tl;dr: Phase 2 of Schopenhauer’s model of new ideas underway.

One of my favorite entries from Blockchains in the Mainstream is Primavera de Fillipi’s.

She quoted the German philosopher, Arthur Schopenhauer, as saying that all radical ideas go through three stages.

First, they are ridiculed.

Then, they are violently opposed.

Finally, they are seen as self-evident.

Even back in December, 2016, Primavera’s observation was that we had completed the “ridicule” phase of Bitcoin and blockchain. We were clearly in violent opposition.

Perhaps with a sense of naive optimism, I had thought we had completed phase 2, but I was wrong.

While the crypto asset/decentralized revolution is self-evident to me (and a growing number of people everyday), it’s clearly not self-evident to everyone.

In fact, I think that we may be still warming up the “violent opposition” act.

What has prompted me, most recently, was an article I saw on page A2 of the Wall Street Journal, the online version of which is entitled, Bitcoin Fraud Concerns Draw Scrutiny From Regulators.

What’s happening is a confluence of events, in my opinion.

First of all, the US government via an increasingly politicized Federal Reserve continues to make money easy and cheap, effectively printing it on a regular basis, as discussed yesterday.

And while we are coming up on the 50th anniversary of Nixon taking the US off the gold standard in 1971, there’s a big difference between then and now. Then, there was no credible alternative to the dollar as the international standard. Today, albeit it very nascent, there is. If the government’s strategy is “we can keep borrowing because others will keep buying our bonds” and that strategy starts to feel “competitive pressure” from a disruptor (i.e. Bitcoin/crypto), then the incumbent will do whatever it can to defend its turf.

That is what I think is happening.

And while I understand how the dollar underpins US diplomacy (and am in favor of a strong America), I fear that, like generals, politicians and regulators are “fighting the last war.”

According to Congressman Himes of Connecticut, “There is not a single shred of evidence over many centuries that new financial systems or new systems of currency grow organically in an unregulated way and lead to good outcomes.”

And, of course, he’s right, but all of his evidence was amassed in a pre-digital, pre-Internet, pre-blockchain age. There was no way to have a 24/7, scalable, verifiable decentralized ledger over all of those centuries.

Now there is.

So, I suspect all of these agencies, despite the fact that “no single regulator inspects crypto exchanges or brokers, unlike in the securities and derivatives markets,” will try and use existing enforcement mechanisms (i.e. ‘square pegs’) to regulate decentralized crypto assets (i.e. ’round holes.’)

I don’t think it will work…because, as Schopenhauer said, “it is self-evident.”

Eventually, “software eats the world” and this time, software is eating money.

We’re definitely in Phase 2.

Interestingly enough, there are some elected officials who also live in Phase 3, including Senator Lummis of Wyoming.

The real downside here, aside from the fact that it will make it increasingly difficult for Americans to participate in the next wave of wealth generation is that it will hinder American competitiveness.

The innovation, which doesn’t need the Bay Area or any area, is going global, so the technological dominance we have taken for granted for so long is also at risk.

I’m not saying let crypto be the Wild West, but I’m saying that it’s time to embrace and adopt rather than fight and contain.

The downsides of losing are too great.

But asking politicians to change their addiction to spending and their mindset…well, that’s not quite self-evident to me.