Crystal Ball Gazing: Independent Capital

In the coming decades we will see truly independent capital that will have the ability to mould the future in ways previously not available.

Capital comes in many forms—financial, social, human, etc. We are often under the illusion that each form of capital is non-deterministic of its past. However, the value of capital is significantly influenced by its historical context, as well as factors such as market dynamics, innovation, and regulatory changes. For instance, technological advancements and policy shifts have historically altered the valuation of financial assets and social capital (Bourdieu, 1986; Putnam, 2000).

If the past exists and the capital was not created from nothing with the intention to be free, it's not independent.

While many collective innovations determined the path for BTC to become the world-stage asset that it is today, this also creates confusion about what it is and why it is where it is today. Bitcoin provides a way for capital to be independent of location, status, political belief, and age. One can get trapped in the details but it really is this simple. However, it is crucial to acknowledge the historical dependencies that shaped Bitcoin's development, such as cryptographic research and early adopters. Understanding these dependencies provides a more nuanced view of Bitcoin's independence (Nakamoto, 2008).

99% of the "thought leaders" within the crypto industry argue that BTC is a dead rock and that scaling a zk-rollup-powered Layer 2 will drive the next wave of innovation. These technical leaps forward do create value and are steps forward for society, but not at the scale of independent capital. These are the rails that provide independent capital a path. Technological advancements can significantly alter how capital is accessed and utilized, reshaping financial systems in profound ways (Jack & Suri, 2011).

From first principles, the rails do matter, but not immediately intuitively. The main factor is that incentive alignment is often misaligned from the outset. Independent capital cannot be created when it is funded. It sounds counterintuitive, but only without being accountable can you truly be free. However, this does not mean that accountability is without value. Accountability can foster trust and stability, which are essential for the sustained value of capital (Ostrom, 1990).

You need to have the available resources when the time comes to shoot your shot. One major flaw with BTC is that its distribution is so widespread and no capital is reserved. Imagine if some well-aligned early contributors had 80% of the BTC, but the decisions to use that capital were able to be questioned only via the miners who contributed to the early stages of the network. This critique highlights the trade-offs between centralization and decentralization, and how different models of capital distribution can address various challenges while preserving the principles of decentralization (Buterin, 2014).