Bitcoin: The Ultimate Offshore Bank of the 21st Century

This article is from Medium, authored by Robert Breedlove, and compiled by Chain Catcher Echo.
This article mainly explores the digital divide of nation-states in the digital age and the subsequent expansion of personal sovereignty, with an in-depth analysis of a key catalytic innovation behind the global transition to sovereignty: Bitcoin. Comparing Bitcoin to the "ultimate offshore bank" is a useful psychological tool that helps us better understand the immense political forces, game-theoretic considerations, and economic incentives driving capital to flow into the digital high seas of the 21st century.
I. Digital High Seas
"Cyberspace is the ultimate offshore jurisdiction, with no tax economy, and diamonds are everywhere in Bermuda." --- The Sovereign Individual
Historically, international waters have been the greatest geographical refuge for nation-states. Gamblers, pirates, smugglers, and other sinners attempting to engage in activities condemned by the state have been willing to exploit this ungovernable territory. This ocean is filled with risks, rewards, and a sense of personal responsibility. But why are admiralty law and the legal systems of land-based nation-states so different? A simple cost-benefit analysis provides the fundamental reason: given the vast and uninhabitable area of the high seas, the revenue generated by tax authorities establishing permanent autonomy there far exceeds enforcement costs.
Even assuming that economic activity on the high seas exhibits sufficient density to justify the implementation of a profitable tax regime, the costs of defending such a monopoly from other profit-seeking nations must also be carefully considered. For these economic reasons, international waters are the ultimate "Wild West," where states invest significant resources merely to protect their territorial monopolies from naval attacks.
Even stable nations are fundamentally unable to conduct commercial activities on the high seas. Since the flow of water on Earth largely determines the ruling boundaries of nations (many rivers and coastlines outline the shapes of nation-states), the dominant forces on these territorial boundaries often hold geopolitical dominance. Waterways provide economic advantages: moving energy or mass (mass is frozen energy) through space and time, the hydraulics of water help humans overcome the friction of gravity, fundamentally enhancing productivity. Pushing a 10-ton load on land consumes more energy than pushing the same load on water.
As a highly dynamic and low-friction territory, water acts as a facilitator of energy trade networks, while simultaneously serving as a barrier to establishing permanent autonomy. This makes control of coastlines a major geopolitical advantage. In fact, unobstructed access to the Pacific and Atlantic Oceans was key to America's economic and military dominance in the 20th century. Overall, those who can exert maximum force on the oceans are often the highest rulers of nation-states. As naval strategist Alfred T. Mahan wrote in his classic work, The Influence of Sea Power Upon History:

The tides of digital space are unstoppable, making it the realm of maximum individual sovereignty.
Being surrounded by vast high seas provides a natural defensive advantage. The costs incurred by tax authorities for surveillance, patrol, and collection in oceanic regions are staggering. Tax regimes must focus their efforts on economically dense land areas to be profitable. Interestingly, the economic dynamics of the high seas can help us understand the commercial advantages in digital space.
Imagine all commercial activities leaving their land bases, conducted by ships scattered across the world's waters. Each of these ships has an invisibility device that renders it undetectable to the naked eye and incapable of being tracked by radar or any other surveillance means. Further, the identities of everyone in the high seas, all the capital under their command, and all communications between them are obscured by similar cognitive opacity.
Finally, imagine this ocean market suddenly expanding to the size of the visible universe. How expensive and difficult do you think it would be to regulate such a secretive and expanding economy? Although all of this sounds fantastical, business, identity, and capital centered around digital space enjoy the same advantages: defensibility, obscurity, and untraceability. Although not yet mainstream, cryptographic technology is rapidly advancing, quickly turning this simulated fantasy into a digital reality for mature sovereign nations around the world.
Just as it was difficult to project sovereignty across the oceans in the 20th century, equating digital space with the high seas helps identify all attempts in the 21st century to unilaterally control humanity. Victims of economic tyranny can now only seek refuge in the one inviolable capital haven—Bitcoin. State power is predicated on its ability to confiscate wealth, which is an aggressive medium that digital technology has largely offset. With digital technology, information and capital can move at the speed of light, hidden behind walls of cryptographic energy, stored in seemingly infinite ways, limited only by the imagination of developers. In short: insurmountable digital defenses challenge the use of force.
The implications of intangible currency are incredible. Every attempt to unilaterally transfer economic value, including inflation, involuntary taxation, and direct confiscation, drives greater demand for more theft-resistant capital. As citizens become aware of the natural advantages of protecting their savings in the unparalleled chasm of the digital high seas, a cyclical tension will emerge between gradually expanding government overreach and digital evasion, with harsher control attempts driving increasingly larger waves of capital flight. In desperation, the tighter governments grip, the faster capital will slip through their fingers into digital space. Game theory always governs human behavior, regardless of decrees.
A direct result of government tightening control is the growth of Bitcoin's market capitalization and network security, along with a corresponding decrease in ownership risk (hard currency is a very good thing). For example, the recent ban on Bitcoin by the Central Bank of Nigeria will only accelerate local adoption of Bitcoin. Ultimately, this dynamic will evolve into a global game-theoretic vortex, pulling all monetary capital into the ultimate offshore bank: Bitcoin. As government revenues sharply decline, the traditional functions it provides (such as voting, private property rights, identity, public services, defense, etc.) will cease, creating a vacuum in the market to meet the unmet needs of entrepreneurs.
As the monopoly of nation-states crumbles, new market opportunities will explode, as non-material currencies monopolize most markets by minimizing the attack surface necessary for effective legislation and enforcement, thereby gradually reducing coercive power (except for direct extortion). Thus, purchasing Bitcoin is a significant bearish signal against nationalism. Some of the greatest thinkers of our time have chosen their stance in this historic transaction:
Life is a series of transactions and trade-offs; individuals who successfully foresee and adapt to these political upheavals will rise in a sovereign nation, and the key to success for sovereign nations in the digital high seas will be capital access, privacy, and protection.
II. Digital Offshore Banking
"When these largest tax havens are fully operational, all funds are essentially offshore funds determined by their owners." --- The Sovereign Individual
In the 20th century, offshore banking became the preferred means of wealth protection. Both plunderers and the plundered sought to avoid seizure, not wanting their funds confiscated. Offshore banks are tax havens that have existed since governments decided to finance themselves through unilateral taxation and inflation. But tax havens are not always banks; in ancient Rome, a duty-free port was established on the island of Delos to weaken competing jurisdictions and draw economic activity into its harbor. The Delos duty-free port was one of the original tax havens.
The nearby Greek island of Rhodes quickly lost trade to this duty-free port, and as the ancient commercial empire continued to decline, an important lesson emerged: when properly leveraging the optionality of competition to provide goods, customers determine the fate of the market. Clearly, customers always prefer to pay less for the same service. In modern history, banks have become fortresses for the secure storage of capital.
Swiss banks may be the most notorious example of modern tax havens. In the early 19th century, Switzerland declared itself a neutral country. Over the next century, its banks gradually became offshore tax havens for the European elite. After World War I in the early 20th century, small Swiss industries began to thrive. Due to the destruction suffered across Europe during the war, most governments were forced to raise taxes for reconstruction. Because of its geopolitical neutrality, Switzerland was not severely damaged by the war, and thus its tax rates remained lower compared to its belligerent neighbors.
This asymmetric governance philosophy attracted a massive influx of capital into Switzerland. The Swiss banking industry quickly became known for its high-quality services aimed at international clients, leveraging its nation-state's political neutrality and the mountainous terrain surrounding the central region of Europe. Naturally, everyone wanted to "master" their financial situation, and historically, Swiss banks provided superior guarantees of financial accessibility, privacy, and security for their clients. In these desirable dimensions, Bitcoin exhibits many orders of magnitude advantages.

Bitcoin is a catalyst for sovereignty
As a public utility facilitating the flow of private property trade, Bitcoin provides financial convenience. Private keys (the information carrier assets that allow the use of Bitcoin) can be stored in analog, digital, or even biological storage mediums. Private keys can initiate Bitcoin transactions anywhere in the world with telecom access, at any time. Owning one's private key is the holy grail of self-sovereignty; although the transaction history of Bitcoin is transparent, the ownership link between the key and the holder can only be established through monitoring, while emerging software developments like Taproot continue to enhance Bitcoin's privacy.
With a certain level of security, Bitcoin is truly invisible wealth. In terms of security, the Bitcoin network is the most powerful and secure computing network in history. As Bitcoin is a purely digital currency, it can be stored in a variety of ultra-secure custodial modes that are nearly immune to confiscation. More importantly, Bitcoin is the only currency in history that is not affected by inflation. Overall, Bitcoin's accessibility, privacy, and security ensure its status as the undisputed tax haven for all sovereign nations in the 21st century.
Bitcoin, as the "ultimate offshore bank" of the 21st century, obliterates nationalism and nurtures an emerging global culture rooted in sovereignty.
Bitcoin is the most reliable haven in human history, capable of resisting unilateral inflation, taxation, and confiscation. This free-market digital currency system will ultimately return the "keys to the castle" to their rightful owners—the individuals who produce symbolic currency in the market (but only those who hold private keys; Bitcoin held on exchanges is not Bitcoin). In this new model, all capital stored in Bitcoin essentially constitutes an "offshore fund," fully controlled by its owners. Market participants are rapidly realizing the importance of monetary sovereignty, and Bitcoin is quickly moving off exchanges into self-custody:

As Bitcoin becomes increasingly valuable, market participants begin to recognize the importance of self-custody
The power, freedom, and sovereignty individuals gain by using Bitcoin to manage their finances represent an undeniable Schelling point in the greatest game of human action. Bitcoin is not just a game-changer; it is a whole new game, and the socio-economic sovereignty system derived from it is expected to inspire people to forever abandon the use of force, thereby elevating the level of global wealth.
III. The End of Extortion
"Power always seeks the easiest path to wealth by attacking those who possess it." --- William Playfair
In its grandest arc, the progress of civilization is a centrifugal force of sovereignty: market exchange makes us more productive through innovation, and cultural adaptation makes us more virtuous, with power radiating outward. As the symmetry of sovereignty increases, decrees and force lose relevance relative to economic efficiency. With the natural extension of political returns and violent acts, socio-economic systems tend toward free formation and decentralization, as cooperation becomes more beneficial than punishment. As the first private property that does not require protection through the threat of force, Bitcoin enables the realization of decentralized but non-violent socio-economic organizations, a profound innovation that permanently alters the logic of violence with this global, digital, non-state digital currency.
Force is the acceleration of energy across the entire space-time continuum. The ability to project and defend force is a key aspect of human affairs. Each era of civilization showcases its unique technological realities, reflecting the scale and efficiency of energy delivery through human ingenuity (including tools, money, and socio-economic organizations). Generally, innovations in this field are driven by war, which often highlights the survival necessities of those affected by conflict; demand is the "mother of invention."
Armed conflict is a coercive force that stimulates invention; it is closely related to the significant characteristics of human behavior—purposefully directing energy across space and time to achieve valuable goals. War is the instinctive clash of human wills, a hellfire that repeatedly consumes and redefines the boundaries of different civilizations throughout history. Due to these physical reasons, humans have historically delivered energy using coercive or violent methods, both of which are directed against others and are closely intertwined with socio-economic systems.
The calculus of violence helps explain why free-market processes favor hard-to-steal monetary technologies. Because the threat of violence has always existed, people are more inclined to hold the most valuable assets (in terms of exchange or utility) relative to their costs; defensive, secure, and hard-to-produce assets naturally resist extortion by others. Security is key to why gold was chosen as money in the free market. Security is part of convenience, as assets with a high value-to-weight ratio are easier to move and have lower security costs.
Bitcoin, with its digital purity, perfects the portability of monetary attributes and its security: it can move at the speed of light and be protected in any information-carrying medium. Addressing the portability shortcomings of gold was one of the main reasons for the introduction of gold currency, which provided a medium for government monopolies on currency supply to attack. Currency is the mechanism through which nation-states conduct large-scale "robbery" of society via inflation and unilateral taxation.

The original purpose of central banks was to incentivize and organize military forces, but they have now devolved into extortion systems that pressure citizens without restraint. Manipulating the monopolized currency supply is the primary means by which governments have seized sovereignty from citizens throughout the ages. From token clipping to quantitative easing (QE), monetary intervention has always had one purpose: to extort citizens. Here, inflation refers to the arbitrary increase in the money supply under legal monopoly control, rather than the symmetrical supply expansions of gold or Bitcoin mining or the issuance of free-market bank credit, which are constrained by their production costs and economic loss risks. Strictly speaking, inflation is an asymmetric non-free-market phenomenon.

Inflation is a tax, but its precise measurement is problematic. Over time, inflation leads to a general decline in purchasing power, as "more money chases the same amount of goods," requiring longer working hours to purchase the same quantity of basic goods necessary for survival. The U.S. government mistakenly (and perhaps deceitfully) quantifies inflation using the Consumer Price Index (CPI), which is based on a calculation method that has been adjusted multiple times to achieve target rates and excludes "volatile" categories like food and energy.
In fact, inflation can never be described by any single indicator. Inflation is inherently subjective, just as the valuation weakened by the loss of purchasing power it brings to market participants. In other words, inflation is relative to the unique goals held by each market actor, and thus all "universal" inflation indicators are inaccurate. The most accurate alternative indicator for inflation tax is the growth of the broad money supply, with this percentage change roughly equating to the degree to which fiat currency holders are diluted over any given time span.

Free land, unless it involves money
Inflation cannot be quantified in specific dollar values, as it is based on the subjective loss of purchasing power that specific market participants experience when trying to acquire a basket of goods. In other words, each market participant subjectively sets (and resets) a unique inflation coefficient for themselves through buying, selling, and holding assets. But do not be misled by its subjectivity: objectively speaking, inflation is a tax, albeit a more covert and indirect form. To put it bluntly: inflation is just a tax.
Despite Keynesian propaganda for centuries, inflation brings zero economic benefits to anyone other than the central banks profiting from this legal monopoly fraud. Direct taxes can be more clearly quantified (in dollars), as they are priced and paid in currency. Although most American taxpayers, like Pavlov's dogs, submit forms and pay taxes every April to avoid the IRS's "threat," it must be recognized that taxing at rates determined without mutual consent is, by definition, extortion. Non-consensual taxation and its evil twin, inflation, are crimes and immoral acts indistinguishable from theft, and I risk repeating myself: unilateral taxation and inflation are both extortion perpetrated by central banks against citizens worldwide.

Market actors face significant economic incentives to evade this pervasive systemic extortion. Central banks are institutionalized time theft systems: one of the last remnants of slavery in the world, and although the trend of extortion is strong, the world has made moral progress in many ways due to the significant productivity gains brought about by entrepreneurial ingenuity. In many respects, morality is a luxury, and inflation undermines its further development, just as it marginalizes other innovations.
Fortunately, for residents of the digital age, there is now an option to exit this manipulated game. Anyone who values their time or the time in their life can now choose a currency that aligns with the absolute scarcity of time. To quantify the inhibiting factors faced by market participants holding fiat currency savings and the corresponding incentives to transfer their capital to Bitcoin offshore banks, consider the following data:


In countries with high annual inflation rates and tax rates, the incentive to adopt Bitcoin as a means of protecting capital from the plunder of nation-states will become astronomical; assuming an annual saving of $100,000 (at a 20% rate), it would exceed $700 million. As market participants awaken to this calculation, the influx into Bitcoin, the ensuing explosion in market capitalization, and the subsequent implosion of nation-state revenue models will be a spectacular historic event.
The question then becomes: how will humanity self-organize after the collapse of nation-states? Driven by their own overreach and the expanded choices offered to digitally fluent citizens, nation-state revenues will plummet sharply: this event heralds the collapse of any enterprise. Those who consider this issue and possible outcomes and prepare accordingly will find refuge in the digital high seas—where 21 million Bitcoins are the "law of the land."
IV. The Rise of Sovereignists
"The tax authorities have become accustomed to treating taxpayers like farmers treat cows, keeping them in the field to milk. In the digital age, these cows have grown wings." --- Sovereign Individuals
Authority is a powerful word: it implies that the will of some people is stronger than that of others. In taxation, authorities rely on taxpayers who remain on land or are at least willing to comply with confiscatory decrees when living outside their legal jurisdiction (see the U.S. government's global tax system). Nation-states depend on clearly defined, impermeable jurisdictional boundaries to supervise and tax economic activities within that scope.
As taxation and inflation become increasingly severe, taxpayers lose the incentive to remain within the jurisdiction (or at least comply). If too much business or capital leaves the jurisdiction, taxation will collapse, and the wealth and productivity gains generated by an overtaxed economy will also collapse. To maintain stability, parasitic tax authorities must remain sensitive to avoid "killing" their host—the productive economy they rely on. Throughout history, this economic struggle between tax authorities and taxpayers has not favored citizens, as they depend on private property, institutions, and the rule of law necessary for effective commercial interaction.
All these pillars of socio-economic cooperation can be manipulated by force—this is the specialty of nation-states. The variability of human capital (assets), human identity, and the relationships between them (property) allows those who wield coercion and violence to freely manipulate the rules of the economic landscape to suit their political agendas. Now, Bitcoin, as an immutable, non-identity-based form of personal property, enables autonomous sovereign individuals to escape the extortion system of central banks:
"The root of authority is 'the author.' Authorities write your role in their story as the author. An independent individual is their own protagonist." -- Mike Hill
The institutional authority of the analog age is now being shattered by the digital tide. Its consequences are comparable to how the Gutenberg printing press broke the church's centralized control over the flow of knowledge; self-organizing networks like the internet and Bitcoin are dismantling nation-states' restrictions on commerce by providing humanity with unpermissioned means to transport information and capital across time, jurisdiction, and human thought. The key to tax authorities lies in their ability to limit citizens' financial choices, which will now be forced to provide increasingly valuable services to retain any revenue. By exiting the fiat currency system, individuals' power to "vote with their feet" will lead to a world that emphasizes freedom of choice, resulting in smaller, less coercive government and governance models. By repositioning responsibility, sovereignism will lead to the widespread expansion of the only human right: choice.

The traditional view of the 20th century saw currency as a monopoly product of nation-states. This traditional thought has deteriorated with the differences in past and present conditions; history is written as the accumulation of dissonance between the mainstream and the possible, ultimately erupting into revolts against tradition. The monopoly of nation-states over currency is undoubtedly incompatible with the digital society, which can efficiently self-organize (and continuously reorganize) when conditions allow.
Like metal shavings near a magnet, socio-economic organizations form along the magnetic lines of trust and security, which derive from the mainstream technological realities of any given era. Trust-minimized currencies and cryptographic technologies fundamentally alter the roles of trust and security in human affairs. Analog institutions are expensive approximations of verification, while digital tools are cheap absolute verification means. Centered around Bitcoin's "Don't Trust, Verify" ethos, economic forces will ensure the demise of trust-filled analog institutions, while verification-focused digital organizations will thrive in the 21st century. Sovereignism is a clear crossroads on the winding path of human history, with its starting point being capital.

Money is a purely selective tool in the market. From a physics perspective, money is a manifestation of power: in this case, it refers to the ability to command the work of others over a period of time. All socio-economic authority systems in the world are derivatives of this primal tool, used to direct meta-energy across space and time. In other words: money controls much of human creativity. Central banks became the common choice of market participants by monopolizing gold and issuing debt-based currencies. Sovereignism originates from Bitcoin, representing the revival of individual choice in the world dominated by nation-states.
By empowering citizens of the 21st century to accomplish more at lower costs and permanently exit the fiat currency complex of command and control when they choose, the digital age is expected to be distinguished by a new social class of cognitive elites: mature sovereign nations. As more and more sovereignists "set sail" into the digital high seas, the societies they form will become more prosperous, peaceful, and moral, thus becoming more attractive to others, leading to a virtuous cycle of civilizational progress.
Choice is the only right of humanity, and Bitcoin fundamentally broadens the range of choices available to market participants everywhere. Those who recognize this new reality and choose appropriate courses of action first will inherit the Earth.
Sovereignism represents an apparently unstoppable political transformation: each market participant can either foresee and accept it or be forced to accept it when the global fiat currency system collapses. Attempting to control sovereignists is like trying to direct a flock of starlings: a self-organizing group seamlessly splits and reconfigures, moving away from any obstacles that hinder its flight path.
Alternatively, we can liken sovereignism to an ever-surge ocean: governed by the laws of gravity, an unstoppable tidal force rooted in physical principles beyond political control—these energies shape the socio-economic realities regardless of the desires of any centralized entity. When digital optionality dominates, decentralization is king. The self-organizing intelligence of this emerging social class known as sovereignists is inextricably linked to the inviolable offshore Bitcoin bank.
Sovereignism begins with Bitcoin, but its conclusion is unknown.