MBitcoiner on Nostr: This is a public response I made on Twitter to a Muslim that has a halal yield ...
This is a public response I made on Twitter to a Muslim that has a halal yield staking service for Ethereum and Solana
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Apologies as this response will be long
I want to first better capture what bitcoin is and what it's actually addressing/solving.
Firstly, understand that Bitcoin is money. It seems simple but has huge implications. By necessity, the competition between different monies is inherently zero sum. People use/adopt one money at the expense of another. This is why when you study the history of money, we see that money converges to one, which makes sense as this convergence is a necessary precursor before a pricing system can emerge.
Just think through it. Money emerged to solve the limitations of barter and indirect exchange. This means that this iterative process to discover money filters out more and more commodities until one money emerges. It doesn't make sense to go through this iterative process to solve for competing commodities to then have competing monies at the end of it.
I mention this to demonstrate that we're not "Bitcoin Maximalists" to only be toxic. It's the logical position to take when looking at this rationally and praxeologically. We're not saying that we value bitcoin more than Islam or whatever. For "commodities" competing as money, one will emerge.
We obviously believe that Bitcoin will win (and one can say that has won) this competition with altcoins.
I put commodities in quotes because we see "crypto", especially Ethereum and Solana and others, as being more like securities rather than commodities.
I don't know how to explain this any more simply, but money itself does not, or isn't supposed to, generate yield. By definition, securities do that.
But then you'd say something like "But we're getting yield by providing a service by securing the blockchain! It's not different than proof-of-work" but this line of reasoning is problematic for several reasons.
We have to ask where the yield is coming from. It's clear for something like Ethereum, it can only come from expanding the token supply.
The issue isn't whether the yield is fixed or not. It's that yield is supposed to come from economically productive assets. There is no such thing when it comes to digital securities. Predictably, the yield serves to power apps that enable rehypothication, securitization, and leverage of these tokens and tokens on other chains.
I mean it's just so circular. You get yield in the form of tokens... To get more tokens through debt to get more yield...
I mean it's quite funny that there's clearly so much financialization happening, yet it's not even real finance to begin with. That should set off red flags already, but we haven't even gotten to the main point.
None of this is finance, and more importantly, it's not even money, yet it's clearly trying to compete with Bitcoin as money, as these altcoins have their own token.
So Ethereum and others aren't addressing the core problem that Bitcoin sets out to solve!
The actual innovation of Bitcoin is in its ability to achieve (actual) decentralized, politically neutral economic consensus on a global scale without trusted third parties. This foundation is what allows for things like retail payments, actual real yields, genuine finance, NFTs, whatever.
Bitcoin is optimized for security and Immutability in a way that Ethereum can't be 👇
"The incentives of crypto trying to be more than just money necessarily lead to centralization as the value is exogenous, which also means that the security of crypto is exogenous and must be managed by the founding startup. So this makes crypto not neutral as the incentives lead to market actors trying to take control of the network to dictate the coin's technical and economic policy. The incentives lead to crypto being not neutral."
The incentives already make Ethereum (and others) centralized from the start, which means that it can't scale to achieve truly neutral economic consensus. It will never be able to address the core problem of fiat money with its Riba based economic consensus model.
More in next post 👇 (sorry)
To be clear, I'm not saying that staking is haram or Riba. I'm saying it's problematic, particularly in Ethereum, besides the circular and artifical points made above.
Staking suspiciously closely mimics the fixed-income privileges of bonds, and we have famous Ethereum developers and leaders calling it interest and functioning like bonds. But even more problematic is that the vast majority of stakers outsource this duty to centralized services, which exacerbates the centralization and non-neutral problem described above.
This is why I'm generally against the use of stablecoins, because it just strengthens this non neutral consensus model that just perpetuates Riba through fiat money issuance and domination.
Yes, I get it, Muslims in other countries are poor or whatever. This doesn't mean that we take the short sighted path and give them stablecoins and artificial yields, because it doesn't address the Riba money problem.
I don't get what you mean by bitcoin being expensive. The base layer is expensive, and it will get more expensive into the future since bitcoin is optimized for security, immutability, decentralization, etc. because achieving global economic consensus is really freaking expensive. You can not abstract away the energy expenditure required to achieve this consensus.
And Muslims living in the third world can already use payment layers built on top of Bitcoin like lightning and ecash. My brother and I send btc to family in Palestine (West Bank). We can literally send btc to Muslims in Gaza too. It's actually working.
But if you want to give them access to stablecoins, then fine, but don't think this is actually addressing the problem.
And yes, there's nothing wrong with the expansion of the gold supply. The expansion itself isn't the problem, it's that the supply expansion in non PoW crypto isn't neutral and credible. The innovation of Bitcoin isn't just a hard cap, it's that the fixed supply is credibly enforced and will continue to be, as an emergent and endogenous property from its optimization of security.
This really is just a difference of approaches that we have, and how we conceive of the problem. We take the Bitcoin Maximalist path because Bitcoin is optimized for security, decentralization, and immutability to achieve economically and politically neutral consensus that allows for peer to peer payments and real, truly Riba free financing. It's the long-term approach.
Whereas in crypto, the approach is short-term convenience at the cost of long-term security and trust, which makes it vulnerable to centralization, resets, obsolescence, which cannot address the Riba money problem because it's all based on artificial yield and circular and self referential leverage and rehypothecation that's really all based on Riba to begin with.
In short, it's not even money, therefore it cannot address the Riba money problem.
**************************
Apologies as this response will be long
I want to first better capture what bitcoin is and what it's actually addressing/solving.
Firstly, understand that Bitcoin is money. It seems simple but has huge implications. By necessity, the competition between different monies is inherently zero sum. People use/adopt one money at the expense of another. This is why when you study the history of money, we see that money converges to one, which makes sense as this convergence is a necessary precursor before a pricing system can emerge.
Just think through it. Money emerged to solve the limitations of barter and indirect exchange. This means that this iterative process to discover money filters out more and more commodities until one money emerges. It doesn't make sense to go through this iterative process to solve for competing commodities to then have competing monies at the end of it.
I mention this to demonstrate that we're not "Bitcoin Maximalists" to only be toxic. It's the logical position to take when looking at this rationally and praxeologically. We're not saying that we value bitcoin more than Islam or whatever. For "commodities" competing as money, one will emerge.
We obviously believe that Bitcoin will win (and one can say that has won) this competition with altcoins.
I put commodities in quotes because we see "crypto", especially Ethereum and Solana and others, as being more like securities rather than commodities.
I don't know how to explain this any more simply, but money itself does not, or isn't supposed to, generate yield. By definition, securities do that.
But then you'd say something like "But we're getting yield by providing a service by securing the blockchain! It's not different than proof-of-work" but this line of reasoning is problematic for several reasons.
We have to ask where the yield is coming from. It's clear for something like Ethereum, it can only come from expanding the token supply.
The issue isn't whether the yield is fixed or not. It's that yield is supposed to come from economically productive assets. There is no such thing when it comes to digital securities. Predictably, the yield serves to power apps that enable rehypothication, securitization, and leverage of these tokens and tokens on other chains.
I mean it's just so circular. You get yield in the form of tokens... To get more tokens through debt to get more yield...
I mean it's quite funny that there's clearly so much financialization happening, yet it's not even real finance to begin with. That should set off red flags already, but we haven't even gotten to the main point.
None of this is finance, and more importantly, it's not even money, yet it's clearly trying to compete with Bitcoin as money, as these altcoins have their own token.
So Ethereum and others aren't addressing the core problem that Bitcoin sets out to solve!
The actual innovation of Bitcoin is in its ability to achieve (actual) decentralized, politically neutral economic consensus on a global scale without trusted third parties. This foundation is what allows for things like retail payments, actual real yields, genuine finance, NFTs, whatever.
Bitcoin is optimized for security and Immutability in a way that Ethereum can't be 👇
"The incentives of crypto trying to be more than just money necessarily lead to centralization as the value is exogenous, which also means that the security of crypto is exogenous and must be managed by the founding startup. So this makes crypto not neutral as the incentives lead to market actors trying to take control of the network to dictate the coin's technical and economic policy. The incentives lead to crypto being not neutral."
The incentives already make Ethereum (and others) centralized from the start, which means that it can't scale to achieve truly neutral economic consensus. It will never be able to address the core problem of fiat money with its Riba based economic consensus model.
More in next post 👇 (sorry)
To be clear, I'm not saying that staking is haram or Riba. I'm saying it's problematic, particularly in Ethereum, besides the circular and artifical points made above.
Staking suspiciously closely mimics the fixed-income privileges of bonds, and we have famous Ethereum developers and leaders calling it interest and functioning like bonds. But even more problematic is that the vast majority of stakers outsource this duty to centralized services, which exacerbates the centralization and non-neutral problem described above.
This is why I'm generally against the use of stablecoins, because it just strengthens this non neutral consensus model that just perpetuates Riba through fiat money issuance and domination.
Yes, I get it, Muslims in other countries are poor or whatever. This doesn't mean that we take the short sighted path and give them stablecoins and artificial yields, because it doesn't address the Riba money problem.
I don't get what you mean by bitcoin being expensive. The base layer is expensive, and it will get more expensive into the future since bitcoin is optimized for security, immutability, decentralization, etc. because achieving global economic consensus is really freaking expensive. You can not abstract away the energy expenditure required to achieve this consensus.
And Muslims living in the third world can already use payment layers built on top of Bitcoin like lightning and ecash. My brother and I send btc to family in Palestine (West Bank). We can literally send btc to Muslims in Gaza too. It's actually working.
But if you want to give them access to stablecoins, then fine, but don't think this is actually addressing the problem.
And yes, there's nothing wrong with the expansion of the gold supply. The expansion itself isn't the problem, it's that the supply expansion in non PoW crypto isn't neutral and credible. The innovation of Bitcoin isn't just a hard cap, it's that the fixed supply is credibly enforced and will continue to be, as an emergent and endogenous property from its optimization of security.
This really is just a difference of approaches that we have, and how we conceive of the problem. We take the Bitcoin Maximalist path because Bitcoin is optimized for security, decentralization, and immutability to achieve economically and politically neutral consensus that allows for peer to peer payments and real, truly Riba free financing. It's the long-term approach.
Whereas in crypto, the approach is short-term convenience at the cost of long-term security and trust, which makes it vulnerable to centralization, resets, obsolescence, which cannot address the Riba money problem because it's all based on artificial yield and circular and self referential leverage and rehypothecation that's really all based on Riba to begin with.
In short, it's not even money, therefore it cannot address the Riba money problem.