June 11, 2023

Bitcoin Reformation

Adamant Research Report.


At the end of the 16th century, a diverse group of rebel intellectuals and entrepreneurs founded the state in one ofleast adapted for life in Europe. This territory was so often flooded that the settlers had to build hundreds of kilometers of dams. At the same time, the country was waging an 80-year war with the world's largest empire.

Thanks to many years of overcoming difficulties fromThe melting pot of ideas sprang up the golden age of the Netherlands and the United Kingdom and innovative economic institutions that changed the world. One of the most successful socio-economic experiments in America, the city of New York, originates from here.

In this report, we will try to show thatBitcoin, encryption, the Internet and the generation of millennials are not just the trends of the 21st century, but the harbingers of a wave of changes similar to the revolutionary European era of the 16th – 17th centuries.

Here are some conclusions from our work:

  • tolerance or intolerance towards Bitcoin will become an important line of political divide;
  • Bitcoin's main growth points are value storage, loans, and underwriting;
  • collective storage of bitcoins will become an industry standard;
  • offshore banks may turn into Bitcoin banks;
  • Bitcoin will develop rapidly: bonds, annuities, loans, insurance will appear;
  • The practice of initial placement of exchange tokens (IEO, Initial Exchange Offering) will continue and will gainaboutless popular;
  • Bitcoin holders can become a catalyst for transforming the worldview.

The past is the key to the present: a remark on the method

My goal as an investor and analyst is to identifysocio-economic trends and anticipate their development. I read, select and distribute materials. I separate the signal from the noise, listening to experts who, it seems to me, are trustworthy. The main difficulty of this work is that global trends are often apparent only in retrospect.

I find a good solution to overcomeof this complexity - drawing historical parallels. In order not to be blind and not to miss modern trends, I study history in the broadest sense. I read historical books and articles and try to find parallels and analogies with today's trends. In the process, I force myself to pay attention to processes that I have not thought of before, and get the opportunity to put forward hypotheses about previously incomprehensible cause-effect relationships. I believe that this helps me more accurately assess the probabilities of various outcomes and, therefore, make more rational decisions on investment strategies and entrepreneurial projects.

“Anyone who wants to predict the future mustrefer to the past, as the events of modernity associated with people always resemble the events of past times. This is a consequence of the fact that all human affairs are committed by people who have always been and always will be obsessed with the same passions, which inevitably leads to the same results, ” Niccolo Machiavelli, 1517

Earlier I drew parallels between Bitcoin andearly oil industry, search engine wars, domain name market, P2P file sharing and Internet protocols. But the feeling that the scale of an era for which Bitcoin could become a catalyst eluded me. It was only after studying the Protestant Reformation that I felt that I had found a prototype of a suitable scale.

I hope that you will read this report with the same pleasure that I worked on it.

Yours sincerely,

Tuur Demester

Four Prerequisites for the Reformation

We believe that the Reformation was ensured by fourthe prerequisites that exist today: the painful status quo, in which services are provided by the monopolist, technology as a catalyst for change, the emergence of a new economic class and workable defense and retreat strategies for rebels.

1. The monopolist in the pursuit of rent

According to the authors of the article “Economic Analysis of the Protestant Reformation,” Catholic Church was a monopoly provider of spiritual services, andpartial control of the legal system allowed it to suppress competitors. For centuries, it has performed an essential function - it has forgiven sins, in fact being the "keeper" of the keys to paradise. This service was usually provided by priests. The authors continue: “If a religious monopoly inflates prices, it risks that a) the common people will choose another provider of religious services; b) the government will find another provider of legal services. ” This is exactly what happened during the Reformation.

The monopolist whose pursuit of rents raises questions today - international monetary and financial system. With the Bretton Woods Agreement of 1944, the dollarThe US has an “exorbitant privilege” as a global reserve currency. Like the Catholic Church of the 16th century, financial authorities have partial control over the legal system, which allows them to suppress competitors. Moreover, the fiat banking system controls access to the savings and pensions of citizens around the world. There is reason to believe that in conditions of quantitative easing, negative interest rates and currency wars, the banking monopoly overstates the prices of its services (for which customers pay through inflation). Because of this, she risks facing the fact that a) ordinary citizens and b) civil authorities choose another provider of financial services. In other words, with a wider distribution, bitcoin can be accepted by political players as full-fledged money for all legal purposes.

“Temporary fees have become permanent, andNumerous new taxes have been introduced for the richest members of the church. Church documents [...] testify that the sons and grandsons of heretics should have paid for the sins of their fathers. [...] The souls of deceased relatives could be released from purgatory for a fee ”, -The Marketplace of Christianity, p. 117

Fragments of the painting “Battle of Shrovetide and Lent”Peter Brueghel the Elder (1559). Bruegel allegorically depicts the conflict of the century: on the left are rebels indulging in pleasures, on the right is the weakened Catholic Church.

2. The technological revolution as a catalyst for change

In the 16th century, several inventions that changed the world were widespread. Printing press reduced the price of the book from annual income to the price of one chicken. Double Accounting accelerated international trade. Advanced compass and hourglass allowed to return from uncharted territories (which paved the way for exploring the world). Finally, many other inventions came about thanks to the boom. scientific research.

The inventions of the late XX and early XXI centuries led to the digital revolution. Telecommunications and email allowed to work remotely. Computing resources and services data storage turned into a mass consumption item, which significantly reduced infrastructure costs and, as a result, the cost of launching startups. Open source software gave entrepreneurs reliable and free tools. Security cryptography technologies have found application in publicly available security solutions. Social networks allowed to disseminate information quickly and without unnecessary bureaucracy.

In Europe in the 15th century, “the price of books has fallen by 2.4% per year for more than a hundred years,” while the share of university courses on science has risen from 25% to 40%. (Dittmar & Seabold)

The price of an Internet connection at a speed of 1 Mbps has fallen by 99% over 20 years: from $ 100,000 to less than $ 10 (99.99% - approx. Per.)

“As a rule, people from Antwerp are brilliant merchants, very rich, [...] strive to imitate strangers, [...] determined and able to trade anywhere in the world,” Gvichchardini, 1612

3. The new economic class: people who have something to fight for

Throughout the 16th and 17th centuries, maritime trade inEurope has grown significantly and improved. The Rhine, flowing from Switzerland to the English Channel, was the most important trade artery, and the cities of the Lower Lands located at its mouth were the winners. The volume of goods delivered by sea has grown rapidly, especially the import of spices from Asia to Europe. In these conditions, the influence of technological progress grew stronger. In port cities, where the rule of law was respected, specialized industries such as the manufacture of paints and fabrics, printing, weapons, tapestry weaving, education and medicine have flourished. Masters who have mastered these professions have attracted customers from all over Europe. As a result of trade growth, technological innovation and intensive specialization overall wealth increased, and the role of agriculture in the Dutch economy fell. This weakened the position of landowners and the church in favor of new class of merchants.

Today, classes in the West are not so pronounced. Nevertheless, in our opinion, certain parts of the population perceive changes much faster than others. In particular, millennials generation very skeptical of traditionalfinance and enthusiastically take advantage of digital innovation. A 2016 Facebook survey showed that only 8% of millennials “trust the advice of financial institutions” and that 45% “are ready to give up their bank, brokerage or credit account in favor of a better alternative." Moreover, a survey by the Transamerica Center for Retirement Services indicates: 76% of millennials believe that it will be “much harder to achieve social protection” than their parents’s generation, and 79% are worried that by the time they retire will remain without the support of the social protection system. It is expected that the millennial generation, which has invested more in the Bitcoin economy than other generations, will control most of the disposable income in the United States by 2029.

"A new definition of millennials - people before 1996Year of birth is important, as it indicates a generation that managed to understand and remember September 11 and met the 2008 crisis by young people, ”- Pew Research, 2018

4. Reliable defense and retreat strategies

Even with economic superiority and considerable wealth, a person is not inclined to resist the prevailing state of things without having reliable strategies for defending and retreating.

No wonder the netherlands revolutionlasted 80 years - longer than any other uprising in those days. Sea creeps were indestructible on the water. In 1573, the Dutch successfully defended Alkmaar from a siege, flooding nearby fields and cutting the supply line critical for the Spaniards. A year later, the same tactics saved the education center, the city of Leiden. Dutch water line - chain fortified villageslocated in direct line of sight from each other- defended the country's cultural and economic center located in the west of the Netherlands: the surrounding fields could be flooded in a few hours. And due to access to the North Sea and the developed fleet, there was always a backup option - emigration to the British Isles or, already in the 17th century, to the New World.

"The Removal of the Siege of Leiden", 1574 (fragment). The flooding of the fields through the destruction of the dams caused great damage, but weakened the Spanish army and allowed the Dutch flotilla to reach the city.

In the 21st century, the safety of people calling into question the economic status quo is responsible cryptography. Cryptographic technologies provideprivacy and protect against confiscation of assets. Encryption is common today. For example, HTTPS usage on the World Wide Web has grown from 13% in 2014 to 77% in 2018. But this is not enough if the service provider can be compromised. Therefore, we are seeing an increase in interest in digital sovereignty: millennials use Bitcoin and are interested in projects such as VPN, Blockstack, peer-to-peer WiFi networks, Tor, Signal, Purism, U2F, PGP and so on.

“If it takes so much to conquer other citiesthe same time as the ones that we have already conquered, we have neither the time nor the money to crush the remaining 24 rioting cities in Holland, ”- Spanish commander Don Luis de Recensence, 1574

“Cryptology is the future of privacy, andhence the future of money, banks and finance. Choosing between interaction with a monetary system that preserves a detailed digital trace of all financial activity and an alternative system that guarantees anonymity and privacy, people will choose the second. Moreover, they will demand it ”, - Orlin Grabbe, 1995

Doctrines of the Past and Present

The intuitive parallel between the Reformation and modernity are doctrines that reflect the essence of the rebellion and proclaim unity and conviction. We see such unifying appeals today.

In the sixteenth century, the central doctrine of the Lutheran Reformation was the words Sola fidethat translates to "faith alone." This phrase expresses the idea that believers no longer need a priest to go to heaven. It is enough only faith and devotion. Another popular Reformation appeal is Sola scriptura, or “Scripture alone,” rejects any authority other than the Bible.

There are several “war cries” in the Bitcoin world today, often scornfully called memes. In our opinion, they reflect a rebellious spirit and proclaim a modern reformation. At first, Vires in numeris - "strength in numbers." The essence of this mantra is formulated in a popular quote by Tyler Winklevoss: “We decided to entrust our money to a mathematical system free of politics and human errors.” Another motto of bitcoiners is “Don’t trust, verify”. This phrase has been known since the 1990s and probably appeared as an inverted quote from Ronald Reagan "Trust, but verify." It encourages users to independently verify the integrity of open source software, and in the case of Bitcoin, the validity of transactions in the blockchain. The 2013 forum entry spawned the word Hodlwhich means a firm intention to keep theirstocks of bitcoins, despite the volatility. Finally, the mantra “Not your keys - not your bitcoins”, emphasizes the distrust of third-party services that take bitcoins for storage.

Christ and the Shepherd, 1524, Nuremberg. This popular engraving shows how Christ welcomes true believers while the Catholic Church plunders a shed and enriches itself on indulgences.

“The very idea of ​​an independent currency, not justapplying private and censorship-resistant payment methods to existing currencies did not appear among early cipher banks or academic cryptographers until it was proposed by futuristic libertarians, ”- Nick Szabo, 2019

Finance during the Reformation

As we found out, during the Reformation, a new cultural and economic class appeared, trying to protect itself in a dynamic, unstable and hostile environment. It was a network of independent, unique economic players ready to defend their views, cut off from traditional ways of doing things, but with powerful tools. Thanks sharp need to improve financial security a whole series of innovations and long-termtrends. In the following sections, we will discuss the characteristics of the financial sector of the Netherlands of the 16th-17th centuries and extrapolate some parallel trends that are likely to gain a foothold in the Bitcoin world.

Marinus van Reimerswale, The Tax Collector, 1542

Deposit banks: full reservation, strict rules

In 1609, the Netherlands merchants and urbanThe authorities jointly founded the Amsterdam Wisselbank (AWB), which performed two main functions. Firstly, it kept reserves of gold and silver brought by merchants - refugees from the South Netherlands and other territories. Secondly, the bank issued bank notes recognized outside the country, denominated in florins, and bills of exchange.

“No wonder the Dutch come toprosperity before us. All their statesmen are merchants. They traveled to foreign countries, they understand how to trade, and do everything in its interests ”, - Petition to Oliver Cromwell, XVII century

The level of security in the Amsterdam Bank is nothad analogues in the world. It was located in Amsterdam - a city protected by the Dutch water line - a moat 80 kilometers long. The office and storage facilities are located in the very center of the city, in front of everyone, in the town hall. The organizational structure itself reflected the bank's firm intention to fulfill its fiduciary duties. Four commissioners worked in it, and at least two employees should always have watched the premises. The Commissioners supervised four accountants, four auditors, three administrators, and a precious metals tester. To prevent fraud, each accountant performed a predetermined task. The Dutch East India Company (Verenigde Oostindische Compagnie, VOC) - probably the most powerful economic organization of its time - kept an account with the Amsterdam Bank and paid only through it.

Despite a somewhat spoiled track recordListed as a fully reserve bank, AWB's reputation was second to none in the 17th century. Reliability and stability of the bank played a key role in the prosperity of the Republic of the United Provinces. Already in 1776, Adam Smith praised the money of the Bank of Amsterdam for "the inherent advantages over currencies." AWB services were not cheap: the bank charged a fee for opening an account and took 1% per year for storing gold coins and 1.5% for withdrawing funds. But in general, the advantages of AWB money were so obvious that his banknotes had agio, that is, they traded more than gold and the coins with which they were secured.

Trolley for transporting gold coins in the Amsterdam Bank

In the Bitcoin community in response to rejectiontrusted third parties, the high risk of loss and theft and long-term regulatory uncertainty, we expect the emergence of similar highly reliable and requiring minimal trust banking systems and storage of bitcoins.

Solutions with minimal trust are designed to greatly complicate theft and fraud. Using delay mechanisms transactions and programmable multilevel signature rights testifies to the establishment of reliable methodsBitcoin storage, which can raise security to a hitherto unattainable level. We appreciate the prospects for smart contract solutions offered by people like Bob McErlath, Bryan Bishop, and Peter Wuille. In this sense, the growing popularity of multi-signature wallets is most likely a promising start to a much larger trend. As of October 2019, 32% of the bitcoins in circulation are stored at P2SH addresses that provide better privacy, and 12% at addresses that can be unambiguously classified as multi-signature wallets (compared to 0% in 2014).

“[Here, storage is defined as] a circuitcreating a transaction that obliges both the user and the attacker to always observe the public blockchain. A weakly protected hot key can be used to send coins to an arbitrary address only after a certain time. During this delay, it is possible to initiate the return process, which can either cause the colder storage parameters, or [...] restart the delay period, ”Bryan Bishop describes a proposal for a pre-signed multi-signature repository, 2019

Business Insurance: Carefully Weaving a Trust Network

With the boom maritime trade in the sixteenth century there was a need for financial technologies that take into account the attendant risks. Interest Rates "marine loans»- an early form of insurance for ship owners- were forcedly high: the loan was repaid only when the ship returned safely to the port. Such contracts were especially convenient if the investor did not have reliable information about the profitability of the expedition. The alternative was the contract "the command"(Comenda), which gave the investor the right to a share inarrived on a successful flight. Both options, however, were not complete prototypes of modern marine insurance. The first insurance contracts appeared in Italy, where merchants themselves acted as insurers, which subsequently laid the foundation for mutual insurance. By the sixteenth century, insurance reached the shores of Britain, France, Holland and Spain.

Image of a Dutch merchant ship (fragment), Willem van de Velde, 1650

One of the main problems for merchants was receipt of insurance payments. Not all financial centers were equally reliable. Having made a mistake in choosing an insurer, the merchant could say goodbye to money. It was difficult to obtain reliable information on the immature maritime shipping market, so insurers were faced with high operational risks. Sometimes sailors specifically insured theira ship for a significant amount, to then sink it, or buy insurance for a ship already sunken. Due to the high risks, merchants paid increased premiums to reliable insurers, while insurers often dealt only with those merchants they could trust. Other factors, such as the financial stability of insurers and the rule of law in the city, also influenced the cost of insurance. The governments of Amsterdam and Venice repeatedly tried to introduce licensing of insurance brokers and guilds, but this measure did not find support.

Merchant of the Dutch East India Company with his wife, Albert Kuyp, 1640–1660

Ecosystem Insurance Bitcoin still at a very early stage. Since the advent of the mining industry in 2013, we have seen many examples of proto insurance. Investors pre-order devices for mining at startups-manufacturers. They, in turn, use the collected funds for the production of chips and equipment and, as in the marine trade of the 16th century, lay claim to part of the profit if the enterprise is successful. In addition, several custodial services offer different forms of insurance. However, in small print it is usually indicated that only “hot” wallets that store no more than 10% of bitcoins under control are insured. As in the trade of the 16th century, insurance in the crypto business depends on many unknown factors, such as price volatility and the risks associated with regulation, information security, service providers, etc. Given the global liquidity of Bitcoin, even attacks by states cannot be ruled out. Insurance companies claiming to be successful in the industry should have deep theoretical and practical knowledge, as well as have a clear set of standards that reinforce the responsibility of the parties and their long-term obligations. It is no accident that self-insurance in the form of a reserve fund has become the de facto standard in the custodial industry of bitcoins.

“While in the traditional market there areinsurance programs with coverage of up to $ 2 billion, programs for crypto assets are available only up to $ 500 million. ”- Jeff Hanson, Director of AON, June 2019

Liquid collateral asset as the basis of loans and derivatives

In 1602, Dutch merchants merged six small companies and collected 64 tons of gold to establish Dutch East India Company (VOC). She owned her own fleet of ships for trade with Asia, for which the Dutch government granted her a monopoly. Thanks to this monopoly, the fleet of the East India Company played an important role in the ongoing war with Spain. In 1604, the company entered the stock exchange, having carried out its first public offering of shares in a modern form. Anyone could buy a share in it. The placement was successful: more than 2% of the population of Amsterdam became VOC shareholders. The deliberate absence of bearer shares and clear rules for the ownership and transfer of securities met the key requirements of a transparent market. In 1610, investors received the first dividends.

“Falling interest rates show successAmsterdam aftermarket. He directed capital in a productive direction, especially in short-term loans, through active trading in securities and related lending mechanisms, ”- Gelderblom and Jonker (Gelderblom & Jonker)

East India Shares Have Been Extremelyliquid. They were willingly taken as collateral: a few months after the company was founded, shares with a total value of 27,600 guilders were used as a guarantee in the exchange of prisoners. Already in 1607, one aristocrat took 2,000 guilders at 8%, laying shares with a market price of 3,000 guilders (collateral ratio 66%). The VOC equity market grew rapidly, but left little evidence of itself, as the transactions took place privately. In 1623, the government formally approved the procedure for the liquidation of shares of the East India Company in the event of default by their holder. By the 1640s, the Amsterdam Exchange had regular repo transactions on the company's shares. Market interest rates in Amsterdam for (secured) loans fell from 8% in 1596 to less than 6% in 1620. The high liquidity of the VOC stock market made them an ideal underlying asset for the thriving 17th century derivatives market in Amsterdam, which offered forward contracts (including with the possibility of opening short positions) and repo transactions. In his dissertation on the East India Company, the historian L.O. Petram concludes that "after the 1630s and 1950s, investors were mainly interested in financial services provided by the secondary market, and not in trade with the East Indies themselves."

Investments and profitability of trading companies until the founding of the East India Company

Access to loans secured by shares of the East India Company led to a sharp drop in interest rates in Amsterdam

Returning to today, we see that bitcoin holders in many ways similar to VOC shareholders. They are prone to long-term investments, keep a significant share of capital in this asset and are reluctant to sell it so as not to pay capital gains tax. Being millennials, they are full of ambition to invest further. We expect Bitcoin to grow in popularity as collateral for loans. We are also optimistic about the markets. derivativesenabling businesses to pinpoint theira risk management strategy, thereby ensuring the sustainable growth of the Bitcoin industry. Our hypothesis is that the largest derivatives markets emerge in sectors of the economy with the highest price volatility: shares of the East India Company in Amsterdam of the 16th century, agriculture and precious metals in the 1980s, interest rates today, and tomorrow, probably Bitcoin.

Trading activity in the financial sector grew by 45%, while in agriculture fell by 53%. : CFTC, Commission in brief, 2016.

“According to our hypothesis, derivatives marketsgrow around the sectors that are most responsible for assessing risks in the economy (that is, economic products that companies must hedge against), ”- US Commodity Futures Trading Commission (CFTC), Commission in brief, 2016

Access to capital in a deflationary world

Life annuity - This is a contract for a fixed price,giving the owner the right to receive annual payments for the rest of his life. Such contracts have been widely used since the 14th century as debt substitutes, since they did not violate the Catholic Church’s prohibition of usury. (Starting in the sixteenth century, the law usually guaranteed that perpetual annuities could be repaid by paying off the body of debt.) Lifetime annuities were often used to finance low-risk capital-intensive enterprises: businesses, farms, and local governments. In the Lower Lands in the 14th century, two common economic scenarios were observed. Sandy coastal regions suffered from frequent floods, and there many landowners could not cope with their debts and lost their property. In the more stable inland lands of Flanders, annuity-based loans were used to stimulate business development (often with the aim of investing in real estate), while older residents bought life-long rental contracts as a pension. Annuities could be passed on to third parties and therefore became a popular financial instrument among the urban population. As the Netherlands Revolution gained momentum, and revenues from maritime trade increased, so did the importance of protecting cities and their populations. Cities began to raise capital by issuing annuities.

“By the 1580s, annuities were enoughdeveloped to serve as a reliable tool for the general public, including merchants, widows, orphans, and charities, ”- Gelderblom & Jonker

Annuities gained popularity much earlierthan mutual life insurance (which appeared only in the 18th century in England), since they required trust to the issuer of the insurance policy to a much lesser extent. The insurance payment would have to be claimed literally from the other world, without the possibility of taking the security deposit. Perhaps the cultural component also played a role: it was more comfortable for clients to put on a long life (annuities) than on a short one (life insurance).

“Annuities could be used for manygoals, in particular as a way to pay off the debt of the heirs [...] Antwerp's outstanding growth has strongly affected both the land and credit markets in its vicinity due to the massive participation of citizens, ”- Limberger & De Vijlder

Bitcoin Nominated Lending lives and lives, although the currency itself is onlyrecently celebrated its 10th anniversary. It is reported that since the start of operations in March 2018, Genesis Capital has drawn up $ 2 billion worth of bitcoin-denominated debt contracts. Demand is evident from hedge funds, businesses with bitcoin reserves and individual traders. We see parallels between the annuities that the Dutch cities issued and the IEO tokens that the exchanges today issue (Initial Exchange Offering, or IEO, the initial placement of exchange tokens). For example, Bitfinex created the LEO IEO token in order to attract market liquidity at a difficult legal time and also to reduce the liquidity risk associated with Tether. The exchange’s perpetual commitment to redeem LEO at a market price makes this token look like annuities. Other exchanges located in offshore jurisdictions have followed suit: Binance issued Binance Coin, Huobi - Huobi Token, and FTX - FTX Token. Bitcoin exchanges have a loyal audience, which to some extent depends on their services, and tokens allow exchanges to use the trust of users, essentially borrowing money from them. Developing an analogy with the besieged Dutch cities and merchants eager for profit, we expect that offers similar to annuities will continue to be popular with offshore bitcoin exchanges and cryptotrader millennials. In fact, these are the first examples of proto life insurance in the Bitcoin market. Over time, we expect mutual companies to appear. life insurancethat may well breathe new life into thisextremely weakened traditional industry. Numerous studies have shown that inflation dampens the demand for life insurance, so the spread of bitcoin as hard money can return the popularity of this service.

“IEO is an explosive mixture of Goldman Sachs and Nasdaq. This is a new type of fundraising that can change the financial industry [...], but first you need to deal with its regulation ”, - Steven Nerayoff, CEO Alchemist, June 2019

US data. : Sixth Annual Presidential Meeting of Life Insurance Companies, iii.org, ycharts

“1% inflation growth is expected to bebe accompanied by a decrease in the total amount of existing life insurance contracts per capita by 1.2%, ”- David Babbel, Professor, University of California, Berkeley, 1981


Venture Capitalist Eric Weinstein (EricWeinstein) recently suggested that the common phrase “good ideas conquer bad” is incorrect and that the more correct wording is “suitable ideas conquer inappropriate”. Paraphrasing Darwin's theory of the survival of animal species, he argues: an idea blooms only when it is most consistent with historical circumstances.

Indeed, history shows thatthe quality of an idea is not enough for its dissemination in society. A working steam engine was described by Heron of Alexandria in the 1st century BC. e., but this technology received commercial application only after 1600 years. A manual printing press existed in Korea in the 14th century, before the Gutenberg machine, but did not lead to a revolution there. The Vikings reached America several hundred years earlier than Columbus and the Hudson. In other words, due to external circumstances, even ideas with great potential are often not widely disseminated.

But from time to time circumstances developin a special way: on fertile soil many ideas take root at once, and this triggers an incredible chain reaction that radically changes society. An example of this is the Protestant Reformation: ideas arose, rebellions broke out, wounds were healed, and a new generation of radical entrepreneurs created an unprecedented series of fundamental economic and financial innovations. Five hundred years later, the situation may recur.

“If startup potential is proportional to sizeIts competitors, multiplied by their incompetence, the most promising startup is one that competes with national governments. This is not impossible: this is what cryptocurrencies do. ”

- Paul Graham, Founder of Y Combinator, August 2019

Today we see that the general population,especially millennials, express strong disagreement with the interventionist policies of central banks. Meanwhile, technicians are increasingly developing tools that can undermine the economic status quo. According to forecasts, in ten years millennials will earn more than all other generations. They are technically well-versed, grew up after September 11, and they have a security technology - encryption. Meanwhile, the Bitcoin ecosystem is becoming increasingly developed in all economic aspects, especially in terms of bank deposits, insurance, loans and derivatives, as well as early forms of life insurance. If this process continues, the multilayer set of Bitcoin protocols can become a global driving force and a potential alternative to the global monetary system.

Are you ready for the Bitcoin Reformation?


A Brief History of the Protestant Reformation with a Focus on the Lower Lands

1. The first dissent

AT 1511 Erasmus of Rotterdam publishes Praise of Nonsense, a popular satirical piece directed at the Catholic Church. Six years later, in 1517 year, Martin Luther gets fame thankshis "95 theses" - a caustic criticism of the Catholic Church and its pursuit of rents. After a few months, thousands of copies of this document circulate throughout Europe. In response to this in 1521 The year the Catholic Church declares his work heresy and burns them. IN 1522 King Charles V establishes the Inquisition in the Lower Lands to suppress heretics. IN 1523 the year the first burning of heretics took place. IN 1535 year Charles V condemns all heretics to death, and in 1539 suppresses the uprising against him in Ghent, provoked by a tax increase.

During this period, all social strata are subject to political persecution. Under investigation in 1543 even the devout Flemish Catholic Gerard Mercator (a cartographer famous for his world map 1569 of the year). He spends seven months in prison, from where he is released for lack of evidence. In the same year, Copernicus publishes a book on the heliocentric model of the world, and the Flemish anatomist Vesalius expresses a fundamental disagreement with the anatomical model of Galen - for the first time in a millennium.

The main characters of the painting "The ship of fools"Jerome Bosch became the representatives of the clergy. The work was probably inspired by the satirical poem of the same name in 1494, the preface to which contains the lines: "Who takes his place on the ship of fools, with laughter and songs, goes to hell."

AT 1548 the year the humanist Christopher Plantin moved to Antwerp - his publishing house soon became the most prestigious in Western Europe. IN 1555 in Antwerp, the first underground Protestant city parish appears.

2. Open resistance

AT 1559 in the year the king of the Habsburg dynasty (Philip II - Approx. per.) leaves Brussels for Spain, after which his half-sister Margarita of Parma becomes the state halter of the Netherlands. 1566 the year goes down in history as the “year of miracles." At the beginning, the Flemish nobility publishes a petition to the Netherlands stalter with a request to stop the persecution, which causes a surprisingly mild reaction. Gaining courage, groups of Protestants begin to preach in Catholic churches, which is accompanied by vandalism, which later becomes known as iconoclasticism, or iconoclasm. At the local level, without the consent of the governor, a truce is concluded with them, and Protestants are allowed to preach in six churches inside the city walls of Antwerp. Later that year, the defeat of the army of Protestants (Geuze) tilts the balance of power back in favor of the royalists.

"The courage of the Calvinist preachers in thisthe area of ​​[Flanders] has grown so much that in their sermons they instruct people that it is not enough to eradicate idolatry in the hearts - it is necessary to completely remove it from sight. Apparently, they little by little affirm their flock in the thought of the need to plunder the church and get rid of all the images, ”- Servant of the Spanish Government, 1566

3. Suppression

AT 1567 the year the Spanish Duke of Alba arrives inThe Netherlands with ten thousand experienced fighters and establishes a "court of blood." His six-year reign as a state halter of the Netherlands is, according to some estimates, the cause of the death of more than eighteen thousand people. Upon arrival, Alba raises taxes and begins the construction of a huge fortress on the border of the city, which will end in 1572 year. This pentagon stronghold becomes "one of the most significant urban structures of the 16th century." Three years later, the Spanish crown faces financial difficulties and stops paying its mercenaries in the Netherlands, who, under the command of the commandant of the Antwerp Citadel, Sancho D’Avila plunder the city in 1576 year. “Spanish Fury” is becoming one of the largest atrocities for many centuries: in 7 days, 7–10% of the city’s population has been killed, thousands of houses destroyed.

Allegory of the Dutch nation attacked by the Spaniards. Johannes Gacyus, 1616

Aerial view of Antwerp, the citadel of Alba in the foreground. : Civitates Orbis Terrarum I

An engraving from 1580 shows how the Dutch were frightened by a Spanish invasion depicted as an invasion of pigs. Lion is a symbol of the Netherlands

Despite desperate resistance, including the partial destruction of the Spanish Citadel, in 1585 Antwerp surrenders to Spain and allProtestant residents are given four years to complete their affairs and leave the city. The same thing happens in Ghent and Brussels. Within twenty years since the looting of Antwerp, almost 50% of the townspeople have emigrated. Europe’s strongest economy is suffering a heart attack: the next century, wages in Antwerp will remain 35% lower than in Leiden, a city located in the Protestant-friendly Northern Netherlands region, just 140 kilometers from it.

4. Netherlands, New Amsterdam, New York

The fall of Antwerp, and then the southern Netherlandsas a whole, makes a great contribution to the establishment of the Golden Age of the Republic of the United Provinces, where 50-100 thousand Flemings are resettled. At the same time, relatively tolerant England is building up its human capital through an influx of immigrants. After decades of wars and conquests, the Spanish Empire is weakening from the inside out (partly due to the damage to health from close marriages), and its rigid, hierarchical rule does not withstand competition from the flexible, dynamic and commercially oriented economies of the Netherlands and Britain. The combination, on the one hand, of religious and commercial tolerance, and, on the other hand, territory protected by water, becomes a recipe for success. Over the next 200 years, the Netherlands and England are at the forefront of economic innovation and growth.

The approximate distribution of the merchants of Amsterdam by origin in 1585 and 1609. “More than half of the merchants with property of 100 thousand florins and more in 1631 were from the Southern Netherlands”

“Events in Holland after 1600 contradictthe widespread belief that secondary markets come from publicly traded public debt. East India Company stocks, not government bonds, have become a key turning point. ”- Gelderblom & Jonker

AT 1579 the provinces of the Northern Netherlands gatherto sign the Union of Utrecht, proclaiming independence from Spain. The document declares complete religious freedom in the Netherlands - freedom that will be respected in New Amsterdam. IN 1588 the year after the defeat of the Invincible Armada in the English Channel, Spain abandons attempts to conquer England. IN 1602 Antwerp immigrant Dirk van Osbecomes one of the founders of the Dutch East India Company. He financially helps Henry Hudson’s expedition to North America in 1607, signs one of the world's first exchange certificates and acts as a co-founder of the Bank of Amsterdam in 1609 year. In the same year, Spain and the Netherlands concluded a peace treaty. IN 1620 the pilgrim fathers who laterset sail on the Mayflower and lay the Plymouth colony, settle in the Dutch city of Leiden, finding refuge there from the religious intolerance of their native England. IN 1621 Flemish-Dutch merchant WillemUsselinks (Willem Usselincx) receives permission from the Generals to found the Dutch West India Company (WIC) with a monopoly on the development of the lands of North America. IN 1624 The first settlers arrive on Governor's Island near Manhattan in the year. IN 1626 in the year, Wallooner Peter Minuit bought Manhattan from the Delaware and placed the capital of the New Netherlands there - at that time a purely commercial enterprise. IN 1638 Galileo Galilei's work, Two New Sciences, which is fundamental for heliocentrism, was published in the Netherlands (his draft was illegally exported from Italy). IN 1643 According to estimates by Issak Jog, the population of Manhattan is five hundred people who speak eighteen languages. IN 1644 the year the English poet John Milton publishes Areopagitics, a philosophical treatise in defense of freedom of speech and expression. IN 1654 a small group arrives in ManhattanPortuguese Jews, and having received a petition from the Jewish community of Europe, the Governor of New Amsterdam, Peter Stewesant, finally allows them to stay, setting an example of hospitality towards future settlers of other nationalities. IN 1664 the year the British army captures New Amsterdamand renames it to New York. The population of the city at that time was 9 thousand people. In 1665, Spinoza’s teacher, a refugee from Flanders, Francis Van Den Enden published “Free Political Suggestions,” in which he defended freedom of speech, freedom of religion, egalitarianism, abolitionism, and direct democracy. IN 1683 in the year, the British Earl Thomas Dungan was appointed Governor of New York with the order to strengthen the influence of the Anglican Church there - he still cannot cope with his task. IN 1689 The year philosopher John Locke publishes A Letter Concerning Toleration, which provides convincing arguments for religious tolerance. IN 1777 New York adopts the first state constitutionwithout religious affiliation, it becomes the only state that has declared independence where there are no religious requirements for government officials.

Map of New Netherlands. Most of the Dutch settlements were in the territory of modern New York

"First of all freedoms, give me the freedom to know, speak and argue freely, in accordance with my conscience," - John Milton, 1644

“This agreement further prescribes, defines anddeclares that free engaging in the religious profession and practicing religion, without discrimination and preferences, is permitted in this state forever and for everyone ”, - New York State Constitution, 1777


In the center of the “Battle of Shrovetide and Lent” by Bruegheldepicted a married couple. A man carries a bag - a symbol of selfishness and imperfection, and a woman - an extinguished lantern, reflecting a lack of wisdom. Supporting each other, they are removed, accompanied by a jester. We interpret these figures as a message in support of the future Reformation. Although simple men and women are not as enlightened as intellectuals would like, they, as a rule, do not participate in the war of fanatics. This lack of involvement is not a consequence of general apathy, but rather an expression of the pragmatic desire for a quiet family life and individual economic progress.

Like Bruegel, we are sympathetic and optimisticWe look at the long-term prospects for improving people's lives, even if Reformation 2.0 takes place. Of course, in any dispute, society is divided into several camps, based on prejudices and inaccurate estimates. But in the long run, the burden of blind faith and fanaticism can be dropped, and the lantern of the mind lit.

The forks of the road of history, like forks, constantly give us the opportunity to turn towards a better world.


Oleg Andreev, Tony B (Bitcoin Translated), Valeria Vazhnova, Dima Zhelezov, Ivan Ivanitsky, Alexander Seleznev, Sergey Tikhomirov (the Basic Block podcast) translated and edited.