TLDR Jason Lowery’s thesis that nation-states will become engaged in an arms race to mine Bitcoin, is causing quite a stir. He presents his tantalizing thesis in the book Softwar. He is challenged by Micah Warren, who questions the likelihood and desirability of such an outcome. He argues that Lowery’s interpretation of proof of work is flawed and that the current game theoretic equilibrium of corporate miners hashing it out won’t translate to nation-states level competition.
Major Jason Lowery (member of the US Air Force and MIT Graduate) envisions a path towards hyperbitcoinization. In such a world, where Bitcoin is the world reserve currency, the only logical choice for countries would be to engage in a peaceful arms race, mining as much Bitcoin as they can.
Let’s first have a look at Lowery’s view and then discuss his challenger’s.
Softwar: Bitcoin as a Matter of National Security?
A pillar of Lowery’s thesis Softwar: A Novel Theory on Power Projection and the National Strategic Significance of Bitcoin is that Bitcoin is digital property that will be fought over in an arms race between countries. That’s why in his view mining Bitcoin is a matter of national security. Being a Major in the airforce, he is allegedly in talks with government officials about this topic.
In his view, mining secures blockspace, in the same way that a navy or an air force secure maritime and air thoroughfare. A nation’s ability to protect its access to its money and data will be vital to its autonomy.
In Lowery’s view, Bitcoin’s use case goes beyond peer-to-peer online cash. Block space can be used to secure all kinds of data (the recent Ordinal NFTs and BRC-20 tokens on Bitcoin are an example of this). Maybe online cash was just the first use case? Lowery argues that many technological inventions, like gunpowder and airplanes, were initially used for different purposes. Gunpowder wasn’t called gunpowder by the Chinese – who invented it for medicinal purposes. That airplanes would have military significance seemed equally unthinkable when the Wright brothers let their rickety plane bounce off some fields.
Only later did armies realize that these inventions had a purpose. Lowery sees the same happening for Bitcoin: it will move from the use case of electronic cash to ‘digital warfare’.
Power Projection in Nature and Proof of Work in Bitcoin
Lowery goes to great lengths explaining how in nature, the use of physical power (‘power projection’), determines who owns what. Animals use physical power to battle over territory. It’s fitting that the ‘(block)chain of ownership’ in cyberspace is also determined by energy.
According to Lowery, the fact that energy (power) must be used to secure Bitcoin makes the protocol superior to proof-of-stake protocols, which only use abstract power structures (software) to protect the network. According to Lowery, that’s a brittle, ‘logical’ shield that won’t hold when push comes to shove.
Hashing Compared to Deer Fighting with Antlers
The hash wars are a new form of war: a non-violent battle for territory in cyberspace. Instead of mutually assuring each other’s destruction in a nuclear war, nation-states could compete for ‘online territory’ by building out the largest possible…
Erik started as a freelance writer around the time Satoshi was brewing on the whitepaper.
As a crypto investor, he is class of 2020. More of a holder than a trader, but never shy to experiment with new protocols.
