Mining bitcoin can guide the network to sustainability, protect it from being commandeered and maximize decentralization.
Satoshi engineered a vessel that to some extent steers itself. It’s more profitable to publish full blocks than empty ones, to cooperate rather than attempt a 51% attack and to run Bitcoin rather than a fork. This all works by design. The game theory of adoption, too, whereby early adopters are rewarded, guides the ship towards a safe and prosperous harbor.
Andrew M. Bailey is associate professor of Humanities at Yale-NUS College. Troy Cross is professor of Philosophy and Humanities at Reed College. Crypto Questioned is a forum to discuss the ideas and philosophies that drive the cryptocurrency industry.
But these incentive structures only set a rough heading. Perils remain. Mining could, in principle, centralize and hold the network hostage. Addresses could be blacklisted. Transactions could be censored. The protocol could even be modified to expand supply, destroy privacy or enable surveillance.
Beyond holding, what can you do about where the ship heads? Bitcoin’s cyber hornets are famously aggressive on Twitter, stinging Bitcoin’s perceived enemies, foreign and domestic. You, too, can call out dangers from the crow’s nest.
There is another, quieter way, more like nudging the wheel. The network requires sustenance; that ongoing work presents bitcoiners with opportunities to steer the ship aright. You can do this. And our thesis is that you should. Mine your values.
By “mine your values” we mean, in part, actually mining bitcoin in a way that embodies your own ideas about what Bitcoin should become. But we also intend it as a more abstract slogan for unearthing and enacting those values in other ways that sustain and direct the network.
Here are three examples of values that can be extended. We’ll give easy, medium and advanced suggestions under each:
Suppose you care about privacy and censorship resistance. Despite prevailing Number Go Up narratives, your fascination with bitcoin derives from the way it empowers individuals rather than institutions. If so, you should take custody of your bitcoin, coinjoin your UTXOs and encourage your family and friends to do the same. Ruthlessly boycott bitcoin platforms or services that punish users for coinjoining and patronize those that respect fungibility. Does this appeal to you? If so:
- Easy: Educate yourself on the best practices for self-custody and withdraw any bitcoin you have from custodial platforms. Quit centralized, KYC-AML-compliant lending platforms and use Atomic Finance and the like instead, should you need yield on your holdings.
- Medium: Complete your next bitcoin purchases on a peer-to-peer exchange like hodlhodl or Bisq. Install Wasabi or Samurai and coinjoin your bitcoin whenever entering or exiting exchanges.
- Advanced: Mine your own KYC-free coin, either by home mining or using a host. Use a pool committed to privacy and fungibility, employing protocols that maximize decentralization.
Suppose that, like many bitcoiners, you take a long view of things. You care about the future of our planet. Though media portrayals of bitcoin emissions are sometimes overblown, you are troubled by climate change and would like to see Bitcoin lead the way towards a decarbonized future. If so, you should invest in green bitcoin mining. Mining is a series of contests to win fixed rewards. The more investment that flows into green mining, the less profitable it is to mine with carbon-intensive methods. In principle, enough green mining could simply drive out carbon-intensive mining while also securing the network on which all bitcoiners rely. Here’s what you can do:
- Easy: Use exchanges that minimize carbon emissions with offsets. When they become available, purchase Green Co-investment Instruments to invest in green mining proportional to your holdings.
- Medium: Buy shares in publicly traded mining firms committed to sustainable methods, like Bitfarms (BITF) or Hive (HIVE).
- Advanced: Mine bitcoin yourself using green energy, and join a mining pool with a commitment to clean energy like Terra Pool. If you have access to private equity markets, invest in nascent green mining firms before they go public.
Suppose you care about preserving value in the face of monetary expansion. You deploy bitcoin not as a get-rich-quick scheme, but as a don’t-get-poor-slowly scheme. If so, you should run a full node, use it to validate transactions and so enforce Bitcoin’s rules, including the all-important supply cap. The plan in action:
- Easy: Get a Raspberry Pi or fetch that old laptop out of your closet, turn it into a full node and use it. Upgrade the software judiciously and signal approval only of the network upgrades that preserve decentralization.
- Medium: Host a Lightning wallet on your own node. Validate on-chain transactions yourself and use LNbits to bring your friends and family on board without relying on centralized institutional custody.
- Advanced: again, consider mining yourself or investing in a mining company committed to decentralization.
These values and proposed implementations won’t necessarily work for everyone. The beauty of self-governance is you are free to express your values, not ours or anyone else’s. So here’s an exercise: Write down some of your own most treasured values and then think about how to enact them in your bitcoin strategy, perhaps taking inspiration from our own suggestions above:
I value ______
I can promote ______ in bitcoin by doing X.
Therefore, I do X.
Some arguments conclude with a theoretical statement. A practical syllogism, by contrast, ends with action. When you run this practical syllogism, what action is its conclusion? How will you help steer the ship?
We are not recommending charity. Mining your values in the ways suggested above is no altruistic giveaway. Green bitcoin mining is profitable. Self-custody protects you from various attacks and counterparty risks. And enforcing Bitcoin’s key economic properties with your own full node is critical to preserving the value of your bitcoin.
There is a price, however, to co-captaining the ship. It requires thought. You have to reflect on, and take responsibility for, what your values truly are and what you’d like bitcoin to become. It requires some self-education.
Every one of these actions is becoming easier – mining, running a node, taking self-custody – but none will ever be as easy as simply clicking “buy” on Coinbase. It requires a minimal amount of research. You have to be mindful when using a product or service of whether it is aligned with your preferred future, or whether you are unwittingly helping to steer the ship in a direction you’d rather not go. The price you pay is the price of citizenship wherever citizens play an actual role in governance.
This price – the unavoidable cost of deliberate and active citizenship – is minimal. But the payout is immense. It is, in short, the intrinsic reward of self-governance, the satisfaction not only of living out your values but of making a difference to our collective monetary future. This is precious. But we admit that it can also be hard to appreciate, so accustomed are we to a voiceless financial existence.
In our monetary system all but a few are mere customers, users making decisions within a system that is simply given to them like the rules of a game. Meanwhile, a priestly caste of central bankers, regulators and policymakers actually shape the rules of that game, the rules of money itself – its issuance rate, its initial distribution, the conditions of its transmittance, lending, etc. Their privilege, of which most of us live our whole lives unaware, remains closely guarded by specialized vocabulary, credentialing and law.
Bitcoin fixes this, we like to say. But one possible future for Bitcoin is that these privileged few, seeing bitcoin as inevitable, use their monetary heft, political power and technical savvy to seize the helm. Block by block and commit by commit, they fashion bitcoin into the image of the existing monetary system, serving the same constituencies. Another possibility is that we don’t let them. Claiming your self-sovereignty and living out your own values could lead to a Bitcoin that collectively reflects the values of its users, rather than the values of nation states, banks or corporations that may try to capture it.
Our argument may remind you of similar pleas to participate in electoral politics. Every four years or so, pundits remind us that every vote matters and that we’re all obliged to do our part. Many bitcoiners will perhaps harbor a few suspicions and take a cynical view of electoral participation altogether. The duty to participate that we’re highlighting isn’t like that. You probably didn’t choose your government; it may well predate your existence and care very little about consent of the governed.
You did choose to be a bitcoiner, and you’re choosing to remain one every day you don’t sell. What we’re urging is that you follow through on those choices in ways that may not be obvious. We’re advocating participation in a collective endeavor that is, at present, still small and where individuals can make a meaningful difference.
It is tempting to think of bitcoin as eliminating the human element in money, of not only disintermediating banks and governments, but people too. Bitcoin, we say, is “just math,” and to many of us that is a comfort. But the temptation to think of bitcoin as code alone must be resisted. Layer 1 is the Bitcoin network. Layer 0 is, and always will be, people.