In this episode of Bitcoin Study Sessions, the hosts Lucas and Grant conclude their six-week discussion of Lyn Alden's "Broken Money," summarizing the book's final part on financial technology and human rights. Key Topics: Nature of Money Fiat Monetary System Problems Internet, Encryption, and New Monetary Order Privacy and Government Surveillance Asymmetric Defense and Encryption Openness vs. Control Bitcoin as an Antidote to Authoritarianism Summary: The hosts summarize Lyn Alden's book, stating that the nature of money is as the ledger itself used to record stored value and transactions. Banks developed to maintain ledgers for gold, which was difficult to use in an international economy. The age of telecommunications further distanced the ledger from the underlying substance, leading to the fiat era where money is backed by nothing and controlled by a central bank. The flexible fiat ledger has problems like inflation and speculation, but new technology such as the Internet and encryption offers potential for a new monetary order. Alden presents Bitcoin and central bank digital currencies (CBDCs) as contenders for Internet-native money. Bitcoin is a decentralized ledger secured by real-world energy, while CBDCs are centralized ledgers that continue fiat abstraction and financialization with added government control and surveillance. The conversation moves towards the final section of the book, financial technology and human rights, emphasizing the importance of privacy, previously ensured by the physical difficulty of surveillance. With the shift to bank accounts and the rise of technology, privacy is increasingly threatened. Governments encourage the use of bank accounts, enabling surveillance, and technology facilitates mass privacy violations. Laws cannot be relied upon to protect privacy, as governments have historically encroached on it under various pretexts, such as the war on drugs, the war on terror, and suspicions of foreign alignment. Surveillance has also become an export, with China leading the way and incorporating it into their Belt and Road Initiative. Corporations, too, contribute to the erosion of privacy through surveillance capitalism, where user data is harvested and monetized. To counter this, Alden suggests that privacy-enhancing technology, rather than laws, is the solution. Decentralizing technologies like the printing press and encryption offer asymmetric defense, allowing individuals to protect their privacy. The cypherpunks, with their focus on building anonymous systems, play a crucial role in developing encryption technology. The conversation touches on the legal battles surrounding encryption, such as the case of Phil Zimmerman and PGP, which the government attempted to classify as a munition under the Export Control Act. Despite the legal challenges, cryptography has become essential for e-commerce. The government's attempts to regulate cryptocurrencies are often justified by anti-money laundering concerns, but Alden raises questions about the trade-offs, motivations, and feasibility of such regulations. She emphasizes the importance of acknowledging the trade-offs between privacy and security, examining the government's motivations, and being realistic about the enforceability of regulations. Bitcoin supports an open world, as demonstrated by its use in funding human rights advocates and activists. Alden notes that Bitcoin enables freedom of speech and due process, preventing governments from freezing accounts without due cause. She explores the political nature of Bitcoin, arguing that it is anti-authoritarian and appeals to people across the political spectrum. Bitcoin provides a way for people to opt out of the existing financial system and build a parallel peer-to-peer system. The nature of money is viewed as a ledger, and the question is who controls the ledger, concluding that Bitcoin represents a closing of the gap between transaction and settlement and could herald an age of simplicity, transparency, and robustness.
