Why I believe in Bitcoin

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This post originally appeared on the Unbounded Capital website, and we republished with permission from Zach Resnick.

Why do I believe in Bitcoin? Notice I am not using the words ‘why I think it’s a good investment,’ or ‘why I think it’s going to work out.’ On that topic you could find many other pieces that Unbounded Capital has put out, most notably our eBook, but also many other articles and essays which you can find here.

This piece is different. This piece is about why I’m devoting at least the next decade of my life to growing the Bitcoin ecosystem. And to remove all doubt—when I use the word Bitcoin, I am speaking about the incredible network enabled by the Bitcoin protocol, not the asset essential to its operation. There are several prominent versions of Bitcoin networks out there, but only the Bitcoin SV version (BSV) is unbounded, without limits on its scale or ambition. For this reason, Bitcoin SV, from here on referred to simply as Bitcoin, is where my and Unbounded Capital’s energy is focused.

I believe in Bitcoin because I think owning your own data and being able to do commerce with it can fundamentally transform global markets.

I believe in Bitcoin because the quality of entrepreneurship of those building on the Bitcoin SV version is unparalleled to any ecosystem I have ever seen.

I believe in Bitcoin because I am not aware of any technology or ecosystem that is actively furthering the values of freedom and sovereignty in a greater way.

Freedom and sovereignty

For me freedom means the ability to act, think, or do as one wants without restraint. This encompasses two different types of freedom—the freedom to and the freedom from. Sovereignty is the recognition that we all have an inalienable right to think and decide for ourselves.

For as long as I can remember, freedom and sovereignty have been amongst my strongest core values. I was fortunate enough to grow up with an incredible family; two parents who loved and supported me, and, in the grand scheme of things, largely allowed me to do as I pleased. Despite this, I constantly felt as though they were encroaching on my sovereignty. At the time, my rationale was that if they did not back up their rules with reasons that I found logical, then I should get to do as I pleased. This led to fights and arguments, but also manifested as an entrepreneurial impulse. It made me want to create ventures and systems which resembled more of what I wanted to see in the world, for the benefit of myself and those I cared about. From a young age I have been fascinated by different ways to provide value for others, different ways of making money, and doing those on my own terms and on my own time.

My mom has a memory from when I was five years old and we were visiting a friend of hers in a nearby town. At that time, I was obsessed with Pokémon cards and games, and when we stopped for a bite to eat, I noticed the town was selling cards at about a 20% discount to the local store in my town. I asked my mom if I could borrow all of the money that I’ve saved up in my piggy bank. She agreed and I bought as many packs as I could and resold them for a nice profit over the next week. It was my first proper venture: arbitraging the price of Pokémon cards.

From there I built many other ventures and businesses as a child and young adult, mostly in the vein of three themes: music, poker, and travel. While these might sound very different, they all embody similar values and skills.

Music

Freedom and sovereignty are embodied through music, especially Jazz—the music that I have most gravitated towards. With Jazz you have many conventions and traditions, yet very few (if any) hard and steadfast rules. Playing music that I created, improvising over that music in real-time, playing whatever I wanted, and finding places that would pay me to play or create my own concert events has been and continues to be deeply rewarding.

Poker

Before music became such a large part of my life, I was fixated with poker, notably during the online poker boom when, technically, I was “too young” to play. I was someone who often felt misunderstood, who felt tired explaining to others why I think the way that I do about things. I liked the idea of the game, that while having lots of luck in the short term, in many ways it is about as meritocratic as any game, or way of making money, can get. This meritocracy, combined with the rising popularity of online poker led to an obsession like no other. While I didn’t know it at the time, the poker community attracted other very similar types of people. Having played a lot of cash games during a couple of summers between semesters at school, I know that playing poker to earn money is quite possibly the most freedom oriented lifestyle in the world, in terms of having freedom from things. However, in terms of the freedom to act and live one’s life, it can often leave a lot to still be desired.

Travel

Growing up I always enjoyed being able to travel, but traveling with my family didn’t truly help me understand the value of experiencing other cultures. Fortunately in this vein I was able to attend the Seeds of Peace Summer Camp before my senior year in high school, a camp that brought together mostly Israelis and Palestinians, some American, Jordanian, and Egyptian campers to attend an American-style summer camp for a few weeks. Every day, in addition to the normal camp activities, we participated in dialogue about what is often called the Israeli-Palestinian conflict. This experience helped me understand from a firsthand perspective what it’s like to have very little freedom and agency as an individual and as a community of people.

It also made me passionate about trying to understand where people come from on a human level versus learning through an article or book written about them. This led me to living in Israel and Palestine where I worked for a human rights organization. I was trying to make a change and further the goals of freedom in the best way that I knew how at the time.

After a sustained period of time living abroad, I became passionate about being able to travel more, and to help others experience the perspective of other cultures like I did. The problem was that I was just starting college and I didn’t really have any money, so I searched on the internet for “how to travel without any money.” I soon after stumbled into the wonderful world of credit card miles and points.

For those reading this who are not aware, it is not just possible (especially if you have an organized disposition) but downright easy for American citizens or those working in the U.S. to get tons of credit card points and airline miles simply by signing up for new credit cards (for further reading on this I always recommend The Beginner’s Guide to Credit Card Miles and Points). Within a year, I was getting more than ten credit cards per quarter, and during many of my school breaks I was flying around the world in business class nearly for free. I then started several businesses around this idea, one of which is still going strong today. I’m proud to say I have helped many hundreds if not over a thousand individuals travel more, and travel with a better experience that they otherwise would have.

While these things may sound very different at first, they are all centered around freedom and sovereignty. While I think it’s positive and rewarding to play my music for others, perfect my poker craft, or help more people experience the diverse cultures that change perspective, all of these lacked the scale of global change; the worldwide positive impact that makes me feel so lucky and aligned to be doing the work I’m doing today.

Enter: Bitcoin

I was introduced to Bitcoin in 2016 and became fascinated with its implications for monetary policy, economics, and the future of money. But it wasn’t until 2017, when my father unexpectedly passed away, that I had clarity: I wanted to build something really big and make a positive impact for the whole world, specifically in the domain of freedom and sovereignty. Having over 1000 people attend my father’s funeral showed me that with scale comes not just the ability to change in an abstract way, but to have a positive impact on a greater number of real people’s lives.

An impact of this scale wasn’t possible with my existing skill sets in business ventures, but with Bitcoin, I intuitively felt that I had found a tool to achieve these ends. I wouldn’t know exactly how Bitcoin would enable greater freedom and sovereignty until later, but that’s jumping ahead in the story.

Upon first learning about Bitcoin, I was fortunate enough to have a great relationship with my cousin Dan, someone who shared my father as his biggest mentor. Dan founded a very successful company financing residential solar power across North America. After my father passed, Dan offered to have me live with him and do consulting on a hybrid credit card loan product for his business. At the time, I was also considering going back to the Middle East to focus on music, Arabic, and my travel business. I am very happy I made the decision to take him up on his generous offer.

Within weeks of moving to the Bay Area, I became inspired by what was happening in the crypto world. Many of my peers exploring the crypto space felt similarly about the virtues of freedom and sovereignty and extolled Bitcoin as a means to pursue them. I felt at home and knew that I wanted to be involved in a full-time way. Originally, I thought I would do this on the entrepreneurial side of things. Then Dan saw the intricacy of the projects I was working on; different miles and points, arbitrageurs, and other related hustles that were similar to the success I was having doing simple arbitrage of BTC across different exchanges around the world. He challenged me to consider getting involved on the trading and investing side of things versus on the entrepreneurial side of things.

While I was having a lot of success from the management of Dan’s and my own personal capital, I felt that it would be prudent to try and get some experience working for, or with, others that have been doing this for years. Despite my sense of ideological kinship with many in the space, I was stunned by the lack of seriousness, diligence, and process prevalent in nearly every crypto fund manager that I came across.

I ended up doing two consulting engagements for different crypto funds in 2017 and was shocked at the way that they were managing risk and evaluating investments. Unsurprisingly, both of these funds blew up/shut down within the following year’s market downturn.

Given the success I had managing our personal capital, Dan and I decided to start a new fund of our own. I was really excited about the promise of crypto and blockchain and what it meant for the world. I felt aligned with this movement, but on some level, I knew that arbitraging BTC and buying tokens of projects that I didn’t intend to support and hold for many years to come wasn’t sustainable for me long-term. Like poker, I think these activities generally hover around the neutral-sum game, sometimes being negative-sum, and sometimes being slightly positive-sum. It wasn’t until I learned about the true potential of Bitcoin-at-scale and what that enabled, that I really started to feel alignment with the work that I was doing.

Bitcoin Unbounded

It wasn’t until late 2019 that I was able to begin to articulate what I had intuited about Bitcoin’s potential as a tool for unleashing greater freedom and sovereignty for the world. Bitcoin and the people surrounding it always talked a big game in this regard, but when I rediscovered Bitcoin as Bitcoin SV (BSV) the path I should take finally clicked. Unbounded Capital Partner Dave Mullen-Muhr wrote an in-depth series of essays about what this change in experience looked like for us after attending the Bitcoin SV meetup in San Francisco in early 2019.

Up until that point, effectively every single crypto or blockchain meetup, talk, or conference that I attended felt dominated by opportunists, or even folks like myself, who I could tell on some level wanted to build long-term things with long-term people, but on a day-to-day were somewhat swept up by the allure of making a quick buck. It often felt a lot like that scene in “The Big Short” in which Steve Eisman (ala Steve Carrell) and crew attend the real estate convention at the height of the housing bubble. Oftentimes, entrepreneurs didn’t talk about what they were building. They were more excited to talk about the trades that they were making on their personal account, or even worse—with the balance sheet of their crypto network or company for which they had raised millions of dollars.

However, at the Bitcoin SV meetup I experienced something totally different. I felt like the dumbest guy in the room—and it felt great. I heard a lot of solid criticisms of other blockchains that were new to me from the POV of entrepreneurs who had tried and failed to build on them. Almost everyone there was either a highly technical entrepreneur or a developer that wanted to learn more about how to build companies that enabled and empowered new business models, impossible prior to the advent of Bitcoin: models that gave people the freedom to own and monetize their data; models that empowered individuals to service previously inaccessible market; models that dramatically reduced the need for permission to innovate from powerful gatekeepers.

Since then, these feelings have been reinforced by the builders within the Bitcoin SV ecosystem who embody the idea of creating freedom and sovereignty at a global scale through Bitcoin as a massively scaled, public, immutable, data ledger serving as the foundation of a new technical and commercial model for the internet.

How Bitcoin promotes freedom and sovereignty

Bitcoin, unencumbered by the technical debt of tinkering developers in the years since its release, is perhaps one of the most powerful tools for freedom and sovereignty ever created. Many within the blockchain space give lip service to how BTC (the version shackled by this technical debt) empowers the individual but most of Bitcoin’s potential in this domain has unfortunately been neutered by the imposed limit on block size and scale.

Luckily, since Bitcoin SV’s restoration of the original Bitcoin design, entrepreneurs are once again leveraging Bitcoin’s full potential. Two of the key tools Bitcoin provides are data ownership and micropayments. By solving technical roadblocks which hampered prior attempts at micropayments, Bitcoin enabled a commercial model for a new internet. The combination of the ability to store data in an immutable, public, and widely distributed way PLUS the micropayment system to accompany it (electronic cash being a killer use case of that public ledger) opened up entirely new models for entrepreneurs.

How many legacy internet companies were forced to monetize through capturing customer data when alternate models may have been preferable? What is motivating Facebook to continually attempt to create online payments systems?

How many internet microservices whose value fell below payment minimums were forced to seek alternative models? Would Google like the option to monetize search through individual micropayments per search?

How many valuable services were rendered impossible because entrepreneurs were locked out of walled gardens because of the incentive to silo and protect data? Have third party applications which could have added value to networks like Twitter opted not to do so because of the fragility of their business and its dependence on Twitter’s permissions?

Let’s partially flesh out an example to make these benefits more tangible using a passion of mine: music. The music industry has been radically transformed by technology. At one point in time, briefly hearing music would have been a rare life experience. Many people lived full lives without hearing a beautiful composition played by an accomplished musician. When music could be etched onto physical objects it became easier to replay and enjoy, distribution problems notwithstanding. Fast forward to the advent of the internet and now music isn’t only easy to record and distribute, but now the problem is that it is no longer possible to keep an artist’s work scarce, largely to the dismay of artists and record companies. I see Bitcoin being foundational to the next phase of music creation, distribution, and consumption. Each step demonstrates Bitcoin’s potential for enabling freedom and sovereignty.

Bitcoin’s ability to transform music creation illustrates the potential of a network which enables users to own their data and monetize it via micropayments. Artists and record labels who own tracks and albums can extend their ownership and control to the data that makes the music accessible online. By storing song files on Bitcoin’s public ledger and incorporating market appropriate paywalls (possibly less than one penny per listen) to access them, artists are no longer strong-armed into granting access and control to large music libraries which make data accessible to their audiences.

It’s currently difficult for artists and record labels to distribute music to wide audiences on their own. With most listeners accessing music through the internet, they either opt to buy music for ~$1/song or rent music through streaming services like Spotify for ~$10/month or users can utilize Spotify “free of charge,” by having ads injected into their experience. The ability for artists to include their music in massive online collections is essential for its wide distribution, the technical aspects of which are handled by companies like Apple and Spotify. On Bitcoin however, the wide distribution of the data on the ledger is foundational to its design and the incentive for smaller players to deliver artist-controlled content to listeners is opened up.

A music listener browsing artists on Bitcoin is not necessarily browsing a private catalogue of artists curated by any single company. Instead, they could be browsing an open market of music uploaded directly by artists, curated by individual and music lovers, and delivered to them via independent players offering competitive services behind the scenes. Prior to Bitcoin, the ability to consume music directly from your favorite artists and only intermediated by a competitive landscape of value add service providers was not a possibility given the technical and commercial constraints of the legacy internet. The markets that are created through Bitcoin’s data ownership, micropayment network, and cooperation-inducing open and public network lend themselves perfectly to transforming the entire music pipeline through increased freedom and sovereignty for each participant in it.

For a more fully flesh out explanation of how I imagine the internet (and more on music in particular) transforming from Bitcoin, check out the first chapter of our Ebook.

The Bitcoin Internet is being built today

After the Unbounded team became dedicated to developing a comprehensive understanding of the theoretical potential of Bitcoin, it became clear that the next step was to find the tangible building blocks being built today.

Unbounded Capital portfolio company RUN is one such example. RUN is a company that develops tools that help people start a business on (or transition their business to) Bitcoin’s public ledger, which we believe has distinct advantages over competitors who use private cloud servers. Opting to build on Bitcoin has various advantages, chief among them is the ability to allow users to retain control of their data and property while still providing interfaces for them to interact with this data.

That same line of thought drives another Unbounded Capital portfolio company Planaria, which also acts as a tool box for companies looking to build their businesses with advantages of a super-powerful, public and immutable database. Planaria has set a foundation from which many companies in the Bitcoin SV ecosystem are fostered, one of which might serve as the social media platform that dethrones the data-for-service model taken on by the Googles and Twitters of the world. In this case, I’m talking about Twetch, which is like Twitter on Bitcoin, with the primary difference being where and how the data is stored. Instead of information being stored on Twitter-controlled servers, information is stored on the BSV blockchain, enabling users to do whatever they please with their personal data. Twetch users could quit the platform and take their data with them, they aren’t censored by any body of moderators, and there are no ads because of micropayments. Twetch was an early user of Planaria’s infrastructure tools which made accessing the data on Bitcoin easier and building interfaces on top of it more developer friendly.

EHR Data, or Electronic Health Record Data, a HIPAA compliant health-care record project that is in development. It is a platform built on Bitcoin that is taking data ownership to a new level: it allows patients to directly control their health information and records. It also incentivizes patients and actors in the ecosystem to interact. For example, patients are incentivized with loyalty cards and discounts (all settled on Bitcoin) to share data with the many actors interested in private health data like healthcare providers, pharmaceutical manufacturers, drug researchers, etc. This is creating all sorts of new markets and business models, and notably this isn’t possible on any other blockchain besides Bitcoin SV. If the business fails your health records won’t disappear. A project of this size needs to be able to contain a global scale of information, something only capable through a blockchain unlimited by artificial block size.

Ignoring the crypto consensus, believing in Bitcoin

It’s difficult to extol the virtues of why Bitcoin excites me without addressing the more orthodox opinions of the broader crypto and blockchain space. It is true that many people in the headline dominating networks of BTC, Ethereum, or other crypto assets claim their networks will deliver similar benefits. Most genuinely believe this, but I find it difficult to reconcile how a version of Bitcoin (BTC) that oscillates between being 10,000-100,000 times less efficient and 10,000-100,000 times more expensive to operate than Bitcoin SV could ever be used in the ways I want it to be. The inefficiency of other networks not only prices out many of the most existing use cases that Unbounded Capital and its portfolio companies are pursuing today, but it prices out large swaths of the world’s population. Many people are making less than $20 a day and can’t consider paying a transaction fee greater than that to use the BTC Bitcoin or Ethereum networks. These concerns are particularly relevant when these unscalable networks temporarily rise in popularity which results in enormous transaction fees, like today’s on BTC which average around $4.51 [6/14/21] (exceeded $62 in April ‘21) or on Ethereum $3.11 (and exceeded $69 in May ‘21) . Outside of personal enrichment for early speculators, I’m at a loss for how that version of Bitcoin could enable anything but marginally more freedom and sovereignty for the small group of those that already have a lot of freedom and economic resources.

I believe in Bitcoin because I think owning your own data and being able to do commerce with it can fundamentally transform global markets.

I believe in Bitcoin because the quality of entrepreneurship of those building on Bitcoin SV version is unparalleled to any ecosystem I have ever seen.

I believe in Bitcoin because I am not aware of any technology or ecosystem that is actively furthering the values of freedom and sovereignty in a greater way.

Watch: Unbounded Capital’s Zach Resnick discuss why “BSV is Green Bitcoin” at CoinGeek Zurich