Bitcoin's Censorship Resistance
Tonight's article will be my first discussion of a topic which I will be discussing much more often on Twitter, as well as here at tennhedge.com: Bitcoin's anti-censorship properties, which I believe are heavily discounted in the Bitcoin price, and deserve more focus in the present day.
Bitcoin, the Nation State, and Incentives
"Censorship resistance — the ability to broadcast information without restriction"
- Nic Carter
Let's face it, nation states are going to do their best to keep as much power as they can centralized at the nation state level in an era of increasing decentralization. Attempts to undermine this will be challenged, which is why you must put your trust in tech that has already passed the proof-of-concept phase, such as with Bitcoin.
Throughout history, wealth has chiefly been in the possession of the ruling class, and that class has had great authority over the distribution of that wealth. Bitcoin is the only financial asset in human history that has demonstrated the ability to turn that paradigm on its head, giving the greatest amount of people ever the opportunity to control their financial sovereignty.
Bitcoin is the foremost and most valuable medium of exchange for transferring wealth in transactions that cannot be censored, reversed, or stopped in any way by a nation state or other malicious actor, period.
Bitcoin will also change the incentives of the nation state, coercing them to play by a rule set closer to that of Bitcoin, if not Bitcoin's rule set itself. Fiat monetary inflation, the Cantillon Effect, 'easy money' banking policies, and fractional reserve banking will all become relics of a bygone age, in favor of individual freedom, the free market, and Lockean ideals. The ability to censor individuals or groups of individuals that hold the 'wrong' beliefs will also become much more difficult, as any avenue of censorship using the financial system will become next to impossible. The incentive will become to let men be free.
Decentralization and Censorship Resistance
"Decentralization is the natural progression of humanity"
Bitcoin's decentralized protocol and governance structure act as a natural censorship deterrent, as there are no single convenient points of failure such as in other cryptocurrencies like Ethereum (if you don't believe me, see Ethereum Classic) or Ripple. The Bitcoin protocol is in essence a web of computers (nodes) running the Bitcoin open-source software, in similar fashion to the internet, to destroy Bitcoin you would have to destroy every last participant in the network - an unlikely scenario.
The network becomes stronger and more censorship-resistant as the number of individuals using the network grows, as the network becomes more decentralized. As the number of honest nodes grows exponentially, so does the probability that any malicious actor or groups of actors can devise a scheme to undermine Bitcoin. Even if a nation state commandeered 51% or more of the Bitcoin mining power (a 51% attack), honest nodes on the network would just prioritize the transactions of honest miners, effectively leaving the nation state with its own worthless hard fork.
Transactions, the Double-Spending Problem, and Censorship
"If it were possible to censor (or prevent) bitcoin transactions related to certain activity or certain individuals, it would be possible to censor any activity and any individuals.
- Parker Lewis
Bitcoin transactions are absolute, they are non-reversible under all conditions, even if you send your Bitcoin to an invalid address, sending such Bitcoin into the eternal abyss. Because Bitcoin transactions are absolute, they are nearly impossible to censor, in other words, a third party cannot, under any conditions (except an unlikely 51% attack), reverse or prevent a Bitcoin transaction from occurring.
Bitcoin doesn't care who the sender or receiver is for any given transaction, because Bitcoin is really just open-source computer code, as opposed to an authoritarian and/or oligarchical government who might want to decide what kind of individual it wants to be able to use the financial system.
Bitcoin is the first digital currency to solve the 'Double-Spending Problem,' which is a situation where an individual spends their coins more than once. Bitcoin solves this problem through the use of a proof-of-work distributed ledger, also known as the Bitcoin Blockchain. Once a transaction is confirmed by miners and audited by honest nodes on the Blockchain, it becomes permanent record, it's that simple.
In summary, Bitcoin is natively censorship-resistant at the protocol level. For a nation state or other malicious actor to censor a Bitcoin transaction, they would either have to attempt to destroy the network or spoof it by creating an alternate Blockchain and somehow get honest nodes to accept it, with the odds of either/both occurring heading closer and closer to zero with each passing day. World governments had their best opportunity at Bitcoin's infancy, now it is virtually impossible given the Bitcoin network's size. There are Bitcoin nodes across this entire planet and outside of the planet in outer space, and it is possible to conduct Bitcoin transactions using radio and other mediums of communication as well. As the Bitcoin network grows, it becomes more robust as it becomes more decentralized and resistant to malignant participants. The Bitcoin consensus is cooperative financial freedom and sovereignty, and is built upon the laws of nature and the natural rights of man. To not participate, but rather to attempt to harm the Bitcoin network, is the most expensive mistake anyone or anything will ever make, for it is seeking to operate outside of the laws of nature.
You should always consider seeking financial advice from a licensed advisor before making decisions with your money, and you should not consider anything I write as financial advice but merely my opinion. Getting your financial house in order is a prerequisite for Bitcoin saving, in my opinion.
Disclosure: nothing in this article should be considered financial advice and I am not a financial advisor. Do your own research as everything in finance carries risk.