I’ve been behind enemy lines reading everything the IMF has put out in the last 2 years.
Here are 10 pieces I found most relevant to Bitcoin.
“When you are thoroughly conversant with strategy, you will recognize the enemy’s intentions and thus have many opportunities to win.”👇 pic.twitter.com/ssDWlWpDGZ
— Sam Callahan (@samcallah) April 21, 2022
Let’s start with the IMF’s note titled “Blockchain Consensus Mechanisms: A Primer for Supervisors”
It might as well have been titled “Slander Proof of Work and Promote Proof of Stake”.
Here is an excerpt that sums it up in a nutshell👇 pic.twitter.com/JYAJsjnPnK
— Sam Callahan (@samcallah) April 21, 2022
You read that right…the IMF hints that virtual assets are being used to finance the proliferation of nuclear weapons.
Is there any evidence of the direct connection between VAs and weapons of mass destruction? 😂
I didn’t find any, but it sure does sound scary!
— Sam Callahan (@samcallah) April 21, 2022
Here, the IMF explores how to regulate virtual assets (VAs).
“VAs pose a significant threat to the integrity of the global financial system, money laundering, terrorist financing, and the financing of the proliferation of weapons of mass destruction”
— Sam Callahan (@samcallah) April 21, 2022
They support FATF guidelines that VASPs do due diligence on customers & non-customers for transactions that are >$1,000.
They acknowledge the threshold is lower than traditional standards, but they argue that given the “particular risks of VAs”, stricter standards are justified.
— Sam Callahan (@samcallah) April 21, 2022
The IMF justifies stricter standards despite a recent report that found illicit activity consisted of 0.15% of crypto volume.
Also, don’t forget that AML policies have impacted only 0.05% of criminal finances.
This appears to be more about control rather than stopping crime. pic.twitter.com/XKbOOgIokt
— Sam Callahan (@samcallah) April 21, 2022
In this IMF report, I came across a new term, “cryptoization”, which refers to the risk of currency substitution occurring in emerging markets.
The IMF now has a term for when citizens opt out of their failing local currencies into digital assets…
— Sam Callahan (@samcallah) April 21, 2022
The IMF would prefer people not to have an exit at all, which is why they’re so excited about CBDCs.
This paper is an overview of 6 of the most advanced CBDC projects: China, Bahamas, Sweden, Canada, Uruguay, and the Eastern Caribbean Currency Union.
— Sam Callahan (@samcallah) April 21, 2022
None of the CBDC projects covered fully protect user privacy.
Some of them offer “quantitative restrictions” in that they offer anonymity for “lower tier” people to help them onboard if they don’t have IDs.
Central banks make the rules that determine who gets privacy and why. pic.twitter.com/O7GU3JOIDb
— Sam Callahan (@samcallah) April 21, 2022
This contains remarks from an IMF employee on how CBDC design choices can overcome the risks.
It displays the coercive nature of CBDCs and the power it would grant central banks. Notice the choice of words: “limit”, “restrain”, “impose”, and “capped”. pic.twitter.com/AOYgGWU6Q4
— Sam Callahan (@samcallah) April 21, 2022
On CBDC development, they write, “The IMF is collaborating with the BIS, the CPMI, and the FSB to establish relevant guidelines.”
That’s multiple non-governmental organizations designing the future global financial system with zero oversight.
Who voted for any of these people? pic.twitter.com/FrztxsP3UL
— Sam Callahan (@samcallah) April 21, 2022
10.)https://t.co/pXQcLnCxqI
Lastly, this interview in the IMF’s flagship magazine, proves the IMF is well aware of the real risks posed by CBDCs but is continuing with its plans anyway.Author Eswar Prasad candidly explained to an IMF employee the danger that exists with CBDCs👇 pic.twitter.com/yfOtFh6Fxc
— Sam Callahan (@samcallah) April 21, 2022
This one argues for a transition to electronic money to enforce negative interest rates.
They stress that a design requirement of CBDCs is they must be interest-bearing to allow for the implementation of negative interest rates.
How about…no.🖕
— Sam Callahan (@samcallah) April 21, 2022
From their own publications, one can see how the IMF attacks Bitcoin.
They scold PoW’s energy and criticize Bitcoin for facilitating illicit activity to justify regulatory overreach.
They push CBDCs and centralized PoS coins as viable alternatives cuz they’re easier to control.
— Sam Callahan (@samcallah) April 21, 2022
PoW vs PoS/CBDCs and BTC vs ESG
These are the battlegrounds.
The IMF wants to push PoW alternatives because they allow them to enforce their unsound policies with impunity. Negative interest rates, surveillance, inflation, etc.
The IMF can’t exert its power & control with PoW.
— Sam Callahan (@samcallah) April 21, 2022
Only Bitcoin is decentralized & censorship-resistant. Its energy use enables it to function as sound, incorruptible money.
Bitcoin consumes ~0.05% of global energy consumption.
So why all the fuss about Bitcoin?
It’s because Bitcoin can’t be controlled..and the IMF hates that. pic.twitter.com/a0imgJgP60
— Sam Callahan (@samcallah) April 21, 2022
Tesla gets kicked off S&P ESG List, where Exxon Mobile holds a top spot.
Caller is Sick of Anti-Cryptocurrency Progressives
If Cryptocurrency Was Honest | Honest Ads (Bitcoin, Dogecoin, Ethereum, Stellar, and Binance Parody)
How to critique Bitcoin: a guide: Now with dice
You’re a Nobel prize-winning economist, or a tenured professor at a prestigious university. Maybe you run a deep value hedge fund. Perhaps you write a popular column on markets. You might be a central banker or a finance minister. You feel that your experience and your credentials grant you a thorough understanding of the world.
You wear dark suits (or, on a casual occasions, Patagonia vests), glide through airports with TSA pre, global entry, and lounge access, you wear round tortoiseshell spectacles, and you most likely live in a brownstone in Brooklyn. If you’re technologically-minded, you like the underlying blockchain technology, although you’re not entirely sure what that means. You have no trouble broadcasting your thoughts to the world — in fact, you are considered a trusted source of analysis on pressing issues of the day. You have opinions, and the masses ought — hell, they should be grateful — to hear them.
You’ve heard of Bitcoin. You do not like it. It’s rat poison, a ponzi scheme, and it’s boiling the oceans with its energy usage. It’s run by an uncouth federation of, presumably, alt-right-ers, or at the very least, ideological undesirables of some sort. It relies on curious, antiquated ideas like sound money, peer-to-peer networking, the abolition of seignorage, and censorship-resistance. It is profoundly distasteful.
You want to write a thinkpiece about Bitcoin.
You’re not sure where to start. You hunker down with a decaf soy latte and ponder the approach. Should it be the volatility? Currencies can’t be volatile, surely. Hyperinflation is a problem for the global south, not you. Maybe it should be the hacks. On NPR, you heard about the collapse of some Bitcoin exchange named after a Japanese… mountain? You reflect on the objectionable tone of those Bitcoiners on Twitter. Those trolls can be awfully rude.
Aha! You identify some core hypocrisy associated with the cyber coin. You read in the New Yorker that Bitcoin doesn’t actually support that many transactions. How could the damn thing be a world currency, at all? You vaguely remember some jargon about block sizes and TPS. You toy with the idea of looking up some usage stats. Better not. You have thinkpiecing to do.
Maybe you will target Bitcoin’s use for illegitimate purposes. You’re very comfortable with your financial life on SWIFT, ACH, and Paypal (if you’re feeling edgy). You couldn’t possibly conceive of a case in which you’d to transact outside of this regulated aegis. If you’ve got nothing to hide, why would you need privacy, after all, you muse to yourself. You recall reading a piece in the Guardian about Bitcoin usage in Venezuela due to hyperinflation. You dismiss the thought from your brain. Venezuela wasn’t real socialism, after all. You ask Alexa to pop on Maroon 5 and get back to your draft on google docs.
There’s so much ground to cover. Where to start?
A solution
I suggest a method to simplify your punditry. No more wondering about which arguments to fit into your piece. No more fretting over Austrian economics. No more trying to recall what your econ 101 textbook said about deflation. Bitcoin has consumed enough of your mental energy already. You want it to go away, but you don’t want to think about it too hard either.
I humbly propose instead:
The Bitcoin spin device
These dice will make those Sunday afternoons spent toiling over Op-Eds so much easier. Just roll these twelve-sided dice several times and transcribe the answers. Simply regurgitate the talking points. You are essentially a random number generator for Bitcoin critiques, so why not outsource yourself entirely?
Do the 2018 thing. Reduce the task to its essence. Automate your punditry. I’ve carefully included the most popular and sophisticated objections to Bitcoin, completely saving you the trouble. These dice represent the platonic ideal of criticism — anything else is garnish.
I’ve included a handy guide so you can easily parse the various objections to Bitcoin.
- 21m cap: as you know, there will only ever be 21,000,000 Bitcoins minted. You skimmed a recap of some paper and you’re now very concerned about the long term viability of the Bitcoin security model as block rewards shift to a fee-subsidy model after the next halving.
- Deflation: if Bitcoin were to become a dominant global currency, its capped supply might end up having deflationary effects. You know that your benevolent central bankers target two percent inflation to encourage people to spend and consume. You see no problem with that. You like spending and consuming.
- Dev. incentives: ICOs (initial coin offerings) offered software developers the chance to write open source software and get handsomely paid for it, too. Bitcoin is disturbingly meritocratic, and doesn’t pay its developers anything. You don’t understand why anyone would work if they weren’t getting paid. Bitcoin devs wouldn’t just do it out of the goodness of their hearts, would they?
- Energy waste: Bitcoin uses heaps of energy to secure the monetary system and retain the integrity of its ledger in a trust-minimized way. The US-driven fiat money regime relies on aircraft carriers and nuclear arsenals instead. You find the latter much more elegant. Its tangibility is comforting.
- Small blocks: for a while, Bitcoin capped its block size at one megabyte (now it’s effectively 2.3 mb). You think the system should attempt to scale right away, rather than being built in a layered manner — consequences be damned.
- Volatile: as an emerging virtual commodity, Bitcoin is extremely volatile. You think that risk in markets should be abolished, or at least suppressed through endless monetary expansion.
- No Turing (completeness): Bitcoin isn’t capable of supporting arbitrary computation, unlike competitors like Ethereum. That makes Bitcoin more conservative and less expressive at the base layer. You think developers should be free to experiment with billions of stored wealth.
- High fees: due to the capped throughput, Bitcoin has a market for block space. In times of congestion, users can pay a premium for higher-priority transactions. You dislike fees and would prefer immediate, global scaling — again, with no thought to the long term sustainability of the system.
- Selfish mining: you may have heard about this potential edge case in Bitcoin mining, and have decided that the Proof-of-Work consensus system is a write-off, despite ten years of reliable functionality. If you really want to impress your friends, dredge up this exotic line of attack.
- No KYC: Bitcoin is a permissionless system that anyone on earth can use to store or send their wealth. You don’t like the idea of free flow of money or untamperable wealth. You believe in capital controls and the USDA food pyramid. You prefer your steaks well done, and your money under the watchful gaze of the government.
- Toxic fans: style is far more important than substance. Maintaining decorum in an argument matters far more than being right. Bitcoiners like to rudely call out ICO scammers and fiat-gorging central bankers alike. That’s not very nice. And nice makes right.
So there you have it. You are now free to launch somewhat erudite critiques of Bitcoin without learning about the system at all! If you want, you could even devise an encoding scheme for the dice, so you don’t even have to bother typing out the objections in full. Your next NYTimes column could simply read “4–11–5–6” and your readers will nod in understanding — Bitcoin will fail due to the energy waste, the toxic fans, the small blocks, and the volatility!
The dice are real. You can buy them today on Bitcoin’s lightning network at Quinsolo for 0.001 BTC (~$3). Cast those dice with confidence, fiat-inflationists.
When he’s not selling novelty dice, Nic is the co-creator of coinmetrics.io and a partner at Castle Island Ventures.