Interview with LN Markets

Published on June 26, 2023 in LN Markets’ Newsletter

Hey Yorick, how did you fall into the Bitcoin rabbit hole?

YM: In 2015–2016, after reading the famous issue of The Economist about what they called the « trust machine », I first fell into the blockchain bullshit rabbit hole. After a few months, I realized that Bitcoin was the real thing. One of the things that helped me was that I already had some notion of Austrian economics.

The Austrian school of economics has had a significant impact on the creation of Bitcoin. How come the cypherpunks got interested in this economic theory?

YM: The authors of the Austrian school (Menger, Mises, Hayek, Rothbard, Hoppe, Salerno, Huerta de Soto, Hülsmann, etc.) believe that a portion of the civilizational collapse of the 20th century had monetary causes. They believe that a return to “sound money” is essential for the normal functioning of the market economy and the preservation of freedom. They are probably the ones who have gone the furthest in the analysis of these highly complex phenomena and who make the strongest propositions (even if they do not always completely agree among themselves).

On their part, the cypherpunks were exceptionally curious, visionary, and intellectually courageous people. When they began to try to create a form of electronic money that would escape state control, they naturally linked it to the Austrian school of thought. Nick Szabo quoted Carl Menger. Hal Finney quoted George Selgin, and Satoshi was aware of the theories of Mises and Rothbard.

Today, some Austrian authors remain skeptical about Bitcoin, but many are increasingly understanding that it is digital gold, a true “hard money” that largely realizes the recommendations of the Austrian school. Saifedean Ammous was one of the first of them. But this process of understanding is necessarily slow because one needs a certain technical culture. The cypherpunks were the only ones to combine extreme technical expertise with an excellent economic culture. Bitcoin was born from this nearly miraculous encounter.

Can you explain your idea of Bitcoin as an “open money” and why it leads to Bitcoin being so frequently criticized?

YM: According to the philosopher Karl Popper, the “open society” is a dynamic social order based on principles such as equal rights, pluralism, critical rationalism, property rights, individual responsibility, exchange, and cooperation.

Since this process creates movement, uncertainty, and complexity, the open society has always been attacked by those who favor immutable traditions, fixed hierarchies and the primacy of the collective over the individual.

In Popper’s theory, these « enemies of the open society » are the reactionaries of all sides (left and right). They consider that too much freedom leads to chaos. They think that individual rights should be severely restricted. They do not like market competition. They favor state monopolies and control.

This analysis may be applied to money. In my opinion, Bitcoin is a form of money that is consistent with the Popper’s archetype of « open society ». And it is attacked in the same way as the open society is, by the same philosophical « enemies ».

The Bitcoin network is open to everyone. Its protocol is open source. Its transactions and its register are public. Its monetary issuance regime is transparent and non manipulable. Bitcoin is an acephalous system. No one has power over it. It belongs to everyone and to no one. It allows for individual financial sovereignty.

No wonder why Bitcoin makes the skeptics of freedom completely crazy. As the currency of the open society, Bitcoin is intolerable for them. The good news is that they will lose this fight, as they have always lost their fights in human history. Because open systems are much more robust, creative and adaptive in the long term than hierarchical and liberticide systems, as all the 20th century has proved, and as Popper (and the Austrians economists) have explained.

More on this theory in my article published by Bitcoin Magazine.

It seems that popular pro-Bitcoin political figures are beginning to emerge in the US or Canada. Do you believe this is a trend that has the potential to expand throughout the globe?

YM: Yes. Probably not because these politicians will understand and appreciate Bitcoin, but because they will notice that their voters do.

What is your view on Central Bank Digital Currencies and their use cases?

YM: The main use case for Central Bank Digital Currencies (CBDCs) is control: economic control, to facilitate the implementation of hyper-expansionary monetary policies ; and political and societal control, by enhancing tools for surveilling and manipulating individuals’ personal finances.

States have an objective interest in implementing these CBDCs. They are well aware that this will provoke resistance, particularly from the banking system; thus, it is in their interest to proceed in a cautious, reassuring, and progressive manner. Central banks have unlimited communication and influence budgets to try to reassure the naive about this issue.

If Bitcoin did not exist, this trend would be terrifying for civilization and freedom. Thanks to Bitcoin, entire populations will gradually understand that they have an unexpected and incredibly effective way to protect themselves. The Bitcoin — CBDC showdown could be one of the major phenomena of the 21st century.