“The panopticon is a type of institutional building and a system of control designed by the English philosopher and social theorist Jeremy Bentham in the 18th century. The concept of the design is to allow all prisoners of an institution to be observed by a single security guard, without the inmates being able to tell whether they are being watched.Although it is physically impossible for the single guard to observe all the inmates' cells at once, the fact that the inmates cannot know when they are being watched means that they are motivated to act as though they are being watched at all times. Thus, the inmates are effectively compelled to regulate their own behaviour.”— WikipediaGood Morning Everyone,We have discussed many times, the dynamic between money and power, and highlighted the risk and harm caused by centralising such power. This is the fundamental problem bitcoin solves. It is money without a center. And it is money that provides the most fair issuance possible and avoids the common pitfall to disproportionately reward any one entity over another. That is not to say distribution is even or equal. Certainly not. Distribution of anything is never going to be even, and to attempt to do so is at its core a deeply unfair act. To evenly distribute something amongst a cohort of people means that individuals are not rewarded for deploying more effort, for being more skilled, more competent and capable and ultimately doing a superior job than someone else. And likewise for those who are underperforming they would have no incentive to work harder or learn new skills as there would be no reward available incentivising them to do so. This would dissolve and distort the incentives that would otherwise exist and it would seem to be the case from past historical examples, to produce highly undesirable outcomes. At the same time, if instead of distributing evenly, certain individuals or entities were disproportionately favoured and awarded an outsized percentage of issuance due to their proximity to the center of supply, this would install a deeply unfair standard at the core protocol level. If applied to the technology of money this unfair issuance creates a catastrophic dynamic where those who are closest to the center of that distribution have outsized power over all others within the network and this dynamic only accelerates over time.This last example describes the issuance of Ethereum. As Nik Bhatia explains in the below clip. Where bitcoin has no center and has no preferential issuance and you can simply buy, mine or earn bitcoin at a market rate and by doing work; Ethereum does have a center, and It is more like a company than anything resembling a truly decentralised protocol. To quote Nik (who also has a great paid substack publication called The Bitcoin Layer)“Ethereum began in 2015 with a pre-mine. This is a sale of Ethereum tokens in exchange for bitcoin. 72,000,000 Ethereum tokens were issued in this pre-mine. 60m of the coins were sold to the investment public and 12m coins were given to insiders. The supply of Ethereum today is above 120m, which means that almost 60% of today’s total supply was part of that pre-mine process. Data shows that 40% of that pre-mine went to the top 100 customers giving us indication that the ownership of Ethereum is highly centralised. This resembles the issuance of an equity in which the majority of the shares go to the management and the ownership.”The bottom line is the two (bitcoin & ethereum) are just not the same. Most Ethereum supporters seem to either not know this, simply not care, or not understand the significance of it. However it is fundamentally important to grasp. As I mentioned earlier, such an issuance schedule is at it’s core deeply unfair, especially when you consider the profound impact of money on our lives, and with Ethereum posturing to move to a Proof-of-Stake system in September, this significance is only acerbated further whereby those with the most amount of eth staked have an outsized voting right and thus influence on the network. We already have this system. It’s called fiat, and ethereum is just a shinier new version of it. Nothing close to the paradigm shifting technology of bitcoin.Many in the community have been surprised at the SEC’s allowance of protocol’s like Ethereum, when they have been clearly and unequivocally exposed as what are considered securities. This is not to suggest I want the SEC or any government to do anything, just that one can only be curious why they would not have enforced their mandate, in the face of the obvious. At the end of the day we don’t need any central body to assert their authority - the market should be able to work itself out. I have postulated for some time, that I believe the reason for this is because this experimentation of permissioned, centralised “crypto digital assets“ provide central banks and government with the single best opportunity to obtain the ...
