Bitcoin is the opening shot in a new jurisdiction. The Bitcoin Economy is thriving in a jurisdiction outside that of any government. The jurisdiction of the Bitcoin Economy is ruled by math and not by violent force. The rules are set by competing software projects, and evolve based on what works. Bitcoin says “thou shalt not double spend.” And what happens if you double spend? Nothing. You can’t. The laws are akin to the rules of physics, not the rule of kings.
Today, the Bitcoin jurisdiction is a small island. There are few inhabitants, and we must leave the jurisdiction frequently and submit to governmental jurisdiction. As more of the economy is subsumed into the Bitcoin jursidiction, it becomes a more powerful force, and government becomes weaker. For the Bitcoin project to succeed, we must find ways to move economies into this jurisdiction. We must also explore strategies to make the interface between the two jurisdictions safe and porous.
In future posts I’d like to expand discussion on two key concepts. Prediction markets
can furnish the Bitcoin Economy with many of the functions of finance, without requiring an interface to government jurisdictions. This greatly expands the scope of the Bitcoin Economy, and provides an essential infrastructure for the rest of the economy.
i2i (individual-to-individual, as opposed to business-to-business or business-to-consumer but similar to p2p) describes the situation wherein large swaths of the economy are carried out by individuals trading with other individuals, rather than via large companies, corporations, and governments. The low transaction costs of the unregulated Bitcoin Economy make this more attainable, and it’s an ideal interface between the Bitcoin jurisdiction and government jurisdictions. Individuals carrying out small, ad hoc trades make terrible targets for government crackdown. They are hard to find in time and space, are low profile even if caught, and each crackdown has almost zero effect on the system as a whole. It's also bad for politics.
The combination of these two concepts packs a powerful punch, and that’s another discussion I’d like have.