s another important angle that people aren’t talking about. This is the fact that Bitcoin is now "China mining ban-proof." China can't ban mining twice, so global confidence in Bitcoin’s staying power due to Proof-of-Work has increased... forever. China’s action not only failed to dent confidence, it helped to grow it — and encouraged more people to hold it.
As the saying goes, if you're going to kill the King, be sure not to miss.
This is how we should be thinking about the passing of the US Infrastructure Bill, the trillion-dollar commitment to spend on regeneration projects. As you’ll know, legislators tacked on an amendment to fund part of the spending through crypto taxes. (This in spite of the fact that — in the words of Ted Cruz — barely five out of a hundred senators could define “what in the hell a cryptocurrency is.”)
Unsurprisingly, the amendment as written will make running many crypto companies, including Bitcoin miners, unworkable in the Land of the Free.
That would be a problem for most cryptocurrencies but not for Bitcoin. As we saw with China, if the senate passes this amendment — and there are many lobbying to prevent this happening — the industry will vote with its feet, leaving Bitcoin undamaged and the USA the only loser.
Savvy politicians get this, and they realize pushing away such a promising innovation will let a once-in-a-century opportunity slip through their fingers. Those who truly understand Bitcoin — and they do exist at all levels of the US and other governments — know it can weather the harshest conditions that legislators can create for it.
For all the sophistication of its core technology, Bitcoin’s hegemony will ultimately come about because it is so much more human than earlier forms of money. It serves people’s innate desire for freedom and self-sovereignty and, like us, it’s at its most resilient when under the greatest pressure. Bitcoin is the Great Survivor; its value to humanity isn’t just as a tool, but as a teacher from which we can learn about our own power and potential.