Sam Abbassi is the Founder and CEO of Hoseki, a proof-of-stake Bitcoin service.
De Soto Dreams of Electric Money
Countries in the Global South are not poor because of culture, collective IQ, lack of entrepreneurial spirit or market orientation; they are poor because they lack formal frameworks for property rights. Hernando de Soto discusses these issues at length in “The Mystery of Capital.” The ability to formalize and express property ownership is at the core of capital and wealth production, and if you think it has something to do with culture, try catching a taxi in Addis Ababa, Ethiopia (as de Soto says) or wander through a souk in Tehran, Iran or rush towards the Golden Temple in Amritsar, India without someone trying to make a deal with you. The idea that people in these regions lack creativity and the “right” culture to create wealth is inhuman, absurd and completely unbelievable. When you step out of the door of the Hilton hotel in Lima, Peru, you’re not leaving behind the wonderful world of mobile technology, antibiotics, internet, and refrigeration. Peruvian people have it all. What you’re left with is the magical world of legally enforceable transactions for property rights.
The unfortunate fact that makes the situation of people in these countries even worse is that they are quite wealthy in their wealth. The problem is that assets in these regions are locked. Its citizens cannot represent their possessions and live the same invisible parallel lives as they can live in the Global North. These assets, in effect, represent dead capital.
In the Global North, you can pledge your home for a loan, use credit ratings to access loans, own shares in a company through legally enforceable contracts, take advantage of limited liability and insurance policies, take advantage of property records. Accumulate capital that can be passed on to your heirs through inheritance. In a world where the property records you own give you (the titleholder) and everyone around you (other market participants) access to general equity rights, you can do all these magic things.
Bitcoin Is A Developing Country
Countries in the Global South do not have these frameworks, and neither do Bitcoin. Bitcoin suffers from much of the same malaise affecting contemporary developing countries, such as mass migrations, explosions of illegal activity, political and civil unrest, and general discontent with an obsolete system. Our digital, illegal activities are dictated by the country in which we live, political and civil unrest has a storied history that shows no signs of waning, and the ramshackle system we are discontented with is perpetuated by a kleptocratic elite that means nothing. accountable to those who implement it.
Ancient America (the America we love) itself was, according to Soto, “a developing country struggling to come to terms with the law and disorder of immigrants, slums, gold diggers, armed gangs, illegal entrepreneurs, and illegal entrepreneurs. the rest of the colorful characters that make it just as wild and very romantic, albeit only afterwards.” Like the first American colonists, the prevailing system of English common law didn’t work. It didn’t take into account new forms of property access without an established and generally accepted title system. This was an issue, especially when it came to cases involving questionable titles. Property in England was so well formed . This form of self-government often clashed with the authorities, but as Peter Charles Hoffer emphasized in “Law and People in Colonial America”:
“In theory they were part of the king’s personal domain. [and subject to his laws], but it precludes the actual theory. Colonies far from England, sparsely populated, rich in natural resources, and occupied by men and women who knew their own minds and were at a bargain when they saw it, sided with self-government.
Eventually, Western countries began to accept social contracts born outside of formal law as legitimate sources of law and made law a tool for popular capital formation and economic growth.
Bitcoin is at a point similar to the point where America announced its establishment, and at the point where developing countries are today.
Bitcoin brings Hernando de Soto’s dream to his ASIC-powered reality. Bitcoin is unique in that it naturally enforces its own property rights without the monopoly of violence that overwhelms most other assets. Bitcoin also has no jurisdiction; Its jurisdiction is cyberspace and is not bound by the imaginary boundaries that make up fleshspace. What do you get when you have an unauthorized entity that enforces its own property rights, regardless of color, creed, country, language, gender or vaccination status? You get a new world.
That’s what we see in Hoseki. Like many of our friends – most likely including the reader – we see a new world where the best money is made. We are fed up with the bland, soulless and immoral money systems that invade and dictate our present lives.
Human potential is limitless, and limiting it to monetary discretion and central planning is psychotic, if not genocidal. Bitcoin provides us with a solid foundation that avoids the pitfalls of systems of the past. Thanks to this foundation, we can generate solid capital. Unlike the current system, which discourages huge debts, numbs itself with bailouts for those closest to the system, and sadistically brutalizes those on the margins, Bitcoin offers more. Bitcoin rewards good behavior, low time preference, high savings, planning and responsibility. Without strong incentives to exploit, we are embraced by a moral future with beams of support built and maintained not by a regional group but by a global collective. It offers a world that encourages savings for your future self and family, connects you to where you are, and allows you, your family, and your community to plan for generations. Bitcoin fosters human potential through the callous application of consensus-based rules that give us predictability and, in turn, reliability.
Hoseki Fixes This
Bitcoin has established proprietary rights. Like the services offered by brilliant Bitcoin companies today that use the functionality that Bitcoin natively offers, namely multi-signature storage quorums, Hoseki is packing something that Bitcoin inherently offers. After multi-signature, signature verification seems to be one of the most underrated functions that the Bitcoin protocol provides. At Hoseki we are taking the torch and extending this core functionality. We want retail users to know that Bitcoin not only allows you to become your own financial institution by taking custody of your own property, but also allows you to express ownership on that property. A framework that expresses property ownership is the basic building block for sound property rights. It is also a way to unlock all capital captured in your currently stranded assets.
Hoseki is the financial installation to seamlessly and privately express ownership of bitcoin to another counterparty. Proving ownership of an asset is an essential feature of any asset class, whether it’s stocks, bonds, cash in your account or real estate. Like our brothers in Peru, Egypt, Myanmar and Afghanistan whose physical property is stranded, we face a similar reality where our digital property bitcoin is stranded. Bitcoin is divided into exchanges, mobile wallets, and hardware wallets. People hold bitcoin in different ways and in different places, and thus expressing ownership has become a challenge. There is no easy way for a broker, lender or insurer to evaluate and verify your assets when trying to get a loan. You have assets – they are quite valuable – but you are not getting any services. You are not expected to move or sell your stock holdings to finance your home purchase, but this is a requirement when trying to use bitcoin. This is particularly frustrating because you have the most pristine asset in existence, but so much like unofficial property on the American border, bitcoin inherently lacks a formal framework for expressing enforceable property rights.
You are chained today. You will be free tomorrow. Hoseki is building a system that allows you to unlock the full potential of your bitcoin. It enables the world to benefit from Bitcoin and seeks to act as a bridge between the old world and the new as we move to a global monetary regime based on a bitcoin standard.
This is a guest post by Sam Abbassi. The opinions expressed are their own and may not necessarily reflect the views of BTC Inc. or Bitcoin Magazine.