All the discussion around the Infrastructure Funding Plan (IFP) has been extremely stimulating. I have spent a lot of time thinking about its implications, and the motivations of people behind their support or opposition. I think that in order to stay sane, we have to realize something: we have spent our entire lives under the rule of governments. Many of us live comfortable lives and are content paying a significant portion of our income to our respective governments because we are conditioned to think that there are no viable alternatives.
Central-planning is inherently flawed. Even if we completely eradicate corruption, no human – however virtuous – can possibly do a perfect job in terms of planning how and where tax money is spent. In the real world – and by experience – spending other people’s money is a recipe for disaster. It also increases the marginal cost of a running society. You have to pay people to plan where the money should go. The world’s greatest recessions and economic downturns were caused by the decisions of humans. Those very decisions are what fueled the creation of Bitcoin in the first place.
With tomorrow’s computational power and wealth of data, it might be conceivable to create a government directed by AI that would allocate money where it is truly needed. However there is a much simpler solution that has been staring us in the face.
In economics, a free market is a system in which the prices for goods and services are self-regulated by the open market and by consumers. In a free market, the laws and forces of supply and demand are free from any intervention by a government or other authority and from all forms of economic privilege, monopolies and artificial scarcities.
In Bitcoin Cash, the IFP would break the current free market, where the market decides what is and isn’t valuable. The issue of funding developers working on the Bitcoin Cash public goods has to be solved without breaking the free market.
I won’t go into detail about why the IFP also breaks the incentives in Bitcoin Cash, because @fatalglory already did a great job with that: https://read.cash/@fatalglory/a-rothbardian-evaluation-of-the-ifp-f69ada2e
We are trained and educated to believe in Statism. We are brainwashed to believe that there is there no alternative. We are trained to be lazy; it is so easy to not have to worry about these difficult and complicated topics. All we have to do is go to school, find a job, and watch TV when we get home.
A significant portion of the support for the IFP stems from the fact that we are all encouraged by society to believe in the state, to find comfort in authority and to even trust in it, as it betrays us time and time again. Politicians wouldn’t lie to get elected, right? They wouldn’t manipulate us for power? It’ll totally be different next time, right?
One of the most powerful concept in Bitcoin is that it is completely trust-less. Unfortunately the IFP breaks this principle with the introduction of the whitelist. I am confident that every member on the whitelist has the interest of Bitcoin Cash first and foremost, but I refuse to introduce trust in the Bitcoin protocol. Humans are fallible, the protocol shouldn’t rely on that.
When Bitcoin was created, there was a need to distribute new coins in an efficient and fair way. If Satoshi had given himself all 21M Bitcoins, you can be sure it would have never taken off. He could have given some to people who were interested in p2p electronic cash, but all this (and most conceivable alternatives) is incredibly inefficient. The block reward acts as a “double-whammy” because it distributes new Bitcoins fairly and efficiently following economic incentives, and rewards the miners’ investment in hardware, real-estate and electricity, thus ensuring the security of the network.
While a lot of people have concluded that it’s disingenuous to say that the IFP is a tax, there is also the misconception that it is a fee. The IFP is not a fee in the same sense that users will pay a fee to miners for their transactions to be included in a block, because the miners can only take the fee after the block has been mined, not before. What the IFP truly is, is a form of rent-seeking.
Rent-seeking is an attempt to obtain economic rent (i.e., the portion of income paid to a factor of production in excess of what is needed to keep it employed in its current use) by manipulating the social or political environment in which economic activities occur, rather than by creating new wealth.
While funding Bitcoin Cash public goods is an extremely worthy endeavor, rewarding (or paying) parties before any work is done goes against the economic theory that we all bought-in when joining the Bitcoin (Cash) community. It’s the reason why monopolies, governments and large corporations protected from competition by gate-keeping laws are so inefficient, corrupted and wasteful.
The most qualified person to spend your money is you, and nobody but you. We all got into Bitcoin (Cash) because it challenges the status-quo, and has the potential to drastically change and bring more fairness and equality to the world.
That’s what the IFP truly is: a Statist’s solution to funding. And I don’t mean that in a derogatory way, or as a way to start argument based on what we each identify with. I mean that in a very simple way:
If you believe that the state is legitimate, it only makes sense to try and install state-like authority and central-planning in a system that is organically anarchist.