Bitcoin does the same for businesses as it does for individuals: it gives them more freedom. In the aftermath of large government companies adding bitcoin to their balance sheetI want to explore the bigger implications of companies adopting Bitcoin.
As companies adopt Bitcoin, they will begin to gain new levels of sovereignty and influence over the state and increase their ability to trade globally. Today, bitcoin is still an alternative treasury, but as larger and more powerful organizations start using Bitcoin directly, they will begin to tear away from the reach of governments. This in itself will challenge the dynamics of governance and the nature of nation-states as we know them today.
In this article, I will break down the tenants a business needs to gain sovereignty with bitcoin today and also explore what the future of a sovereign business holds.
How to Establish the Future of a Sovereign Company
Step One: Keep the treasury in bitcoin and release the wallet with cold hard monetary energy.
Of course in the cases of both Square and MicroStrategy, there were business reasons for converting parts of the balance into bitcoin. However, it is not enough for a company to simply hold bitcoin to become a sovereign corporation.
To become truly sovereign, a business must run a full node and keep its own keys in a geographically dispersed way.
Step two: Self-custody of the bitcoin.
By keeping your own Bitcoin private keys, you benefit from all of Bitcoin’s censorship and confiscation-proof features. These features drastically reduce the cost for a company (or individual) to break from a geography or jurisdiction of all their value.
Step Three: Get full geographic mobility and control and use jurisdiction arbitration.
This kind of geographic sovereignty was extremely expensive and complex before Bitcoin.
With Bitcoin, a user or, in this case, a company simply keeps their bitcoin keys so they can connect to the internet of value and commerce.
Yes, it is still inconvenient, but the key is that it is now possible to operate globally outside of the existing system. The alternative economy is here.
But what exactly is jurisdiction arbitration?
Jurisdiction arbitration, geographic arbitration or political arbitration is establishing in very regulatory friendly countries while still serving a global customer base. Jurisdiction arbitration is especially suitable for Internet businesses and services. It is often frictionless and inexpensive to establish in a favorable jurisdiction, but serve customers in less friendly jurisdictions.
Sovereign companies are companies that have adopted Bitcoin as their reserve currency, own their bitcoin and have created a legally favorable and mobile construction.
The foreseeable future will be hostile to sovereign corporations. Sovereign corporations will need to be nimble to circumvent the taxpayer and the arbitrary and cumbersome restrictions that major predatory jurisdictions seek to subject a sovereign corporation.
A Look to the Future: Statutes of the Nation-State
What are the consequences if a company becomes sovereign? We can investigate this by looking at the BitMEX case study.
In early October 2020, the Commodity Futures Trading Commission (CFTC) and other US-based agencies launched an attack on the legendary Bitcoin leveraged exchange BitMEX.
US authorities arrested BitMEX co-founder and CTO Sam Reed in Boston and issued arrest warrants for the exchange’s other co-founders. After paying his bail, Reed is currently out of custody, although he is not free to travel.
This wasn’t the first time the US had attacked a cryptocurrency exchange, but this time things turned out differently than ever before.
BitMEX is a unique, large exchange in the sense that it never hits fiat during its operations. The whole company only works with bitcoin. When the US attacked, it took Reed, who lived in the US, into custody. The remaining BitMEX team was out of reach of US officials and successfully bypassed custody.
BitMEX was ordered to stop operations, but because the monetary base was only BTC, the CFTC could not arbitrarily seize BitMEX’s funds.
This is an example of Bitcoin’s attack-resistant properties in action.
As BitMEX still had full control over its Bitcoin keys, customers were still able to withdraw their funds and, since the initial attack, BitMEX has commented that the exchange will continue to operate and that senior leadership would step down so new leadership could run the business. continue.
This turn of events illustrates BitMEX’s unprecedented degree of sovereignty and defensibility against the government of the United States, the most powerful organization in the world.
I would argue that BitMEX has gained a level of sovereignty thanks to Bitcoin that was only in the hands of nation states before Bitcoin’s existence.
The key to unlocking this sovereignty is the combination of a Bitcoin standard and jurisdiction arbitration. With this formula, any large organization can become sovereign.
In a world with huge tech giants like Apple, Google and Amazon already pushing the boundaries for business sovereignty, it’s not too far to imagine how Bitcoin’s features will accelerate this. At some point, large corporations will have to become sovereign.
As major governments begin to micromanage both small and large companies, these companies have two choices: comply or forgo. Bitcoin solves countless problems for almost every type of business, including this one.
As more and more companies turn to Bitcoin to stunt inflation, they will inevitably increase their own sovereignty by an order of magnitude as well. Imagine Facebook or Apple’s bargaining power with even the largest nation-states in a world where they hold their reserves in uncensored digital gold and their executives are all multinational sovereigns themselves.
This future is not far from today’s reality.
We have the technology (Bitcoin) and companies are applying it (bitcointreasuries.org).
I really have no idea what the future of the business organization will look like. I don’t know if it will come in the form of Decentralized Autonomous Organizations (DAOs), or if Google is simply adopting a Bitcoin standard and seceding from the US. What I do know is that Bitcoin companies and individuals will have enormous amounts of sovereignty and control and, as the world gets on board with Bitcoin, companies will be much more sovereign.
As stated in the prophetic book “The Sovereign Individual,” the mega-political return on violence has shifted. Thanks to Bitcoin, smaller organizations and jurisdictions will be able to compete with larger, more powerful, and they will create the conditions that businesses need to serve the internet economy by playing from a home base that will not regulate them.
The macroeconomic consequences of this will change the human experience for the better. People and companies will have choices due to competition around the world.
This is a guest post from Christian Keroles. The views expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.