A 20-20 Perspective from the Man on the Margin

As my readers who reached the final chapters of Life After Google know, ever since the untimely death of Jude Wanniski, my best guide on matters of money has been a six-foot-five-inch pilot for American Airlines.

Operating at 35,000 feet where everything is clear and free of academic smog, Mike Kendall is a worthy follower of the Wall Street Journal supply-side paragon Jude.

Returning from my inspirational stint with Craig Wright’s Bitcoin “Satoshi Vision” at CoinGeek 2020 in London, I turned to Kendall to get a true 20-20 perspective on the crypto space. He did not disappoint.

Pruned for space and edited for my readers, I offer his bracing views below…

The blockchain space appears to be in confusing chaos, with thousands of cryptocurrencies defined as currency, blockchain, tokens, securities, and outright scams. But it is possible to sum up the crypto space in three categories:

  1. Bitcoin and its derivatives
  2. Blockchain solutions
  3. Tokens of various utility, most of which have none.


Only Bitcoin has the potential to revolutionize our global fiat financial system because only Bitcoin creates a decentralized currency that can compete with government fiat monies. All other cryptos are derivatives of Bitcoin based on the open source code for its blockchain.

Bitcoin has evolved into three separate chains, Bitcoin core BTC, Bitcoin cash BCH, and Bitcoin SV (Satoshi Vision) BSV. These splits, called hard forks, occurred for ideological reasons. The personalities who control each of the three Bitcoin blockchains have separate visions for Bitcoin’s creation and ultimate promise. Defining the differences are the degree of privacy and implicit paranoia, and the degree of competition with government fiat and the conventional financial system.

Originating in the Cypherpunks group and mailing list that formed in the Bay area in the 1990s, peer-to-peer currencies were based on the internet combined with public-key cryptography.

Early forerunners were E-gold, David Chaum’s DigiCash, Wei Dai’s b-money, and Nick Szabo’s bit gold. Satoshi built on these early attempts with his creation of Bitcoin.

Craig Wright claims to be Satoshi Nakamoto, inventor of Bitcoin. With a history well known within the crypto community, Wright is impossible to ignore. To scale Bitcoin and restore the original protocol in his Satoshi vision, he forked from the original BTC blockchain to BCH, and then due to disagreements with BCH’s scaling plans, to BSV.

BSV introduced unlimited block sizes in February 2020, and Wright has between 100-200 patents granted and plans hundreds, if not thousands, of more patents on blockchain technology. As Chief Scientist at nChain, Wright has the capital, vision and technological background to make BSV a global financial system.

Keeping all transactions, in some form, on the blockchain, Wright’s scheme provides a permanent transaction record on an immutable ledger. BSV not only allows for complete and open records, it enormously expands the systems capabilities.

Corruption hides in darkness. An immutable public blockchain shines a light on all transactions and makes them transparent.

Bitcoin Derivatives

Other decentralized cryptocurrency blockchain solutions are derivatives of Bitcoin. They use the Bitcoin open source code to create a blockchain that differs from Bitcoin under their own uniquely defined protocol. Privacy, contract creation, or a marketing ploy may differentiate a decentralized derivative of Bitcoin.

For the reasons I explain in Free Banking and Cryptocurrency, the crypto space will eventually devolve toward a cryptocurrency of the most stable value that can compete with the fiat dollar.

Currencies like Libra and other central bank crypto efforts are merely digital fiats. Not decentralized, they are issued and controlled by a central bureaucratic authority similar to any central bank. They depend on fiat as their underlying support value.


The third derivative of Bitcoin is tokens. Initial coin offerings, ICOs, govern token creation and they are the least respectable of Bitcoin derivatives. Many ICOs were outright scams that piggybacked on the initial crypto speculative mania and lost their value very quickly.

The SEC has been late to the token game but has now issued regulation that defines a token as a utility or a security that has to comply with the same SEC regulation required for any financial instrument issued as an investment vehicle.

Other tokens are designated as utility tokens and offer the purchaser a future in whatever the issuer promises to create.

All tokens are built upon the underlying value of the cryptocurrency that supports them — mostly Ethereum — and are dependent on Ethereum’s success and stability of value for their own success. Ethereum is unable to scale and is rewriting its code and protocol to transition from a proof of work (PoW) system like Bitcoin to proof of stake (PoS). At some point, Ethereum will reinvent itself as Ethereum 2.0.

State of Cryptocurrency

The cryptocurrency blockchain space continues to evolve. Wright’s BSV has unlimited scaling, accommodates micropayments, and promises to achieve transaction throughput comparable to the leading credit card companies.

The cryptocurrency blockchain vision is for a new internet architecture, defined in George Gilder’s Life After GoogleGilder’s vision foresees an internet defined by heterarchy rather than hierarchy. An internet architecture that democratizes money, revolutionizes the financial system and opens the world to a new era of unimaginable innovation based on security, privacy, and the individual at the center of the system rather than a few massive corporations.

The current reality is a constantly increasing list of speculative assets that are designed to increase exponentially in value while their functional, underlying utility remains elusive. That model cannot prevail.

When I first looked at Bitcoin in 2016, it was immediately obvious to me that bitcoin couldn’t work as a transactional currency. “The bitcoin flaw.” George called it in his book. No currency has ever existed in fixed supply.

An extremely primitive example is the Rai Stone on the Micronesian island of Yap. Vitalik Buterin has cited the Rai Stone as an example of a historical currency and ledger that provides a premise for cryptocurrency and the blockchain. But this is silly. A cryptocurrency has to act like any other currency throughout history.

There has never been a fixed supply currency adopted by any expanding monetary system. The addition of ‘crypto’ to currency combined with digital cryptography does not magically overthrow thousands of years of monetary history.

The same rule holds true for fiat currency. The massive increase in computational power that tenuously holds together the global fiat financial system will not add permanence to fiat currency. Fiat has no set value against a monetary standard of reference. All fiat systems eventually fail via their inherent proclivity for devaluation.

One can make the case that Bitcoin initially required a fixed supply to demonstrate its efficacy. Bitcoin started from nothing and was a revolutionary technology understood by only a few specialized technologists. By limiting the supply of bitcoin, future demand would increase its value commensurately.

Oddly, however, it was Ross Ulbricht’s Silk Road illegal drug marketplace that proved bitcoin’s efficacy as a currency. Silk Road demonstrated that the Bitcoin protocol worked as an un-hackable ledger and that its currency could obtain value, which led to eventual wider adoption by the general public. For his illegal marketplace demonstration of bitcoin’s currency efficacy, Ross Ulbricht will spend the rest of his life in prison.

However, the fixed supply template of crypto that was successful in demonstrating Bitcoin’s efficacy by creating value for bitcoin will naturally have to evolve into a functioning currency that expands in supply to meet demand relative to a standard of reference. This is the only way that cryptocurrency and the blockchain can achieve widespread adoption and fulfill its promise.

–Mike Kendall, The Man on the Margin



George Gilder
Editor, Gilder’s Daily Prophecy

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George Gilder

George Gilder is the most knowledgeable man in America when it comes to the future of technology — and its impact on our lives.

He’s an established investor, writer, and economist with an uncanny ability to foresee how new breakthroughs will play out, years in advance.

And he’s certainly no stranger to the financial newsletter...

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