If You Can't Trust Bitcoin, What Can You Trust?
Those familiar with Bitcoin are aware that it consumes an enormous amount of energy. Estimates are that Bitcoin-mining consumes as much power as the entire country of Finland — roughly one-half of one percent of all of the electrical power generated on Earth. The theory behind Bitcoin is that avoiding detection of fraudulent transactions should be more expensive in terms of time, effort, and energy than is keeping track of honest transactions. There is necessarily some power required to keep track of honest transactions, and, in the case of Bitcoin, the power required is considerable.
The rationale behind the energy-intensive computer processing necessary to support Bitcoin was described in the original Bitcoin paper: "What is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party." The crucial point is that purpose of Bitcoin is to allow people to conduct transactions among themselves without a supervising institution such as a bank, while at the same time reassuring the transacting parties that the payment system is trustworthy. Trust is necessary to any workable system of trade, whether that trust is in the other party to a transaction, a third-party intermediary, or a cryptographic system that makes fraud difficult to commit and easy to detect. In the absence of such a system, fraud associated with internet commerce would be extremely difficult to control, given the vast number of jurisdictions that are potentially involved, stateless actors, and the relative anonymity associated with virtual interactions.
The massive amounts of energy consumed by Bitcoin mining demonstrate how important trust is in commerce. The commercial system outside cryptocurrency relies on a vast infrastructure of lawyers, courts, regulations, and industry groups to maintain trust in transactions. Trust has always been necessary to commerce, and institutions such as civil courts, criminal laws against fraud, and social disincentives for dishonest behavior developed to promote trust in transactions and, therefore, commerce. Societies that did not have the benefit of cryptographic sophistication or high-speed digital computers nonetheless developed processes and institutions to promote and maintain trust. They developed and nurtured a system of shared values and mutual interests that resulted in high levels of trust, and these values and interests are the defining characteristics of culture.
Trust, of the type that has historically been necessary to reliable commerce and satisfactory civic life, is largely cultural. Societies that are careless, or even reckless, in their stewardship of culture tend to have lower levels of the types of trust necessary for social and political health. This is particularly true of ideologies that attempt to preserve intermingled cultures with differing values. A society that tries to accommodate a culture that respects property rights alongside one that does not will have lower levels of trust. Likewise, a culture that excuses criminal behavior diminishes trust in a society that demands respect for the legal authority.
Some cultures are more nurturing of trust than are others, and societies with higher levels of trust are generally more successful. The developers of Bitcoin understood that the internet is not conducive to the type of cultural institutions and norms that societies have relied upon for millennia to encourage trust among their members. Bitcoin uses an enormous amount of electricity to create a type of artificial trust. There is, however, no blockchain that ensures that children are educated appropriately, or that a recidivist felon will not re-offend. There is no technological replacement for cultural values that promote trust.
The idea of a social compact implies some minimum level of interpersonal trust below which a society cannot function. Trust is essential to much more than commercial transactions. It is necessary for the orderly passage of traffic through intersections and traffic circles, buying food from a grocer, allowing an institution to educate one's children, and choosing officials for all levels of government. Trust is maintained by common culture and institutions and traditions that people rely upon to enable that trust. This culture, and these institutions and traditions, are currently being undermined.
The fundamental factor undermining public trust is the relentless politicization of virtually everything. We find it difficult to believe the pronouncements of public health authorities, academics, "experts," law enforcement, etc., because of open and increasingly common use of public institutions for political and ideological purposes rather than public benefit. Our politics, and specifically its metastasis into every corner of daily life, is making us less trusting, and less of a healthy society.
The past several years have seen advocacy of policies and practices that are trust-destroying. Among these are alteration of electoral processes that result in election outcomes being unknown for several weeks, associated with lack of transparency, public health officials distributing a seemingly capricious and unfounded stream of recommendations and assessments, promotion of re-segregation that is antithetical to a culture of trust, encouraging people to surveil and report on each other, praising cultures of intolerance and censorship that serve powerful interests rather than the general welfare, hijacking established institutions and altering their priorities to conform to ideological vanity, the substitution of subjective sensibilities for objective reason, and public officials flagrantly flouting the rules that they impose on everyone else.
A particularly corrosive practice is the fad of electing "woke" prosecutors who do not enforce laws that are inconsistent with their revolutionary zeal. Uniform enforcement of the laws is one of those cultural values that helps maintain trust in society. One of the reasons merchants have confidence in the security of their stores, or commuters have trust in the public transportation system, is that such trust is supported by a system to deter and provide consequences for unsafe and antisocial behaviors. When this system is undermined by officials who refuse to support it, merchants become less trusting of their customers and take extraordinary precautions against theft, and subway riders become anxious that their personal safety may be at risk merely by standing on a subway platform. These phenomena, which are typical of woke activism, make society less trusting, less safe, and less free. They destroy a common culture and replace it with an unsustainable culture of decline and decadence. Trust is essential to the development of human capital and the success of enterprises for the common good, and loss of trust causes long-lasting damage.
Societies do not work without trust or the cultural values and institutions that are conducive to it. Progressive ideology attempts to replace these with government intrusion, represented by submission to the opinions of "experts" and oppressive bureaucracies, and a culture of social shaming and ideological surveillance. They pursue an agenda where people generally need not be trusted to do the right thing (which is a bedrock characteristic of civilization) as long as they can be coerced into doing the politically desirable thing. Where Bitcoin uses an exceptional amount of electricity to compensate for the absence of conventional bases of trust, the committed progressive will use exceptional amounts of coercion. When there is an insufficient amount of interpersonal trust based on shared ethical values and a common culture, the result will be tyranny and a failed state.
Image via Pxhere.