Months of research and 82,000 words later, The Chain series has concluded – at least in its current online form. What began as a simple investigation into the stablecoin issuer Tether quickly unraveled into a decades-long web of figures, companies, investors, and technological mechanisms that conspire to build what is referred to as “The Bitcoin-Dollar” system. This financial instrument consists of two main components; the first being Bitcoin itself, a distributed digital asset boasting deflationary monetary policy and trustless settlement on a transparent ledger; while the second is privately-issued tokenized government debt that operates on public blockchains, known as dollar stablecoins.
These two elements could not be further separated in regards to the publicly-stated ethos of their champions. Bitcoin will circumnavigate the government, and separate money from the State, while stablecoins aim to strengthen the dollar as the world’s reserve currency, provide much needed demand for government-issued debt reserves, and further perpetuate the U.S. dollar as the de facto medium of exchange to the unbanked citizens of the globe. At the surface, Bitcoin and the digital dollar appear as if oil and water, unable to co-exist in the same space, and molecularly opposed.
And yet, collectively, the dollar and Bitcoin are to form the backbone for an entirely new financial system, a yin and yang construction that allows an entirely new commodity class to co-exist with a hyper-dollarized world. It was my opinion before embarking on this research vein – see 2021’s The Birth of The Bitcoin-Dollar – that the coincidence of this structure emerging at the onset of the U.S. government’s greatest-yet threat of a debt crisis was likely not an accident. Upon further investigation of the primordial Bitcoin community, and the ensuing class of stablecoin issuers – not to mention the cross-section of these parties – I must unfortunately now conclude that the emergence of this system immediately after the 2008 financial crisis, and the subsequent phase-shifting adoption of Bitcoin by the institutional authors and beneficiaries of the pandemic’s financial stimulus, was the work of a modern intelligence community that has merged with the Silicon Valley technology meridian since at least the 1980s, but unabashedly since the formation of the CIA’s venture firm In-Q-Tel just before the turn of the millennium.
While not a popular opinion in many circles, the patterns are visible of the now-merged intelligence, organized crime, bankers, venture firms, and technologists within the story of The Chain, and thus the formative incubation of Bitcoin itself. Take for example, Brock Pierce, an early pioneer of virtual assets who worked with Goldman Sachs’ Steve Bannon and modern economists to trial monetary policy experiments in online video games, and whose fellow co-founders of the Digital Entertainment Network – Marc Collins-Rector and Chad Shackley – were both found to be sexual criminals with large stashes of underage pornography. As an early Bitcoin evangelist with his hands in the venture pie of nearly every important exchange and software company within the early blockchain space, the former Disney star Pierce reeks of a private-sector, blackmailed agent of the currency speculator stalwarts that have run the public sector in the shadows. Pierce tellingly commented that “if the government were knocking off people in this field, I would know,” upon the drowning of stablecoin developer Nikolai Mushegian just days after Mushegian stated that the CIA, the Mossad, and the “pedo elite” were going to kill him.
Operation Underworld, one of the earliest unions between organized crime and the early U.S. intelligence apparatus (dominated by Wall Street bankers and lawyers), demonstrated the need for the intelligence state to partner with mob affiliates for better data on ports of the U.S.’ east coast during the second World War, and thus this merger – as outlined eloquently and prudently at the onset of Whitney Webb’s One Nation Under Blackmail – perfectly exemplifies the reasoning for the mafia and the State to work together – networks, information, and money. In the 1940s, the networks were smaller and slower, the information lossy and hard to transmit, and the money was greenbacks – paper bills that, while serialized, were quite hard to track.
Interestingly enough, it was likely the emergence of more advanced surveillance techniques by the Treasury, the IRS, and their law enforcement partners, that led to the arrest of many figureheads of the 20th century crime syndicate. But these arrests did little to stop the flow of goods from drug runners, bootleggers, and human traffickers, among the many other trades of the blackmarket. In fact, it appears that the intelligence apparatus simply stepped into the void left from the controlled take down of the mob, leading to further consolidation within the centralization of the off-shore dollar market. Off-shore markets are essential to the modern intelligence state, which fights to service the budgets of its black-book operations using clever accounting schemes to launder payments, while also investing via private-brokers into private companies built to privatize projects that were once fully-siloed within the national security state’s jurisdiction.
Take, for example, Peter Thiel’s Palantir, a CIA-cut out that developed as the private-sector iteration of DARPA’s TIA, or Total Information Awareness, which was founded after advisement from the CIA’s Alan Wade and the architect of TIA, John Poindexter. Today, Palantir feeds off of billions in government contracts to satisfy the brokering of data needs of both the public and private sectors. Their first customer was the CIA, who also provided the seed money for the founding of the firm, and they were subsequently funded by the CIA’s In-Q-Tel. They even accept Bitcoin. But before Palantir was officially incorporated, it began as the anti-fraud algorithm at PayPal, known as “Igor.” PayPal’s first institutional investor was the California tech incubator Idealab, whose founder Bill Gross would later go on to start Near Intelligence Holdings, the “world’s largest source of intelligence on people, places and products.” Gross’ GoTo.com/Overture holds the patent that upholds Google’s AdWords – the backbone of Google’s monetization, which remains critical to the U.S. economy. Palantir itself holds 160 patents for their global surveillance network that all reference patents held by Gross.
Even PayPal’s first board member Scott Banister was a Vice President at Gross’ Idealab, who lent his Palo Alto couch to PayPal’s cryptographer and CTO Max Levchin the week he first met Peter Thiel. The aforementioned Brock Pierce ran the Clearstone Global Gaming Fund formed out of the Idealab facility Clearstone Ventures, which was co-founded by Bill Elkus, a trustee of Jeffrey Epstein’s J. Epstein Foundation. Steve Bannon, Pierce’s “right hand man,” filmed Epstein for 15 hours as part of a failed effort to rebrand Epstein after arrests for sex crimes, and Howard Lutnick – the CEO of Cantor Fitzgerald which holds the Treasuries backing Tether’s USDT stablecoin – bought the home neighboring Epstein’s own (which was previously owned by Epstein) for “$10 and other valuable consideration.” Lutnick, the current co-chair of Trump’s transition team, also sits on the board of the Tether-funded, Earth observation satellite firm Satellogic alongside former Treasury Secretary Steve Mnuchin, which aims to provide anyone with the funds to gather human movement data and commodity surveillance from their fleet of cameras orbiting the planet.
All this is to say, it can be hard to know where the lines between the mob and the intelligence state are drawn. But make no mistake, The Chain‘s construction was not intended to be as transparent as the blockchains they manage. Nor was it built in a day. Ironically, it was likely our government’s own want to circumnavigate their own legislation that pushed the intelligence state firmly into the private sector.
When bureaucratic red tape – see: The Constitution – prevents the acquisition of certain personal data of citizens from government-funded data brokers, the private sector becomes available as an enabling environment for otherwise unconstitutional surveillance. Many of the defenders of the free market, which are certainly rooted in well-read intentions, miss that the regulation and deregulation via the public sector leads to a further lack of competition in the formation of king-made networks and market monopolies, which often lead to further customer restrictions on speech, all within the framework of supposed free markets. The internet and Bitcoin’s blockchain take a similar misdirection dialectic, but via a differing philosophy – decentralization. Bitcoin is less decentralized in nature than it is distributed, with its consensus mechanism standing across rungs of infrastructure that uphold our internet, and the panopticon leviathan living inside its fiber optic cables. No longer will the Federal Reserve’s 12 regional Fed banks decide monetary policy or limit reserve settlement to those within their regulatory regime, but the energy generators, the chip manufacturers, and the internet service providers – at both the software and hardware level – become the new industries of consensus. The neo-banks, likely to emerge from FinTech-integrated social networks – an industry pioneered by Peter Thiel at PayPal and Facebook– are ready to embrace the oncoming regulation presumed to be imposed at the onset of Trump’s second term.
There were millions in campaign financing waiting for a candidate to so brazenly champion the blockchain industry, and thus Trump’s campaign pivot on Bitcoin should be of no surprise. It his affinity for stablecoins however – no better exemplified than his appointment of Howard Lutnick as co-chair of his transition team, whose firm Cantor Fitzgerald holds billions in government debt for Brock Pierce’s Tether (not to mention hundreds of millions in Bitcoin) – that offer a quiet-part-out-loud insight into his plans to service our ballooning debt via the sale of securities to the blossoming stablecoin industry.
Trump would even go on to announce his own blockchain project, World Liberty Financial, with a stated mission to extend dollar hegemony via tokenized dollars, with the co-founder of Paxos, Bill Teo, chosen to lead its stablecoin component. Paxos was the former partner of Facebook’s stablecoin project, Libra/Diem, and currently issues PayPal’s own dollar stablecoin, PYUSD. While these stablecoin issuers might offer a way out of massively irresponsible fiscal policy, and certainly remain mission critical to the “tether”-ing of Bitcoin’s price appreciation to the U.S. dollar system, luckily they do not retain any direct control over Bitcoin’s blockchain. Yet, with the proliferation of investment into Bitcoin mining firms and computation farms, and an amassed fortune of Bitcoin the asset, those surrounding the neo-money printers of the Digital Federal Reserve are set to capture any ground the Bitcoin community cedes in their supposed fight with the State.
It is, of course, important to note that who made Bitcoin is significantly less important than who stands to benefit from it, in no small part due to its distributed and decentralized nature limiting any singular body from perverting its monetary policy and diluting the capped supply. This is a state change of money, and demands an honest introspective investigation of the net benefits of a capped monetary supply in neutering the State’s ability to debt pardon en masse. It is only upon a deep distilling of the commentary coming out of the mouths and think pieces from the affiliates of The Chain that one can begin to visualize the mechanisms being built to allow the United States government to, in fact, use Bitcoin and stablecoins to debt pardon – at least, crucially, one more time. Regardless of the success of the Bitcoin Strategic Reserve now being proposed by Senators adjacent to the incoming second Trump administration, the freedom derived from blockchain-native assets likely remains strictly economic for a select few, while the programmability and surveillability downsides of privately-issued stablecoins on public blockchains remain as fear-worthy as the CBDCs we have learned to reject.
So what solutions are available to combat the effects of the careful, discrete construction of The Chain system? For starters, the rejection of all dollar instruments native to the Bitcoin blockchain itself. Bitcoiners should learn from the dollarization of Ethereum, and how the proliferation of stablecoins centralized consensus and opened entirely new cans of regulatory concerns. In addition to the simple prohibition of tokenized government debt on chain, Bitcoiners would be smart to optimize consensus today to encourage and enable self-custody and transactional settlement for not only the many billions of world citizens that do not current hold bitcoin the asset, but also the billions not yet born. Stablecoins are not an appropriate scaling mechanism for a new financial system – it is simply a worse implementation of the current debt-based monetary system, with privacy, programmability and surveillance concerns. The beauty left in Bitcoin is that, while its monetary policy can never be perverted, its consensus remains malleable by nature of being software, and thus can be enhanced to service a global economy of those wanting to opt out of the current system. This lever should be explored at great length and with great haste by the technologists and dissidents still active in the Bitcoin industry.
The main flaw in the thesis presented in The Chain, according to its author, is why exactly would the PayPal Mafia and its ilk perpetuate tokenized dollars pegged directly to U.S. government debt, while simultaneously building tools to privatize monetary issuance, allowing real world assets to back exchangeable digital twin counterparts on blockchains? This question poses many follow-up threads for discussion, but perhaps can be answered by a need for U.S.-based stalwarts – cartels, for lack of a better word – to preserve the public-sector as a legislative body and regulatory regime due to its role as an enabling environment for their de facto monopolies. As Thiel said, due to know-your-customer regulation that appeared after the events of September 11, 2001, perhaps a company like PayPal could not have virally grown in the manner that it did prior to that world-altering event.
The power structures of the United States government actually prevent newcomers from gaining serious marketshare over their king-made platforms, such as Facebook and PayPal, via the enforcement of copyright and patent law, not to mention domestic and international sanctions. Want to play ball in the largest buyer economy in the world? You best respect the IRS, the SEC, the CFTC and the regulations and executive orders they strive to uphold. Unfortunately, as we have seen with the current stablecoin bill referencing the controlled collapse of FTX and Terra-LUNA, the games – crimes, for lack of a better word – of the private sector can have serious implications on the language of legislation, and purposefully be used to king-make their chosen companies and Neo-financial institutions.
The critics of the warnings outlined in The Chain are quick to point to the Trojan Horse meme, which proposes that the synergy between the monetary policy of the State with Bitcoin’s decentralized nature will progressively diminish the State’s control over our lives, limiting the manipulation of interest rates and the issuance of money itself. The intention of The Chain was never to dissuade participation in what remains a very alive game, nor was it to express doubts upon Bitcoin’s imminent appreciation. In fact, upon deeper examination, it is quite the opposite, and Bitcoin must appreciate greatly for this debt swap to play out favorable for the United States. There is clearly plenty of opportunity within the Bitcoin-Dollar’s birth – an opportunity we hope many builders and problem solvers take. The risk we broach is not of whether or not monetization occurs, but instead the issues that arise from that exact occurrence, from Bitcoin’s appreciation itself – mainly, the extension of U.S. empire and the “boon for surveillance” provided by public blockchains as described by a former CIA Director.
Bitcoin, like money itself, is simply a technological tool. This tool has many differing properties depending on whether it is wielded by an individual or the State itself. Ultimately, it is simply irrelevant if the State or cypherpunks published the Bitcoin software. However, if the proliferation of tokenized government debt settled on public blockchains occurs alongside the adoption of an increasingly difficult-to-spend digital commodity like Bitcoin – especially when held in large quantities by government-affiliated entities – and these strange bedfellows become the determining factor in the fate of our country’s debt problem, then maybe the cypherpunks have inadvertently solved the largest empire’s most pressing problem.
Or perhaps it was us, the dissident economists and technologists, that were tricked, and the United States has once again kicked the world reserve currency can down the road another thousand years, conveniently at the onset of the deflationary age they most likely dawned.
