Other Means Principle

Bitcoin is an act of resistance, an attempt to "gain a new territory of freedom." Freedom contracts through the constant pressure of compulsory financing of the state. It is typical that freedom is expanded through bloodshed, with the specific objective of reducing state power. Bitcoin cannot eliminate the need for personal risk in achieving this objective. However, through risk sharing it can potentially reduce the inflation tax without spilling blood. This will not eliminate tax, however it will reduce state power by making tax significantly more visible.

This conflict between state and individuals for control of money will pass through three phases. These phases will overlap and vary regionally, but are each clearly identifiable.

1. Honeymoon
2. Black Market
3. Competition

The honeymoon phase is characterized by a desire of state agencies to retain regulatory control over the movement of money and securities. To this end pressure is applied at points of aggregation. As pressure on pooled miners and centralized merchants increases, cost rises and utility drops. The money then necessarily becomes more distributed.

As it becomes apparent that controls on points of aggregation are insufficient enforcement, and the awareness surfaces that seigniorage is at risk, transaction in and mining of Bitcoin is outlawed. As states collaborate to protect their monies, this may become a global "war" akin to the "War on Drugs", i.e. the "War on Bitcoin". This may coincide with adoption of an official new money, i.e. Fedcoin. The objective would be to appear to embrace a "safer" money than Bitcoin while retaining the advantages of electronic fiat. The two essential elements of Fedcoin are (1) a hard fork to allow introduction of new units based on the signature of a state agency, and (2) a censorship soft fork with the requirement that all transactions are signed by the state. The former protects seigniorage and the latter facilitates other tax collection.