Bitcoin as a Shield Against Totalitarianism
How Bitcoin could have changed the past, and will change our future.
Author’s note: this topic is one that is close to my heart. As a Czech, the damage that socialism inflicted upon our society is one of a large wound spanning generations. Czechoslovakia, from 1948 to 1989, was turned from a thriving democracy in the heart of Europe to a country of fear-driven citizens and economic stagnation. I hope that this article can enlighten the reader’s knowledge of our history as well as how digitally distributed ledgers could act as a defence of individual privacy and finance.
Almost 70 years ago, in 1953, a demonstration against failed monetary policy began in Pilsen, Czechoslovakia, the first of many which would come to symbolize Czech resistance to the Communist regime.
History is full of events from around the world like the Pilsen uprising. If a similar situation were to occur today, however, would the outcome be the same? Are we still as vulnerable to dictatorship as we were 70 years ago?
With the adoption of the internet, a dictatorship’s control of society may not be as straightforward as it once was. In the 21st century, it is for the first time in human history that each of us individually possesses a way to protect ourselves against totalitarianism, be the custodians of our own money, and all in our very own pockets - with Bitcoin.
Building Socialist Finance
When the Communists, under Klement Gottwald and with support of Joseph Stalin, launched a coup d’etat of the Czechoslovak government in 1948, a massive series of economic, social, and political changes took hold within the nation. The democratic traditions of Czech politics and society were unwound, purges occurred across the country, and a Soviet style dictatorship was installed.
Citizen’s freedom of speech was restricted, media censorship enacted, economic reforms (such as the forced seizure of property and collectivisation of agriculture) was dictated letter by letter from the party.
Inflation soared to an astonishing 20%. Consumer goods, especially food, ran in short supply. As general strikes began to organize across the country, the Communist Party of Czechoslovakia did not hesitate to continue. Although denying it officially amongst the public, the next step in the destructive creation of their utopia was a complete devaluation of the national currency.
Antonin Zapotocky, then president of Czechoslovakia, would famously state:
“our currency is fixed and there will be no currency reform, these are all rumors spread by class enemies".
This was untrue. The reforms were announced on the 31st of May 1953 at 10pm - punishing those with savings but also deeply hurting workers. All savings were devalued at a ratio of 50:1 and all salaries at a ratio of 5:1. Work quotas for workers increased while the rationing of food was stopped.
This means that, for example, if I had been a worker at the nearby Skoda plant in Pilsen, with 10 000 Czech Crowns (CZK) in savings and a 50 CZK hourly wage, I would have overnight saw my savings devalue to only 2% of their original worth (200 CZK), and my wage would have diminished by 80%.
It was a turning point for many, who saw this as the final straw with totalitarianism - the government had instigated total control over their lives and now they rightfully felt that they had been robbed.
Thunder is Heard in Pilsen
The following morning, on the 1st of June, a massive general strike of 20 000 people was planned. Ironically, these dissidents were not what the party considered bourgeoise capitalists, but ordinary workers, whom the regime sought to model itself upon.
Protestors began marching towards the city centre, and eventually a rebellion began - barricades were built on the streets and symbols of Communism were torn down by workers. Slogans, chants, and posters demanded the end to totalitarian single party rule in Czechslovakia.
The Communist Party leadership was infuriated. It berated these citizens as ‘agents of imperialism’ who were instigating violence in Pilsen, and deployed the the Czechoslovak Army, the People’s Militia, and the secret police to immediately suppress the rebellion. Tanks and soldiers quickly overwhelmed the city - 220 people were injured and 650 arrested.
Elsewhere within the country workers followed, an estimated total of 360 000 workers in Czechoslovakia would strike against the regime that week.
What speaks volumes about the story of Pilsen is the reflection it casts of human nature. The workers had their civil liberties taken away, their rights, they worked harder and got less every day, but it was when the state infringed upon their core economic freedoms that they rebelled.
So how could such a crisis be averted in the future? How can people protect their stored value against tyranny in a meaningful way, if at any way at all? Well, first we need to discuss what value actually is.
What Actually is Value?
The textbook definition of value is:
“The regard that something is held to deserve; the importance, worth, or usefulness of something.”
However, value is a far more abstract concept than just monetary worth, or use-fullness. When we look at the history of value, and how it has been stored, a fascinating tale and evolution of money is created, one that ends with what is likely the most sophisticated store of value that mankind has engineered to date - Bitcoin.
When our ancestors 100 000 years ago began making jewellery from shells and stones it was perhaps the first time that value was being created and stored by us. Jewellery looks nice, you can carry it around with you, it doesn’t break easily or expire, maybe you could even trade it for some food later?
The Egyptians discovered gold around 2450BC. Gold in terms of its properties is really great as a store of value, even better than jewellery, and our ancestors quickly realized this.
I can move gold around with me, I can divide it into smaller pieces, it’s durable, looks nice, most importantly, it’s scarce: un-like that jewellery I’ve been carrying around, theres only so much gold on the entire planet. We as a species admire that, and we derive value from scarcity. This is why gold and metals began to be mass adopted as currency across the world.
But to be honest with you, gold has its problems too. It’s heavy and not too portable, if I have a lot of it I have to store it somewhere or with someone (where it could be stolen), the government can take it away from me, it’s not that easily divisible, it can be mixed with other metals and diluted, and actually it’s not that rare: we can mine more here on Earth or there is a ton of it in space.
As humanity digitalizes every aspect of society today, money has also come with it. Which is why when we fast forward about 4500 years from gold we reach 2022 - Bitcoin’s 13th year of existence. As a decentralized, censorship resistant, non-custodial, portable, divisible, durable, hard to confiscate, and finite form of money it ticks all of the boxes for a good store of value.
Bitcoin is a relatively new invention. With the first ‘genesis’ block being mined in 2009, widespread public knowledge of what Bitcoin actually is and its real power has not yet been fully understood. It’s still seen as a speculative asset, loved by some and hated by almost every grandfather in America.
I can’t send gold easily to people, I can send Bitcoin at the speed of light at any divisible amount. My gold can be stolen, my Bitcoin is cryptographically secured. The government can confiscate my gold, but it can’t on the blockchain. Gold has a 1.5% yearly inflation rate, Bitcoin is truly finite, capped at 21 000 000 in digital existence. I can cross international borders with millions of dollars worth of Bitcoin in my pocket without anyone batting an eye - try doing that with millions of dollars worth of gold bars, the TSA probably won’t be too happy.
Perhaps more importantly are the applications that can be run on top of blockchains like Bitcoin - does gold allow you to borrow and lend it within seconds internationally? Or create groups of people that can work together in decentralized governance structures? I don’t think so.
If for some reason in the future I need to send monetary value to Elon Musk on Mars (if he gets there, i’m rooting for you Elon!) I can’t do it with gold, martians might not find value in US dollars, or Euros, but Bitcoin is Bitcoin, and we have yet to realize it, but this is a really powerful piece of technology when compared to past historical assets that we store value with as a species.
Bitcoin in 1953?
Economics and politics are intertwined.
Communism, for example, is as much of an economic theory as it is a political ideology. The same is true for free societies - without free money there cannot be a free society.
Freedom, as an abstract concept, is often described in the individual’s rights to speech, movement, fair trial, and while these social and political components of freedom are widely understood and important, what is not is the component of free money.
Historically we have always observed a pattern of totalitarian dictatorships controlling currency, just as much as other components of freedom, like in Czechoslovakia. The digital age has made this all the more complicated. In our century we stand at a crossroads: use the digital information age to reinforce freedom, or totalitarianism. Engineer and innovate our way into greater freedom, or into digital surveillance and slavery, repeating the mistakes of the last century.
With the internet, free social media has defended citizen’s speech from dictatorship, like in Hong Kong. It is free money, like Bitcoin, which will ensure that totalitarianism’s control over currency is never allowed to happen again. Which is why regimes like China are so keen on banning it and controlling it, but they can’t, no matter how hard they seem to try.
As the world moves to a more decentralized political and economic system, every individual for the first time in history has a cryptographic shield to protect themselves against totalitarianism. A bank in their very own pocket.
We take democracy and freedom for granted in the West, but billions globally live their lives in dictatorship every day. Billions don’t have access to banking or reliable financial infrastructure. Billions more will be victims in the future, and they are set up for failure. Bitcoin is an economic and digital solution.
Had Bitcoin existed in Pilsen in 1953, an entire nation’s savings and wages could have been protected from the hands of totalitarianism. So is the power of computer science and economics when combined. Citizens of the regime would have had a passive way to resist and protect themselves against the failures of socialist finance.
As loud as they had chanted, as high as they had built their barricades in the streets, as hard as they fought the army, nothing would have been more effective then to circumvent socialism entirely. How? Through economics, through freedom, and through Bitcoin. Which is exactly why the dictators of the 21st century are scared of it.