Balaji Srinivasan on the Three Types of Bitcoin-States

The following is an excerpt from a talk and Q&A given by Balaji Srinivasan posted on the ETHGlobal YouTube channel on the 6/06/2023.

The excerpt starts from 1:02:41 with the following question from an audience member. Srinivasan’s reply follows.

I’m wondering if you can talk about the prospects of Bitcoin being banned, and what would you do in that case, and how would you buy gold custodially?

I think what’s going to happen is Bitcoin trifurcates the world into three kinds of states. Bitcoin atheist, Bitcoin monotheist, Bitcoin polytheist.

So, the Bitcoin-atheist-states will probably be blue America, the dollar states, and probably the Chinese zone. Bitcoin in private hands may not be legal. It’s like guns in private hands. It’s like gold. Like, you must give Bitcoin to the state if you have it – you’re not supposed to hold Bitcoin personally, the state is supposed to have it.

Bitcoin-monotheist-states will be like Bitcoin maximalist states and their only cryptocurrency will be Bitcoin. So, that is the one constant, when everything else is variable, and it will acquire a spiritual level of significance for those people where the state has failed, and the network is still there. OK, it’s the inverse of what Nietzsche said in the late 1800s. Nietzsche said God is dead, and what happened? The state rose in its place. The state also tried to kill the network. It tried to kill capitalism - you know, the Soviet Union tried to kill capitalism.

Now today it’s the reverse. Technology has restored God in the form of the AI God. Why? Because it’s smarter. It’s wiser, it’s more all-knowing. We are at the early stages of when every community will build its own AI, which will be like unto a God, because you’ll go to it for guidance. You have something that is smarter and wiser and more knowledgeable that knows everything from your culture, the Indian version will know the Upanishads, the Ramayana, the Mahabharata. It will know all these things and be able to give you, you know for example the Hindu way of doing things or the Dharmic way of doing things. Every culture will have its own God.

We’re also restoring the network, and this time it’s the state that is dead. So, the rise of AI and Bitcoin flanked the state on either side. Point being, the Bitcoin monotheist states will basically worship Bitcoin and it will be lightning, it’ll be ordinals, it’ll be Bitcoin only, like “shitcoin scammers” will be treated extremely harshly. You would not want to have any digital asset other than Bitcoin - the One Coin.

And then finally you’ll have Bitcoin-polytheist-states, which are those states which are far enough outside the blast radius that they aren’t radicalised as being either Bitcoin atheist or Bitcoin monotheist. If you’re far enough outside, then you can afford to think: “OK, Bitcoin AND”. So, Bitcoin and Ethereum. So these will be the financial centres of the world. Like the UAE, like Singapore, potentially like El Salvador. Potentially other countries that make good decisions. Lots of the small states, the ignored states, the looked-over states of the 20th century that have good leadership could be Bitcoin-polytheist-states. But they’ll need some degree of background prosperity to allow this.

And so that’s my answer to your question. I don’t think it’s as simple as a Bitcoin ban. I also think by the way, that the Chinese might be able to effect a Bitcoin ban, but I think the Blues will find it hard to do so, because it’s like they’re bans on speech. They don’t have enough political or economic support or enough IQ to execute on them. There’s enough pushback from the Greys, the tech people, and the Reds. You know, think of tech libertarians as the future, and Reds and conservatives as the past, and the Blues as the present – they’re hanging on to the western present and they’re fighting the future and the past at the same time. I have to be political here because just everything is gonna be political soon. They’re also fighting the Asian past and the Asian future. So, the Western present is against the Western past, the Western future, the Asian past, the Asian future. I don’t think they could fight all those things at the same time. I think they’re gonna try. I think it’s gonna be nasty. I think they’re gonna try to narrow the exits to Bitcoin.

As they do so, by the way, as liquidity drops, less buying spikes the price higher. As you close the exits, people demand the exit more.  And it’s going to be very hard for them to ban every single crypto exchange in the world. It’s going to be hard for them to do that, because what’s gonna happen is some states will rise and they will say: “We’re gonna open the digital gold window.” We’ll have something like bitcoin.florida.gov, bitcoin.texas.gov reopen the gold window that Nixon closed in 1971. Other states can do it – bitcoin.elsalvador.gov – where you can buy and sell Bitcoin. It’s just Coinbase 2013. It’s simple exchange functionality. The simplest order book, buy and sell Bitcoin for the local fiat currency, but that means the right to buy, sell, send, and receive Bitcoin shall not be infringed.

That’s, I think, the founding principle of the Bitcoin states. If you have that, you have everything, and if you don’t, you have nothing. You don’t have digital freedom. So, freedom is basically can you buy, sell, send, and receive Bitcoin? And if so, you can probably do other things. And if you can’t, well, you’re probably in digital lockdown. So I don’t think it’s as simple as just a Bitcoin ban or what have you. I think it’s gonna be quite a struggle.

[end of transcript]

Note on terminology:

Srinivasan uses a tribal lens that distinguishes the world into cognitive camps. He refers to this a ‘cloud cartography’, dividing up the world into value-sharing tribes. Greys are the techies sharing ‘internet values’, Blues are the US Democrats, #Me Too, Ukraine, Greta Thunberg, homeless industrial complex, foreign aid, etc., and Reds are conservatism. Future, present, past.

Sources:

– Moment of Zen’s Balaji on the Tribal Lens: Reds, Blues, and Grays (substack.com)

– Balaji Srinivasan’s The Network State Conference – balajis.com

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