Bitcoin is insurance against states

A clash between Bitcoiners and the establishment has long been imminent. Satoshi’s quote above illustrates a common concern with the inevitable conflict: we all want the masses to first experience Bitcoin as the neutral money it is, not as a tool that helps causes. potentially controversial. The state will not accept fair competition between fiat money and non-state money (because fiat money would inevitably lose), instead it will try to portray Bitcoin and its supporters as the enemies of civil society.

No one expects the Canadian Inquisition

Recent developments in Canada have been instrumental in our understanding of how the conflict between Bitcoiners and the state may unfold. For those unfamiliar with the situation, I recommend this recent article by Jesse Willms.

In Canada, we have seen an unsurprising failure of centralized fundraising platforms, but bitcoin-based fundraising also had its shortcomings. Granted, no one expected the Canadian government to suppress a peaceful protest and its supporters with such a heavy-handed approach, so it’s understandable that the organizers weren’t too paranoid when it came to setting up the whole thing.

Even though bitcoin-based fundraising could circumvent the censorship that older platforms and payment systems have to comply with, it still ran into serious problems. First, the identity of the organizers is knownso distributing the funds to the protesters could now become an offense – unfortunately this seems to be the case, as shown Tweet by NobodyCaribou below. Second, fundraising bitcoin addresses are known and quickly became blacklisted by the government, so regulated institutions could no longer accept funds from such addresses. This limits the fungibility of funds even if they reach individual protesters. And third, blockchain analysis could reveal donor addresses, and possibly also their identity if the addresses were linked to a regulated exchange; these donors could then become the target of government harassment in various forms (legal proceedings, employment problems, frozen accounts, tax audits, etc.).

NobodyCaribou took it upon himself to distribute the funds raised to individual protesters, now he is being sued by the government.

Self-care is a necessity, but it doesn’t stop there

The Canadian government has chosen to employ a nasty tactic of weaponizing the financial system against the protesters and their supporters. The bank accounts of truckers and some sympathizers have been frozen, placing these people and their families in a critical situation. This alarming overshoot – in a G7 country, by the way – proves what Bitcoiners have been pointing out for years: that today’s monetary system is far from neutral and subject to political censorship. motivated.

The true nature of Fiat and the banking system

One of the most powerful aspects of Bitcoin is its neutrality: anyone in the world can use it without asking permission. Bitcoin thus gave power to individuals who would never obtain such authorization; individuals like dissidents of oppressive regimes or Afghan women.

But to take full advantage of Bitcoin’s censorship-resistant capabilities, two basic rules must be followed:

1) Self-guard. If you don’t hold your own keys, you don’t own bitcoin. As Kraken CEO Jesse Powell recently pointed out, an exchange will always comply with government requests to hand over customer data, as well as their funds. The only way to mitigate this risk is to withdraw all coins from all exchanges that you might be using.

2) Confidentiality. Bitcoin itself can be used privately, but when users link their real identity to their Bitcoin addresses, they lose that option. Purchasing bitcoins on exchanges that request user IDs results in a loss of privacy, as all transactions are traceable through Bitcoin’s public blockchain. Thus, the exchange knows the user’s withdrawal addresses and all subsequent addresses where funds are transferred. There are tools like CoinJoin to break those ties and regain lost privacy, but the best option is to never lose privacy in the first place: learn how to buy bitcoin without getting doxed.

Now, the common criticism is that since Bitcoin has the censorship resistance and privacy capabilities, it can also be used for nefarious purposes such as money laundering or terrorist financing. But the curious truth is that only 0.15% of all digital asset transactions (i.e. bitcoin and all cryptocurrencies combined) have been linked to illicit activity: and most of between them are notoriously buggy Ethereum app exploits. The inconvenient truth is that terrorists and money launderers stick to dollars, either in cash or through corrupt banks.

Self-custody combined with privacy is crucial not only because of possible excess of government power, but also because of “private sector” criminals. Trades with their user datasets are lucrative targets for hackers who use this data to hack into individual accounts, attempt to phish their victims, or even sell the data to more hardened criminals who can invade Bitcoiners’ homes. If you need motivation to boost your privacy, read Jameson Lopp’s list of known physical attacks.

The swarm will keep coming

“The swarm,” as Satoshi described government agents, will always be upon us until hyperbitcoinization ends. It’s tempting to be lulled into the fiery sermons of Michael Saylor or the flattering studies of Fidelity putting bitcoin on a pedestal. But well-capitalized and well-connected engines of power will always hold their own no matter what happens to ordinary men struggling for their livelihoods. The Saylors of the world don’t need self-care and privacy, but most of us do. We cannot afford frozen accounts, protracted court battles and legal costs if the establishment turns against us for exercising our civil rights. Self-custody and privacy are our defense against the arbitrary nature of state repression.

Open source tools are the ultimate defense. Crowdfunding campaigns can be hosted through the BTCPay server, a powerful self-hosted payment portal. Any funds raised this way can go directly to an open-source hardware wallet such as Trezor, as BTCPay Server offers users the option to link their hardware wallet. And if the government of a particular region restricts users from buying hardware wallets in the market, they can be assembled from commonly accessible parts. The government may be able to shut down middlemen; they cannot prevent millions of independent sovereign individuals from using tools only they can control.

Withdrawing from inherited trust structures and taking possession of what is rightfully ours is the ultimate form of protest. Bitcoin is insurance against a state gone rogue. We should thank the Government of Canada for reminding us of the true value of the independent currency, Bitcoin.

This is a guest post by Josef Tětek. The opinions expressed are entirely their own and do not necessarily reflect those of BTC, Inc. or Bitcoin Magazine.