(This article is part of a series of two articles by Karo Zagorus. The previous article in the series is on Citadel21.com in Volume 10 under the name “Confidence, the lack of.”)
Fiat money has become a disease that created an environment that has invaded the very foundations of society. Last time we looked at the direct effects of money, which can cause Even our environment to bend into evil cycles that indirectly affect human trust. It is not the goal of institutions and individuals to abuse our trust, but their behavior is indirectly enabled and reinforced by the environment in which it is located.
This problem has a direct impact on perception – we become more selective with who we trust and how we make our connections. Social capital is required for a properly functioning society, and it is what is now depleted. Think of social capital like energy in a mobile game that forces you to wait for it to replenish over time. Now imagine if people worked the same way. It works the same way, if you are not there you will need at least some cash to increase your time preference and replenish your energy meter to continue activities. But it’s a bit oversimplified to be honest because it can have way too many consequences when worn out.
Robert D. Putman, in his book Bowling Alone: The Collapse and Revitalization of the American Community, has successfully shed light on why we have fewer friends. However, the main cause is incomprehensible: paper money.
As society loses its stored value, time preference increases, leading to intensifying cycles that deplete social capital, creating the perfect environment in which to dissolve trust. This simple process is what’s going on in society right now, but it’s not just trust that it’s dissolving. It’s also the very social fabric.
In Japan, where national debt to GDP ratio is over 260 percent, we can best observe the negative effects of societal loss of stored value. Although Japan is a more conservative society resistant to far-reaching change, we can see that it is not necessary to be socially liberal to be directly affected.
Japan has a record low in births and marriages and more people suffering from depression and suicides. It is a fact that there are over 1.1 million people in Japan who suffer from long-term acute social withdrawal (known as “hikikomori” in Japanese). Where sources claim that young and old people with hikikomori suffer from numerous problems, the underlying cause can easily be traced back to the fact that Japanese cultural phenomena have evolved to such an extent that their phenomena, with a high time preference, are societal destruction cause.
It can be concluded that two factors can create a high time preference with extremely similar effects (although they are completely different due to environmental factors), namely debt and inflation. (These factors literally come from central banking.) Debt accelerates spending and robs individuals of savings and, with them, the ability to have secure and stable futures. While inflation does exactly the same thing, it directly deprives individuals of their savings.
Although Japan’s case is very special in that it is an extremely wealthy country that is at the height of technological advances, the same negative impacts of paper money on society will appear in any society at some point. (At this point someone might argue that we can group the effects of social isolation on central banks. This might be possible, but the problem is that the people who control them may have interests that are based on false principles – MBA, Social science economy basically – but the fact is, we could then go back to the main culprit of the whole system: John Maynard Keynes. Sound central bank policy based on hard money might be different so we cannot blame these issues just the concept of a central bank. But I think I can also agree that we should lump them together.)
Another negative effect we see today is that we want to organize less and join fewer organizations because it just doesn’t make sense. There is no point in voting any more, just as there is no point in joining bowling leagues. The need for chivalry has long since died.
If you are a bitcoiner, you are in that environment and somehow, through luck or education, you managed to get out of it. Deflation is not an immediate solution to our problem, however, as resetting neural synapses wired by this disease is a long-term process. Miracles don’t happen, especially when you are overshadowed by the dangerous ghost around you.
To this day, many of us lack confidence and trust in the system, and it is way beyond repairing it. Bitcoin’s positive effects must slowly override those of the negative system that surrounds us.
At the end of the tunnel we can already see weak light. Savings were reintroduced into the hands of society. You can save money and the state cannot influence your money on the bitcoin blockchain. Nobody can take your money away from you, and this creates economic stability that has a positive effect on mental well-being. When you know that you have savings and can pay any unexpected costs that might arise, and that you have laid the foundations for a prosperous future, things change.
You will certainly be less depressed and other emotions will overtake this feeling with higher intensity. You may feel more responsible for your future and this will eventually lead to excessive stress. (We need to be very careful with depression here, as some variants of it may be due to underlying psychological conditions that less time preference and reintroduction of savings cannot resolve at all.)
So have we built trust?
No, we certainly did not, as the trust has certainly not been broken. The process of how we build trust began to change thanks to Bitcoin.
So what exactly is going on then?
Bitcoin basically restored a long-lost organizational function and paired aspects of it. Bitcoiners today are actively trying to find and form stable connections based on mutual understanding of their economic, social, religious and political aspects. The solid basis has returned, because now affiliated participants adhere to an unwritten code of honor that maintains the structure of trust in their area. Individuals have learned that if they remain inactive, they now have many things to lose.
In a world of decay where every aspect of the civilized norm is slowly disappearing and being replaced by a new normal, the only solution is for others to band together to fix the broken system. Bitcoin was created to solve one problem, but it fixes many problems as the underlying root cause it fixes leads to everything else. However, the effect is so strong that Bitcoin alone cannot fix the problem. Individuals must act as a self-help line to literally restore function and show others that there can be life beyond credit cards and without savings.
Let’s not avoid the bush.
Trust isn’t just something like believing that your neighbor won’t break into your house in the middle of the night because the ledger leak made him believe that you are a Bitcoin millionaire (even if you are), but it is is the fundamental foundation for moving forward humanity through entrepreneurship, solid science and organization. Without trust, the whole world collapses and we will not be able to move forward. This is what the use of Bitcoin enables the individual: the chance to make progress again and build more trust through the rebuilding of social capital and economic stability.
(If you didn’t know, the basic principle behind the company is that of trust. Without that principle, business cannot grow and grow from within the family.)
When we inhibit trust, as the collapse of social capital does due to the high time preference created by the loss of savings, it enables the processes that lead to the kind of society we all live in now system because the system itself is broken and they seek refuge in failed ideological promises such as that of Marxist socialism or communism.
Human organizations have now returned to the foundations. If I look around (basically browsing Twitter), clear aspects of the rebuilding can be found. The average bitcoiner has more stable alliance-level relationships (based on honor, trust, and personal reputation) with people willing to take extreme risks in order to survive Bitcoin’s revolutionary phase. Although temporary, the fact that Bitcoin could create such an environment is noteworthy. The next phase of Bitcoin is revolutionary, its users are going to change the world and no state actor can tell them to stop.
If I claim chivalry has returned, it’s real. Some may argue that you have no friends when using Bitcoin, but this is an extremely flawed view. As we progress through the revolutionary phase, dangerous encounters could stand on our doorstep that require the full cooperation of aligned individuals, much like how medieval knights swore allegiance to God or a brotherhood, or how many in the United States take the oath of allegiance.
Do you remember my writing about the importance of being neutral?
If you do not remain loyal to your allies, you will lose every one of them.
By restoring the smallest elements of trust, you are directly helping Bitcoin fix the world. It is arguably obvious that if we were to give everyone Bitcoin now, and everyone started using it from tomorrow, it would create a shock effect that could further disrupt society and cause long-term despair (this is because you haven’t resolved in high time Preference and you have not resolved any other negative effects that could become nuclear due to a bitcoin currency standard, so we need the processes that are going on today to fix everything properly.
I get scared every time people say “Bitcoin doesn’t need you” because they’re so wrong. Without the input and care of people who use the Bitcoin network, store value on it, or politically organize around it, it would be completely meaningless in the current state of the world. (Bitcoin literally even pays you to proactively engage in revolutionary behavior because it requires it they! There’s no point in life without someone to talk to or print pads to – Bitcoin just doesn’t want to be lonely.)
With social capital now slowly replenishing (for some it might be replenishing already based on the level of toxicity seen on Twitter) these individuals should double down and keep building more of the trust we need. Not just building groups, but building the foundation for entrepreneurship and the foundations of the brave new world.
This is a guest post by Karo Zagorus. The opinions expressed are solely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.