Decentralization and Its Discontents
Cryptopia, "Exit", and the Paradox of Freedom
Crypto-Libertarianism, most clearly embodied in Bitcoin, makes big promises. It claims to be the final answer to state overreach, financial censorship, and even civilizational decline. Balaji Srinivasan, one of its most articulate champions, has suggested that "the choice is between the network state and the failed state." Others declare Bitcoin not just a currency but a new social contract: sound money for a collapsing world.
Crypto was supposed to transcend the moral compromises of legacy finance. But its most visible use cases—fraud, volatility, hype cycles, and status signaling—aren’t aberrations. They’re emergent features of the system’s incentive structure. The whitepapers promise stability; the markets deliver chaos. Fortunes are made and lost overnight, and retail investors are left holding the wreckage.
When these contradictions surface, the response from the faithful is ritualized: “It’s early,” they say. Critics are cast as ignorant or compromised. This defensive posture echoes a long tradition. When utopia doesn’t arrive, blame the saboteurs. Like the Bolsheviks, Bitcoin maximalists recast dissent as sabotage, responding with dogma rather than adaptation.
The system's failure to function as promised is never intrinsic; it is always someone else’s fault.
A truly resilient system would metabolize critique. A brittle one deflects it with slogans. And so we find the paradox: the more Bitcoin insists it has no center, the more it behaves like a movement obsessed with purity, hierarchy, and control.
This is a critical point. We urgently need to integrate radical technologies to move forward. But replacing Uniparty dogma with Tech Bro dogma would not be progress; it would be regression. One unaccountable elite exchanged for another, even less accountable one.
Here we run the risk of falling into the old trap:
Something must be done
This is something
We must do this
Ritual, Myth, and the Comfortable Revolution
Revolutionary movements ask us to suffer now for paradise later. Crypto-Libertarianism, personified by Bitcoin Hodlers, puts a luxury twist on this: it promises both utopia and Lamborghinis. In this Five-Star Jihad, the vanguard of the financial revolution grows rich while denouncing the very system that enabled their rise.
Yet the classical revolutionary structure remains. The playbook holds from Robespierre to Lenin to Satoshi: diagnose the corruption, proclaim the alternative, rally the faithful. As usual, the prospectus diverges from reality.
Bitcoin may have begun as code, but what it reveals is cultural. Its most important function is not transactional, but mythological—a vessel for hope, rage, and the dream of justice.
It sells not a product but a belief: that price appreciation is proof of progress (and proof of the impending death of the Federal Reserve, US Dollar, etc.). However, this is circular logic. 'Number go up' is not a sign of utility; it is the defining feature of a recursive belief engine—a planetary-scale Ponzi scheme masked by libertarian aesthetics. The more it claims to escape power, the more it reenacts the mechanisms of speculative control.
The Leviathan and The Network State
Between Srinivasan’s "Network State" and Hobbes’ Leviathan lies a 400-year conversation about sovereignty and trust. Hobbes argued that without central authority, life would be “solitary, poor, nasty, brutish, and short.” The Leviathan was not utopia. It was a compromise; a structure capable of absorbing contradiction and mediating justice. It proceeded from a mature psychological acceptance that we live in an observer-dependent universe (what Wolfram now calls the hypergraph); that personal freedom is not an absolute, but an unattainable goal to be maximized via practical trade-offs in an opaque world.
"The only way to erect such a Common Power... is to confer all their power and strength upon one Man, or upon one Assembly of men... This is the generation of that great Leviathan... which is but an Artificial Man." — Leviathan, Part II, Chapter XVII
Crypto promises to create a new kind of Leviathan: a system in which power is supposedly vested in nobody. “Code is law,” but code cannot interpret ambiguity, resolve disputes, or balance justice against context. When the DAO was hacked in 2016, the Ethereum community reversed it through a hard fork—proof that even in decentralized systems, human discretion reasserts itself when the stakes are high.
Bitcoin lacks discretion, adaptability, and the capacity to enforce norms beyond its digital perimeter. These limitations are philosophical, not just technical. Crypto reflects a worldview that treats human connection as vulnerability rather than strength. It replaces trust with verification, relationships with transactions. It doesn't just use technology; it enshrines a vision of humanity that is atomized, transactional, and fundamentally distrustful of collective decision-making (except, comically, when it isn’t).
Hobbes understood, and crypto advocates often miss, that justice requires judgment, not just blind execution; coherence, and consensus. Srinivasan’s model may offer a compelling digital counterpoint—governance through voluntary networks instead of territorial sovereignty—but the question remains: Can it deliver what Hobbes’ Leviathan once promised—not perfection, but enough stability for human flourishing?
I see tremendous potential in new technologies to provide this, but in their current incarnation, with their current power-brokers, the odds look to me to be very low. After all, this movement is populated by wannabe Lenins and Trotskys (and maybe even Stalins). We need a movement populated by Wolframs, Kurzweils, and Washingtons. As Ray Dalio points out in his excellent work on Principles, if you care about the “what,” you must first care about the “who.”
The Illusion of Reducibility
Stephen Wolfram may well be the most crucial fundamental scientist of our age.
Wolfram's principle of computational irreducibility suggests that in many systems, especially those involving life, intelligence, and society, the only way to know what will happen is to run the system and observe. No algorithmic shortcut or simplification can predict the outcome without simulating the entire process.
The system cannot be compressed into a formula; it must unfold in time.
Bitcoin, and crypto more broadly, attempts to sidestep this because they are ignorant of it. Quite simply, they are unaware, don’t understand, don’t care, or (more likely) a mix of all three. Despite positioning themselves as “the future,” they are locked in a reductionist philosophy of science that is on its last legs and will soon die the same death as the pre-Copernican worldview. I’m making a bold claim here: so watch this space.
These would be prophets of the future, may, in hindsight, turn out to be the last gasp of a dying epistemology.
I will discuss this in (a lot) more detail soon in my upcoming White Paper, “The Limits of Empirical Distinction in a Computationally Irreducible Universe.”
This system of thought encodes governance into rigid, predefined rules—smart contracts, consensus algorithms, deflationary supply schedules—as if social coordination could be reduced to mechanical execution. But this is a category error. Human societies are not deterministic machines. They are adaptive, recursive, context-sensitive organisms. They change, learn, and surprise. They metabolize ambiguity.
As David Chapman has eloquently pointed out, we live in a state of Nebulosity, and the best of us learn to deal with it and thrive in it. [This is a direct parallel of Wolfram’s Physics, for those interested.]
Wolfram's insight warns us against premature closure. You cannot shortcut complexity with code. You cannot write a social contract once and for all. Governance is not a solved problem; we cannot simply stick a fork in and move on; it is a living and ongoing series of novel problems to be solved. No matter how sophisticated its algorithms, any system that pretends otherwise will eventually collide with the irreducible weirdness of the real world.
The Recursive Paradox of Decentralization
The more aggressively a system pursues decentralization, the more it reconstitutes power in opaque and unaccountable ways.
Bitcoin eliminated traditional middlemen, but in their place arose centralized exchanges like Mt. Gox, FTX, and Binance, entities whose opacity and risk appetite rivaled or exceeded those of the worst actors in traditional finance. Unlike regulated banks, many of these platforms offered little recourse for users in the event of fraud or collapse. When FTX imploded in 2022, over a million customers were left without access to funds, highlighting the fragility of these new intermediaries.
Far from democratizing finance, Bitcoin’s distribution has become radically concentrated. As of 2023, more than 80% of all Bitcoin was held by just 0.01% of wallet addresses, an inequality that makes “traditional” Wall Street look almost egalitarian by comparison.
In this context, calling Bitcoin decentralized is like calling the French Ancien Régime aristocracy “decentralized” because they had grand Chateaux scattered all over France. The current vision of decentralization obscures a new elite: developers who shape protocol updates, miners who command validation power, and early adopters whose financial leverage is both opaque and vast. Most users cannot name these actors, let alone hold them accountable.
Decentralization doesn’t eliminate power. It reconfigures it, makes it truly unaccountable, and hides it.
This recursive loop, where revolutionary means undermine revolutionary ends, is not unique to crypto. Political revolutions replace monarchs with dictators and aristocracies with party elites.
The pattern is structural.
The mechanism is obvious: a visionary lays out a system for a more “just world,” and opportunists, interested in profiting from chaos, rush in to immediately corrupt the pure new vision—the more ambitious and disruptive the vision, the greater the opportunity to exploit it for personal gain.
For every Lenin, a Stalin. [Not that Lenin himself was a saint!]
For every Danton, a Robespierre.
For every Nakamoto, a Sam Bankman-Fried.
Paradise Postponed
“It’s early.” The crypto movement’s liturgy. A shield against critique and a temporal sleight of hand. Failures aren’t failures; they’re stepping stones. Absurdities aren’t contradictions; they’re teething pains. But as Karl Popper warned in The Open Society and Its Enemies, this is precisely how unfalsifiable ideologies protect themselves: by perpetually postponing their promised outcomes into a future that never quite arrives.
Popper argued that the danger of utopian movements lies not in their lofty goals but in their immunity to feedback. When outcomes don’t match predictions, the fault is never with the system—it’s with the lack of belief, premature judgment, and insufficient implementation purity. Every flaw becomes an argument for doubling down. Every critic is cast as an obstacle to destiny.
Crypto has been “early” for over fifteen years, through multiple boom-and-bust cycles, despite institutional adoption, and even after achieving a $3 trillion market cap. At what point does “early” become a euphemism for unaccountable?
Yes, early adopters got rich. But not by creating productivity or solving real problems. They profited by onboarding the next wave of believers. This isn’t financial innovation—it’s a recursive belief engine. A speculative cult with better branding. What Bernie Madoff called “returns,” crypto calls “number go up technology.”
And here lies the most damning irony: Bitcoin depends entirely on the system it claims to overthrow. It feeds on the dollar-based financial order's liquidity, legality, and infrastructure. If realized, its dream of replacing Fiat would destroy the host it parasitically relies on. This isn’t emancipation. It’s extraction.
A revolution that cannot exist without its enemy isn’t a revolution.
It’s codependent theater.
False Liberation and the Myth of EXIT
Balaji Srinivasan’s concept of “EXIT” tells a seductive story: when systems break, opt out. Build parallel societies governed by code, consensus, and capital. But beneath the language of autonomy lies something older: not liberation, but secession.
It is not systems change but strategic withdrawal by those who can insulate themselves from the consequences of collective failure.
EXIT isn’t a revolution, it’s entropic export on steroids. It’s a high-bandwidth escape hatch. A libertarian lifeboat for those who no longer believe in reform—and who no longer feel bound by obligations to the whole. Its ideological architecture mirrors the old aristocratic impulse: to retreat behind walls when the village begins to burn.
Margaret Atwood saw this. While The Handmaid’s Tale remains her most quoted work, her MaddAddam trilogy captures our current trajectory more precisely. In those books, techno-elites seclude themselves in gated Compounds—algorithmic castles guarded by privatized security—while the rest of society deteriorates into chaos and precarity. The Compounds are clean, efficient, and self-sustaining. But they are not redemptive. They are amoral enclaves of engineered safety built atop systemic abandonment.
Today’s crypto visionaries echo the same logic: citadels, seasteads, private islands, gated ledgers. The pleeblands are renamed. This is not decentralization. It’s rebranded feudalism, coded in solidity and cloaked in the language of innovation.
EXIT may promise freedom, but it delivers selective continuity: the reproduction of elite control under a new protocol—the architecture changes, but the hierarchy remains.
Digital Scarcity, or Infinite Forks?
Bitcoin’s fixed supply of 21 million coins is often considered sacred—a digital analogue to gold’s geological constraint. However, in practice, the scarcity of crypto is not a natural law. It is a narrative. And narratives can be copied.
Crypto ecosystems are infinitely forkable. A new coinbase, a revised codebase, a rebranded mission statement—that’s all it takes to launch a parallel universe. Each fork is not just a technical variation, but a social experiment: will enough people believe in the new chain? Will they follow the tokens, the team, the meme?
Scarcity, in this context, is not intrinsic. It’s performative. It lives and dies by consensus—by the willingness of a community to treat one instantiation of the code as canonical, and the others as imposters. In this way, Bitcoin’s supposed uniqueness is constantly under pressure, not from rivals with better tech, but from an ecosystem that rewards replication over resolution.
Even if Bitcoin stabilizes as the “sun” of a new financial solar system, it will still be orbited by thousands of speculative moons—altcoins, meme coins, governance tokens—each diluting the symbolic gravity of the core.
This isn’t digital gold. It’s a volatility engine. A Cambrian explosion of interchangeable scarcity claims, engineered not to hold value, but to spin new stories that someone, somewhere, might be willing to buy.
Crypto-Bolshevism and the Return of the Nomenklatura
Crypto shares more with Marxism-Leninism than its libertarian proponents would care to admit. Both are revolutionary ideologies animated by the belief that a single, all-encompassing system, dialectical materialism or decentralized blockchain protocols, can reorder the world. Both rely on technical fluency to access power. And both, in practice, generate steep hierarchies despite egalitarian rhetoric.
The crypto movement, like the early Soviet experiment, has birthed its version of the nomenklatura: miners with disproportionate control over validation, developers who dictate protocol changes, influencers who shape the cultural narrative, and whales whose financial gravity warps entire markets. These are not elected stewards. They are unelected elites—positioned through early access, technical expertise, or charismatic reach.
Just as Soviet apparatchiks cloaked privilege in proletarian language, today’s crypto elites speak the language of decentralization while accumulating informal power with no real oversight. The architecture is distributed, but the leverage is not.
Status in this world is measured in social media clout, Discord admin rights, token pre-sales, and insider access to liquidity events. The promise was flatness. A new pyramid emerged, rendered in code and meme-speak rather than steel and ideology.
The revolution did not abolish hierarchy. It rebuilt it on-chain.
Toward Resonant Systems
The true potential of decentralization is not escape—it is entanglement. It is not the rejection of complexity but the capacity to metabolize it. Systems that endure don’t simplify the world; they learn to resonate with it.
For decentralization to evolve beyond adolescence, it must confront the entropic shadows it has long ignored: opaque power structures, recursive wealth concentration, and the illusion of neutral code. The goal isn’t to eliminate governance. It’s to render it transparent, participatory, and accountable.
That requires a different set of design principles:
Transparency Beyond Code: A public ledger means nothing if decision-making remains invisible. Governance must be legible to the governed—not just auditable in theory, but navigable in practice. Clarity of process is as essential as clarity of protocol.
Distributed Benefit, Not Just Distributed Infrastructure: Nodes can be geographically dispersed yet powerfully centralized. Decentralization is only meaningful if it distributes opportunities, not just architectures. This means directly confronting wealth concentration, token gatekeeping, and insider asymmetry.
Integration, Not Isolation: The future will not be built in secessionist fragments. Sustainable systems must interface with existing legal, ecological, and social frameworks—not in capitulation, but in coherence. Bridging complexity is more complicated than rejecting it, but rejection is no longer a viable strategy.
Coherence is not control. It is alignment across differences. That is the task.
Conclusion: Stewardship or Collapse
Bitcoin began as a rebellion against central banks, fiat currency, and coercive trust. But without intentional stewardship, it risks becoming what it once opposed: a brittle, hierarchical system posing as liberation.
Every revolution must evolve into a system of care or collapse into its contradictions.
Decentralization is not inherently emancipatory. Without conscious design and moral imagination, it reverts to entropy, invisible hierarchies, recursive privilege, and hollow participation rituals.
The question is no longer whether decentralization will scale. It already has.
The question is whether it can hold integrity as it does.
Coherence is not the absence of disorder but the ability to navigate it.
And entropy, unaddressed, always wins.
This was very very good. Some lines in particular that could have come out of my own head:
"A truly resilient system would metabolize critique. A brittle one deflects it with slogans."
"Bitcoin may have begun as code, but what it reveals is cultural. Its most important function is not transactional, but mythological—a vessel for hope, rage, and the dream of justice."
"The more aggressively a system pursues decentralization, the more it reconstitutes power in opaque and unaccountable ways."
I don't know much about the crypto space. What about it drew your interest?
For all the hate of Central Banks imagine a scenario where there is a severe recession and no central bank to help stabilise the deflationary spiral. That is why Central Banks were created and evolved and that mission is nowhere part of the bitcoin nor scam coin system. Stability upon which widespread prosperity flourishes is not the aim of bitcoin however, rather because there is no yield inherently generated by Bitcoin its price is entirely, by definition, a speculation. Therefore, being speculative it requires a narrative only and is without a valuation model or framework for valuing it worth. The driving force of FOMO is not new, and thus Bitcoins are just the tulips of the 21st Century and greater in their scale.