1/ Cryptocurrency will affect Bankers in much the same way the printing press affected the Catholic Church and democracy affected Kings.
2/ A quick political science concept to understand why.
3/ Selectorate theory in political science is the theory that the larger group which has influence over the government, the better that government tends to be.
4/ Democracy is a better form of government than dictatorships, not because presidents are intrinsically better people than dictators, but simply because it's harder for presidents to collude, coerce or cheat to get things done.
5/ If a ruler wants to maximize their power, it's better to have a small selectorate (e.g. a group of five warlords) rather than a big selectorate (e.g. five hundred representatives).
6/ The larger the group, the harder it is to coerce, bridge and control all of them.
7/ Citizens obviously want the opposite: a bigger selectorate makes it harder for an autocrat or dictator to get their way.
8/ Selectorate theory extends beyond just politics to any power structure.
9/ The printing press allowed individuals to read the Bible and decide how to interpret it for themselves which reduced the power of the Catholic Church and enlarged the selectorate of Christianity.
10/ One of the properties of bitcoin and other cryptocurrencies is what @VitalikButerin has called the defender’s advantage. (medium.com/@VitalikButeri…)
11/ It means that using cryptography, an average person can defend themselves from even state-level actors.
12/ Cryptography is one of the very few fields in the 21st century which continues to heavily favor the defender.
13/ (See ch. 1 here for the math behind this - d28rh4a8wq0iu5.cloudfront.net/bitcointech/re…)
14/ Bitcoin is often called a censorship resistant store of value.
15/ The Defender's Advantage is what creates censorship resistance.
16/ The Defender’s Advantage afforded by cryptography and embedded in cryptocurrencies offers a mechanism to distribute power and enlarge the selectorate of money.
17/ In this way, it’s not unlike the printing press.
18/ The printing press enlarged the selectorate of religion.
19/ Because of the defender’s advantage, cryptocurrency will enlarge the selectorate of money.
20/ Currently, the selectorate of money is a relatively small group.
21/ A few hundred bankers working for governments and the largest private institutions get to define what sound money is.
22/ Though certain institutions might try to stop this, in the same way the Catholic Church tried to stop Protestant sects from splitting off, the asymmetry of the defender’s advantage makes extremely expensive to do so.
23/ In the same way having a large selectorate in a democracy forces presidents to behave better to retain power and having a larger electorate in Christianity forced the Catholic Church to behave better...
24/ having a large selectorate in the realm of money would force better behavior on bankers.
25/ In 2008, the world realized the cost of bankers behaving badly was higher than anyone imagined.
26/ A small selectorate of bankers nearly brought the global economy to its knees.
27/ This is not to say bitcoin or other cryptocurrencies will be a panacea.
28/ But democracy is no panacea either. It is, as Churchill said, “the worst form of government except for all those other forms that have been tried.”
29/ Bitcoin may be the worst form of money except for all the others that have been tried.
