When I introduced myself here on the blog, I mentioned that I was working on a study of risks to Bitcoin. The foundation’s work to standardize, protect, and promote Bitcoin is fostering the development of a new economic, commercial, and (in some respects) social system, so there’s no end to the things we might do. Prioritizing our efforts is key. So today, I’m pleased to announce the release of my study, which should aid in that prioritization. The study is called Removing Impediments to Bitcoin’s Success.
It is essentially an orthodox risk management study. The study first seeks to capture what makes Bitcoin an asset worth protecting. (Bitcoin is obviously very special, but can you say exactly why?) Then the study calculates the threats to Bitcoin in each of its key dimensions, based on interviews I conducted with Bitcoin Foundation leaders in the course of getting to know them last year. The major threats are graphed in terms of likelihood and consequence, pushing the most important ones to the top. Finally, the study groups together areas of risk, identifying potential measures of success or failure in efforts to respond to them. Take a look.
I’ll be presenting and discussing the study at the #Bitcoin2014 conference, which is happening May 15-17 in Amsterdam, and I hope to repeat the study regularly with input from the foundation’s membership. (If you’re a non-member, it’s probably time to change that!) A project like this should never be treated as final. It will evolve and improve over time.
I’m a big believer in risk management, if only because of the years I’ve spent criticizing organizations that fail to do risk management well. There are entities that say they are risk-based, but they waste millions of dollars in some instances and needlessly imperil privacy and civil liberties.
I’m mostly talking about the U.S. government’s Transportation Security Administration. But maladministration is not only seen in some government agencies. It also shows up in government relations and lobbying because this, too, is an area where goods and services don’t have easy measures of price and quality.
Public choice economics first identified the dynamics at play in these fields with respect to elected officials. We may wish them to be disinterested public servants, but the better theory is that they prioritize their own interests, such as in reelection. That certainly doesn’t mean they always act contrary to the public interest. They promote the interests of their constituents much of the time. But too often they don’t. My late Cato Institute colleague William Niskanen extended this theory to government agencies in his book,Bureaucracy and Public Economics, showing that government agencies seek to maximize their discretionary budgets.
Private-sector organizations can be bureaucracies, and market-driven organizations can have bureaucracies in them (“bureaucracy” in the non-pejorative, economic sense—not sayin’ it to be mean!) Government affairs and lobbying is such an area, where interests can get badly misaligned.
In the worst cases, I’ve seen government relations personnel working in Washington, D.C., to produce additional public policy challenges for the industry or clients they represent. Lobbyists routinely groom their clients and friends to help the politicians or party they align with, regardless of whether that improves outcomes. They may believe that they are doing the right thing, but what is certain when they gin up issues and deliver their clients to their political patrons is that they produce bigger budgets for their projects or departments and job security and political relationships for themselves.
The worst of it for me is watching business leaders—masters of the universe in their fields—doing such a poor job as consumers of government relations. Lacking other indicators, they seem to treat price as a signal of quality, and they shovel money into projects, firms, and campaigns, often achieving no useful end. It seems like the sophisticated thing to do, and it’s what everyone else is doing, so I suppose they think it’s the game they have to play.
I don’t want to work for an organization that subtly prioritizes its own growth over its stated goals, or that feeds key parts of the Bitcoin ecosystem to the political maw in the United States or elsewhere. So we need the oversight of the Bitcoin community to hold us to account. Risk management and regular, open reassessment is meant to make us and you more aware of the challenges to Bitcoin we see and what we’re doing about them. If, over time, we fail to solve them, you’ll be right to ask why and demand that we do better.
What I’ve said above certainly sounds “anti-lobbying,” but we won’t decline to use any tool that will help protect Bitcoin. You can expect that we’ll begin to lobby—systematically and intelligently—in the near future, both in Washington, D.C., and in other world capitols.
Anyone in the Bitcoin community is free to petition their governments in pursuit of their goals, of course. My preference would be for you to be as systematic and careful as we are trying to be. I have some experience in the field and obviously have some thoughts to share. If you’re a Bitcoiner with plans or existing programs to work on public policy, by all means let’s compare notes and see how we can work together. You might enjoy looking at things through the lens offered by the Removing Impediments to Bitcoin’s Successstudy.