The Next Revolutionary Change Coming is a Humanity Hardfork
The conflict between manipulated currency and sound money is the fork in the road.
There has been much discussion in the last six months about a mental model that thinks of human activity in terms of cycles. These cycles describe human routines we follow to create reference points in our lives. Some cycles are natural. Others we impose. Others are imposed externally.
While identifying some cycles require technical or intellectual acumen to identify, some common cycles are very easy to see. Seasons are one. The American school year is another.
In the US, the school calendar follows an essentially agrarian sort of schedule with classes starting in August each year and ends as certain agricultural activities commence in summertime. It is more out of tradition now that American education follows this pattern, but it does create a framework to help millions of people organize their lives. One beneficial feature of this cycle is that it gives participants the opportunity to both build on what they learned previously but also to start again with a more or less clean slate. This aspect of the cycle is interesting and regenerative.
There are two other popular cycle based mental models of interest being explored that I find worth discussing that are not so evident to people but may have importance to our society.
The first is Bitcoin’s four-year halving cycle. With so many new buyers coming into the Bitcoin market, understanding the ebb and flow of the block rewards system and its implications on scarcity (and therefore, as some believe, its important influence on price).The halving cycle is directly related to Bitcoin’s monetary policy. Approximately every ten minutes a miner finds a new block, records transactions to it, and writes it to the blockchain. In return, the miner receives a reward, an incentive for the work done on confirming transactions. In the 2020–2024 cycle, the block incentive is 6.25 bitcoins. At current US dollar conversion, that is worth about $350,000 (note: as this article ages, that value will change). Conventional wisdom suggests that Bitcoin follows the block reward cycle with substantial increases in price following a correspondingly large correction. But even with that correction, Bitcoin ends the cycle factors higher in terms of USD than it started.
Bitcoin-related social media is replete with discussions related to the importance both of the cycle and the system behind it. My view is that while it is important, it is overstated in terms of its long-term impact on the spending power of Bitcoin. I will come back to this idea a little lower in this article.
A more complex cycle model being explored recently is the idea of the Fourth Turning. Unpacked in the book The Fourth Turning: An American Prophecy and evaluated in terms of Bitcoin in his article “Bitcoin and the Rhythms of History”, the model suggests that American history follows four repeating stages based on the idea of the Saeculum, a Latin word to describe a roughly 90-year lifetime.
The stages are as follows:
- First Turning (Rebirth/High/Spring)
- Second Turning (Revolution/Summer)
- Third Turning (Unraveling/Fall)
- Fourth Turning (Crisis/Winter)
Each stage lasts roughly 20–25 years and has different characteristics. It may be a useful tool for describing certain repeating events in a nation’s history and offer a predictable structure to civilization.
In his article, Brandon argues that we are currently in or are approaching the Fourth Turning of our current cycle and that certain elements in society will change radically during the crisis. In this case, he suggests that an important driver of this current situation is our broken money system, and that Bitcoin is the solution to this particular tumult. I find this argument interesting and compelling, but I think another mental model, one in which all other models are destroyed, must be considered.
The Humanity Hardfork
That mental model is the idea of revolution, or to put it in Bitcoin terms, the humanity hardfork.
In blockchain ecosystems, changes to the code such as the number of transactions permitted in a day have to be approved by node operator consensus. If operators decide they do not like the new conditions, they can reject a block that relies on those conditions. If the programmers who created the new conditions convince enough operators to accept the rules, you can essentially end up with a fork in the blockchain, with each strand following its own rules. From this point forward, the original coin becomes two distinct coins recording transactions on independent blockchain. While the original has experienced a fork, it still continues to live on. The two will likely compete until they reach an equilibrium of support or one destroys the other by capturing all of the mining support, transaction activity, and node support through upgraded software.
The idea that revolutions bubble up and systems end is not new. From the dawn of injustice, human beings have risked their lives to overcome it. But the hardfork is different. This is a split of a single unit into two separate functional groups that continue forward, one under one set of rules and the other under another.
While the first example of a hardfork pertains to a divergence in a technical innovation, humanity itself experiences them occasionally. They are similar to Fourth Turnings in that they represent a sea change for the societies affected by them, but the humanity hardfork is different in one important way. The Fourth Turning mental model suggests that a cycle is reset through some sort of tumult. The hardfork suggest that both systems exist in competition or alongside each other.
Hardforks in History
Several significant hardforks come to mind. Martin Luther unintentionally caused one when he nailed his ninety-five theses to the Wittenberg church door. In an effort to reform the church, he protested its abuses. He was met with a court trial and an escape to the far reaches of Germany. He was forced into the role of revolutionary. Luther did embrace that function, but a direct relationship with God without an intervening priest was his goal, not the overthrow of the church.
Overthrow, it turns out, was never a serious threat. The Catholic Church experienced a series of political and financial setbacks, but it was so well-entrenched that once it appraised itself of the threat and developed a strategy for counter-reformation, it regained its footing as an influential and powerful entity.
Similarly, the leaders of the American revolution sought originally to control their economic liberty. If anything, it was a reform movement. The simple plea, “No taxation without representation” is a simple consensus rule update. But King George II had other ideas. While the American colonists saw themselves as British subjects, governed by Parliament, the home office, so to speak, saw them as agents of the Crown. The colonists expected to be protected from offenses by the English Bill of Rights, which William and Mary had to affirm before the British nobles would restore the throne in 1689. The King and Parliament, however, saw the colonies as a corporate cash cow and had no intention of allowing them to function sovereignly. In fact, the Crown responded to the pushback by taking a number of actions with the support of parliament that put hardfork pressure on the colonists. Through tax levies, gun confiscation, troops quartered in homes, checkpoints, land confiscation and curfews, the colonies became an utter police state. Referencing the experiences of Athens, Rome and even the political/legal conditions in Britain, the colonists sought a rule change that would break the consensus system that excluded them. They so advanced the idea of self-government that they would have no choice but to splinter off from England if they were to pursue their agenda. But while they were ultimately successful, the American revolution did not mark the end of the British Empire, which continued to flourish alongside the new system.
Both of these situations are examples of what we see happen in hardforks. Those in the original system root for the demise of the new, and in some cases, such as the bitcoin hardfork that occurred in 2017, where the new system offers no improvement, the ensuing system will likely falter and disappear in time.
The Fork in the Road
The Fourth Turning discussion raised the issue of what comes next in our economic history. Some believe that American society is, per the turning cycle, readying itself for the next crisis, a deep-seated overthrow of an existing order that results in reordering of the country. This reordering could go as far as a total political realignment of the union into regions based on political voting patterns. I tend to believe that the banking class, dating back to the 17th century in England, has enormous influence over what our next era looks like. I cannot fathom that they will lose control over something as ethereal as massive debt. In fact, it is not their debt, but ours that is the problem. The country may suffer in its requirement to pay these bankers back for the money they “gave” us, if they are threatened by whatever debt they take onto their books, they will simply reposses any and all goods and property of value related to the debt and use it to recapitalize a new monetary system. It is diabolical in its level of manipulation, but it is not hard.
What we will end up with in that situation is two groups of people: 1) those who still own assets (bitcoin in particular), and 2) everyone else. This is the humanity hardfork.
The bankers, as flouted by the May 2021 edition of The Economist, will use the trillions of dollars worth of assets they have repossessed, to reinflate its currency, which will be issued in digital form to the terrified and desperate masses. They will accept any lot in life in exchange for the promise that they will be fed. They will find that what they are given is just enough to buy provisions and entertainment but not enough to thrive.
The other group, those with assets and bitcoin, will be tolerated by the bankers, for many are also in this class. It will do them little good to pursue the asset holders overtly. They will need to be more sly so as not to draw attention to themselves, but in the end the existence of sound money that cannot be confiscated will weaken their power. As bitcoin circular economies are developed that insulate this group, the authoritarians will try to box them in rather than destroy them (Because again, the bankers hold the same unconfiscatable money. They have no interest in draining its value). From this situation two very different societies will form. One will consist of subsistence-level serfdom. The other will consist of the well-resourced asset holders who sought out a revolutionary sound money.
You might think that the banking elite will seek to stamp out the asset holders, but they have a couple of problems. The first is that it will be very difficult to access bitcoin since it is digital and portable.
The second problem they will face is that the masses will require more and more attention. The elite believe they can control the people, but they forget how difficult it is to deal with the details of billions of lives. Part of the central bank plan is to issue digital accounts directly to the people. Welcome to micromanagement, Mr. Scrooge. The central bankers just grasped global responsibility for something that moves like a cloud of birds swarming the sky. They will spend more time chasing the amorphous mass than dictating the details of life to the bankers’ advantage.
It is my assertion that under the cover of distraction, bitcoin owners/asset holders will grow more numerous. Their economies will become more robust. As they trade with each other for the best goods, others will seek them out, first to create for them and then later to transact with them. These groups will applaud innovation. They will reward those who create value and freely welcome them into the circle. Some of the bankers will join their ranks, and their children will eventually see the difference between the two forks. Over time, more and more trapped in serfdom will find their way into the circular economies of the asset holders. It is possible the sound money camp will become strong enough to break the elites’ hold on money, but I believe this will take a very long time, or possibly like the Catholic Church or England may never die, only ebb and flow in terms of influence and power.
The good news is this: we are still pre-fork. There is still time to join the sound money economy before people can no longer convert their fiat cash into bitcoin. Anyone can be an asset holder, but you have to choose between serfdom and freedom. When you are being drugged and manipulated, it is hard to see through the fog to the life raft. But there it is. It is the humanity hardfork, and once it starts splitting, there may not be another chance to find your way over.
Guest post by Mike_OntheLam.
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