Will El Salvador be the Chicago of the great pre-hyperbitcoinization interregnum?

This morning Stacy tweeted out a comment about El Salvador, which inspired me to write a 1300 word reply sharing an alternative perspective, which is largely a summary of my thinking about the idea of composite currency contracts. This is the first thing I have written on the matter since finishing reading The Futures yesterday, a book I heard about from Junseth. I read the first half a year ago.

Except a bitcoin node is a "central bank" you can carry around in your pocket nation-based banking services not needed.

El Salvador could become the new Chicago however in the interregnum between fiat and bitcoin, that few have considered. An impromptu essay on the matter:

Chicago because of its centrality to the rise of futures exchanges, and the fact that forward contracts will be the principle tool that facilitates and smooths the final transition to a bitcoin standard -- standard referring of course to a standard of value, the 4th monetary function that has been swept under the rug incorrectly as unit of account, which hides its complexity amidst transitionary states -- Austrian economic theories are flawed like General Relativity in that they are true in equilibrium, but breakdown at singularities.

The fall of fiat to 0 is literally an economic singularity, and like black holes, people often try to ignore them and just consider what's on either side. Fortunately, I figure out the grand unified theory of hyperbitcoinization, and it is rather revealing of bitcoiners broadly that there has been such an abject failure to learn about it.

The premise is rather simple: the US dollar is far and away the best mono-monetary-component standard of value, that is, denominator in contract that obligates a series of future payments, which must be set in advance for the same reasons that firms exist as Coase explained, rather than a world of free agents negotiating each atomic element of every transaction (imagine if you negotiated the price of lettuce as you attempted to purchase a sandwich -- bundling exists for a reason! -- and bundling must occur in TIME as well, as is apparent even informally through the notion of relational contracts, which labor contracts will fall under (hence @runcaliber, a startup that bitcoiners failed to fund. Embarrasing (for them -- for me by association as being of the same species, but I digress)!)

Yes, bitcoin is not only not the best, it is in fact entirely unusable today as a mono-monetary-component standard of value (I have explained it before, just think through it in any real business context). It is the best in the equilibrium state post-hyperbitcoinization, but we are not in that world, so again, we arise at the question of the singularity. Savings are trivial in that a person may fractionalize there savings, starting with a little bitcoin, and then more as there understanding grows. Similarly, a standard of value could also be fractionalized, it is simply seldom done so the notion is wholly unfamiliar to people, even if they are deeply familiar with bitcoin -- it is as foreign a notion to think about contracts in this way as it is to think about the nature of money as a nocoiner who does not even entertain the notion that this is a question one perhaps ought to consider.

But anyone who truly cares about hyperbitcoinization must. So back to the mechanism I am getting to, a fractional standard of value is best enabled via insertion of forward contracts in a way that seems rather convoluted at first glance, but is the only way to resolve what will occur. Quantum mechanics is also tricky to grok. Forward contracts are how one can effect fractional value standards in non-atomic (i.e. a bundled time component, not ~instantaneous settlement of the variety seen in a 1-time consumer purchase) contracts. It seems absurd, but it is less absurd than the alternative, which is a totally discontinuous jump from the dollar being the best single-component standard to bitcoin being the best single-component standard. Obviously, a composition is superior to both, today, pre-hyperbitcoinization, and the question becomes one of ratios.

Moreover, such compositions may incorporate all sorts of equities that are fungible, transferable, and measurable, as components of pseudo-monetary instruments. This leads to a flywheel effect as it changes the properties of those assets and their risk dynamics for it is a means of further monetization. I call this financialize-to-definancialize, for bitcoin demonetizes everything, and pushing P/E ratios up boosts equity risk!

I accuse all bitcoiners of being intellectually lazy! Many words are shed to discuss the end state, yet few bother to think about the dynamics of this end game. Do not be like the amateur chess player who can swiftly find checkmate after the game has been won.

As Satoshi said, as soon as the first version was released, the major parameters were set in stone. Of course there is much rabble these days and core development is still needed, but there are significant bounds to the sorts of things that might arise from that in terms of things that are economically interesting. What I am discussing is the most interesting thing to think about, and the most critical path of human civilization, for bitcoin does fix everything.

It is in this era[sic] where El Salvador could dominate. And yes, such contracts absolutely require a jurisdiction to take place in and sound rule of law. This is biggest opportunity in the world, and it is difficult for me to think much about it when no one else wants to react properly to it because I deeply understand its inevitability (though @beautyon_ mentioned to me no one else will build, which has a deep element of truth in the short to medium term). The things I wish to build in the physical world can transform the world today, with machines and technologies that are brought into the world decades before they might have had I done nothing. These ideas as the bitcoin on the other hand are not multiple decades, but 1 at most, and I suspect 3-6 years as more realistic.

But there is more than just the degree of advancement, it is about what one gets at the end of it, what is achieved with hyperbitcoinization... and it is a quirk to that transition, which has so profoundly shifted my thinking -- I realized the critical event, the critical time, to the so-called fixing of everything, hits an inflection point not upon the year of hyperbitcoinization, but 2-3 decades later I estimate. This is because the mechanism of fixing is not via positiva of a great many brilliant bitcoiners, though some will surely exist, but the via negativa aspect of people losing their bitcoin after being foolish once -- it is my suspicion this will be a sort of exponential decay where there will be much tumult and foolish losses in the first decades, only after which will the perpetual era of hyper-efficiency truly begin.

What's more, over the years, the more bitcoiners I interact with (though there are many I like), the more I do not think the actual values match the stated values -- the desire for technological advancement, beauty, and such is most often affected. This saddens me, but it is a reality I must contend with.

Amidst a world in which even bitcoiners do not bring themselves to become interested in that which most greatly accelerates hyperbitcoinization is a world in which I am unlikely to live to see the beginning of the fixing of everything. Such a world is one in which I must take a more myopic focus and simply built great machines to fix that which I can today.

However, if there were to be some pivotal shift in this arena, some sincere desire for El Salvador to be at the foundations of this interregnum financial tooling I described, and anyone were to think that I have some value to add to that development, as it seems reasonable to think might be the case given I have written more on the subject than everyone else in bitcoin combined (even looking at this tweet alone), that is the singular thing that would lead me to entertain moving to El Salvador.

Hope all is well, Stacy. Wishing you, Max, and El Salvador all the best.

[Original tweet: https://x.com/DiracDel/status/1812905915483627778]

Unrelated: I am working on fixing the seed oil problem at a global scale, potentially working with El Salvador by helping them become the first region in the world to become totally “seed oil free” with zero increase in costs. Follow @LoLaOil_, subscribe to the mailing list (https://trylola.com/) to be notified of the launch of the consumer product (macadamia + coconut oil blend), and reach out if you are interested in taking a look at the LoLa Oil pre-seed (anti-seed?) pitch deck.

I also have red light therapy devices you can buy in bitcoin: https://based.getchroma.co