Bitcoin Commonwealth
Humanity is on the verge of a great collapse and expansion
Abstract: Humanity is on the verge of a great collapse and expansion. The forthcoming societal breakups will recreate the same journeys of our forefathers in leaving old bonds to create new commonwealths. This paper outlines how any group can make that journey successfully, in four phases of developing a balanced current account, using a sound money supply like Bitcoin.
Download pdf with citations: Bitcoin Commonwealth
The Current Account
A Commonwealth’s monetary north star
A “balanced” current account reveals the measure of money supply necessary to sustain a population’s survival. It should be the goal of any commonwealth to keep their current account balanced or positive. The “balance” will be different for every economy because all populations place a unique set of requirements on their capital.
The Current Account is the Net Balance of:
- Goods and service exports — imports
- Earnings citizens gain outside of the commonwealth — earnings foreigners gain inside of the commonwealth
- Money transfers sent out of the commonwealth — money transfers sent into the commonwealth
Developing a Modern Current Account
Four phases to develop a balanced current account
Developing a balanced current account can be achieved progressively through four phases, from basic survival products and services into modern technological service sector revenues. These phases were developed under the historical assumptions that a new commonwealth is culturally homogenous, with capable leadership, and a committed population. The length of time spent in any phase depends on the degree of unfavorable conditions experienced such as: harsh terrains, inhospitable climates, natural resource scarcity, security threats, death, disease, hunger and despair.
Creating more favorable conditions in any phase, will yield greater results. Removing historically proven social advantages such as cultural homogeneity or capable leadership will result in failure to complete or sustain all four phases.
PHASE 1: Settling Basic Industries
The founding families enter into agreement, settle their terrain, and build systems to deliver sustainable food, water, power, shelter, communication, transportation, health care, and defense.
PHASE 2: Developing Service Exports
The population expands into intellectual services which can be exported with minimal inputs and raise the capital account balance (ex Software Services).
PHASE 3: Subsidizing Industrial Expansion
Capital account surpluses are used to subsidize the domestic development of products and services currently being imported.
PHASE 4: Capital Market Formation
A private capital market matures to supplement centrally subsidized industrial domestication. The private sector begins to allocate capital and credit based on independent analysis of commonwealth needs and wants.
Financing Development
Money supply formation
Before a commonwealth can transform their money supply into a functioning economy, their money must be trusted by the domestic population as well as their foreign trading partners. While it is possible for a commonwealth to launch a new money, it may not be widely accepted by foreign trading partners during phases 1–2 depending on conditions. In order to solve this dilemma, a commonwealth’s founding families could acquire a supply of Bitcoin which is already the Solar System’s reserve currency, currently accepted world wide as store of value, with convertibility into all major earth currencies.
One Bitcoin is divisible by 100,000,000 satoshis, which means a new commonwealth with the right phase 1 strategy, could launch with a money supply ratio of 1 Bitcoin per 1,000 people, or 100,000 satoshi per person.
At Bitcoin’s current price trajectory as measured in USD stock to flow models, a price of $1 USD per satoshi will be achieved at some point in the next fifteen years. To give that perspective, Ecuador’s population of 17.7 M creates a GDP of $107B with a $254 MM current account surplus. That means Ecuador could theoretically replace their national currency with the equivalent of only 1,070 BTC of money supply, and still have surpluses. When Bitcoin reaches $1 per satoshi, 14 out of 200 United Nations countries could theoretically support their entire annual GDP with less than 10 Bitcoin, and another 13 countries with under 20 Bitcoin.
Permissionless Settlement
Economic security is national security
Prior to blockchain technology, commerce required settlement on a vast network of regulated fixed assets that took decades of investment to create and maintain. These traditional settlement networks are heavily regulated, and controlled by sovereign gatekeepers who can restrict access to their money supply. In this permission based model of monetary settlement, even large nations can lose control of their current accounts, while new phase 1 commonwealths can easily be stomped out by any of the gatekeepers.
A population that owns a supply of Bitcoin, simultaneously owns access to the Bitcoin settlement network. A new commonwealth may send their transactions to the Bitcoin network for settlement, without asking for permission from any other sovereign nation, and needs only power and basic communications equipment. This is the first time in human history a small group of people can achieve the same permissionless monetary sovereignty as a large group of people.
While governments around the world are working to find ways to add layers of “permission” to Bitcoin transactions, they will ultimately fail because physics makes it impractical to control electromagnetic signals carrying encrypted data through space. Governments will continue to pursue control at the physical device level, while the people continue to evade their control by moving into the level of digital light. Eventually, governments will attempt to win this war of technology by forcing the devices they control, into their citizens’ bodies. This is the logical end game for all governments of this generation of humanity. Therefore you must put your faith in God, and prepare your commonwealth now.
The Rails of Monetary Velocity
A network of payment channels
The velocity of capital measures the amount of transactions a unit of money participates in during a specified period of time.
V = PQ/M
V = Velocity of Capital
PQ = Nominal Gross Domestic Product
M = Money Supply
An increasing velocity of capital means an increasing number of transactions are taking place in an economy. A new commonwealth requires a high velocity of capital to balance it’s current accounts because domestic industries must rapidly develop in order to avoid sending too much capital out of the economy on imports.
Every on-chain Bitcoin transaction carries with it is an associated fee, which has the effect of sending Bitcoin out of a commonwealth’s money supply even if a transaction was performed domestically. Additionally, fees act as a deterrent for everyday commerce, especially when a fee is larger than the intended transaction. In order to avoid how these fees would dampen velocity of capital, a commonwealth can deploy a network of lightning protocol payment channels.
A payment channel allows a group of people to transact and settle with each other in a closed channel off the Bitcoin blockchain, while still using real bitcoin, and avoiding large fees.
For example, imagine your friend loaned you a $10 bill on Monday and you had to pay him back on Friday. All week you continuously exchanged his $10 with just the members of your household without any fees. On Friday you pay your friend back with a different $10 bill than you received from him, and pay only one fee. In this example you and your family are considered a “payment channel”, and in that channel you performed numerous transactions your friend will never know about. Your friend is the Bitcoin blockchain, and when you paid him back, the blockchain only cares about the final state of the $10 he is owed.
With the lightning protocol, a commonwealth’s entire economy can operate on a network of payment channels to conduct every day commerce with each other ”domestically”, while anyone at any time can settle back to the “global” Bitcoin blockchain without permission from anyone else. A lightning network like this would provide the infrastructure necessary to bootstrap a new commonwealth’s banking needs through the first phase of development.
A Commonwealth of Nations
The Bitcoin Solar Reserve Currency
Humans create money, like beavers create dams. A soundly engineered dam, will collect water, just as a soundly engineered money will collect humans. In the same way that the Bitcoin protocol has created a network of sovereign individuals, it is about to create a network of sovereign nations. When humans enter into a social contract or agreement with one another they may form a “commonwealth” or nation. When commonwealths using a Bitcoin standard enter into agreement with other commonwealths on a Bitcoin standard, they form a Bitcoin Commonwealth of Nations.
The forces of physics create fractal patterns in matter, in the same way that the force of sound money creates fractal patterns in human networks. The Bitcoin Solar Reserve Currency is a force organizing humanity into patterns of sovereignty: individual sovereignty, commonwealth sovereignty, or sovereignty from a network of commonwealths. That sovereignty will take on both new virtual forms and old political forms such as federations, union, kingdoms, and republics.
Whatever your preference or needs are, you should begin accumulating access to the Bitcoin monetary network now so that you may have a greater degree of optionality later. Humanity has entered into an iron age which concludes with a behavioral sink collapse of nations. Out of this collapse will emerge a Bitcoin commonwealth of nations that spreads throughout the solar system. Humanity has repeated this process many times, but this is the first time we will be doing it with a base money that is incorruptible. The outcome of the next age may be no different than this one, but it will not be because of the soundness of money. That lesson will prove to be far more valuable than Bitcoin itself.
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