More censorship is good for Bitcoin adoption

If Bitcoin wants to go mainstream, it has to find a place in peoples’ lives.

The problem, as I’ve written before, is that the beneficial properties of Bitcoin tends to be invisible to users:

wilcox 2x2

  • Q1. Global and direct: transaction fees

  • Q2. Global and emergent: privacy, censorship resistance

  • Q3. Local and emergent: “local subnetwork effects” like it being easier to get crypto by mining in Venezuela than to get cash dollars

  • Q4. Local and direct: a local tax or local incentive

He [Nathan Wilcox] suggests that users detect direct properties and usually do not detect emergent properties with the exception of the occasional “local subnetwork effect” where a global property can be tangibly experienced locally. Global and emergent properties are hardest of all to detect.

End-users don’t detect emergent properties like “censorship resistance”–such properties lack salience. But these otherwise invisible properties become visible when they go from global to local.

Wilcox uses the example of Venezuelans citizens mining Bitcoin because it’s easier to obtain than USD. The unique conditions within Venezuela (e.g. hyperinflation, seizure of foreign currencies) plus the emergent properties of Bitcoin (e.g. censorship resistance, unseizablility) yield directly observable properties (e.g. Bitcoin has greater availability than USD and greater buying power than the bolivar).

When Bitcoin supporters are challenged for non-speculation use-cases, these are the scenarios they tend to cite; unstoppable money for authoritarian regimes makes sense. But most people don’t live in authoritarian regimes, so one always wonders whether actual usage of Bitcoin will only be for very extreme niches.

Recently, we’ve seen a string of mainstream stories that suggest emergent properties are going local for more and larger communities:

In each of these cases, particularly the more recent, Bitcoin is top of mind1. By using Bitcoin, Gab can accept payments without needing the permission of any third parties. Before experiencing censorship, the benefits of Bitcoin were global. After, they become local: Bitcoin becomes the best form of currency they can use to generate income.

By and large, a bet on Bitcoin is a bet that its emergent properties become more and more visible to people. That seems to be happening. The censors and surveillers of the world are working hard to make group after group experience the emergent costs of today’s systems2.

This is the bullish case for Bitcoin3 in action. Every day, a group of True Believers improve Bitcoin. They contribute to core, add liquidity, improve usability, educate the masses, and more. With each improvement, Bitcoin and its surrounding ecosystem is more capable of serving the needs of those that need an alternative.

These are the two conceptual lines to care about.

  1. Growth of the market of users who need the emergent properties of Bitcoin

  2. Improvements to Bitcoin’s usefulness as a solution for those that need the emergent properties of Bitcoin

If line 1 gets big and line 2 passes some threshold where it’s the best solution for the users in line 1, we get mainstream usage.

  1. We see something similar when there’s a big hack, but the concept of “web3” is perhaps too abstract for it to be useful yet.

  2. There’s a feedback loop at play here, too. If your neighbor is getting censored, it’ll make you wonder whether you should take precautions yourself.

  3. And other blockchain based (or non-blockchain based) goods and services. But the case for Bitcoin is most clear, in my opinion.