Exits & re-breaks

Bitcoin as scarce light-speed settlement

❓ What problem is bitcoin trying to solve in the book’s frame?

Close the speed gap: a scarce bearer asset that settles over networks without a central mint (Chapters 20–21). Success conditions: decentralization of validation, security budget, credible self-custody exit, resistance to capture. Failure modes: protocol bugs, state multi-front attack, custody wrapping (ETFs as gold-certificate redux), fee market too weak post-subsidy (U1 unresolved).

PoW vs PoS

❓ Why prefer proof-of-work for money-grade neutrality?

Unforgeable costliness: rewriting history costs energy/work external to coin ownership. PoS validates the ledger with the ledger’s own coin distribution—circular for “money for enemies.” PoS can be fine for application platforms; Alden argues it is weaker for neutral base money (Ch 24–25). Energy use is bounded by miner revenue, often chasing stranded power—not infinite.

Layers

❓ Can Lightning fix base-layer throughput without banks?

Base layers settle; layers (Lightning HTLCs, sidechains, rollups) scale payments. Trust returns if operators can seize funds or if exit is slow. Public capacity stats undercount private channels—measure carefully.

Stablecoins

❓ Fix or new Eurodollar risk?

Fiat-collateralized stables export dollar claims on open rails—hugely useful under local inflation (Nigeria/Argentina pattern). Risks: issuer/bank freezes, reserve quality, sanctions, contract blacklists. GENIUS Act (US P.L. 119-27, July 2025) and MiCA pull dollar/euro tokens into formal payment-stablecoin regimes—state reasserting claim control even on public chains. Algorithmic designs without exogenous collateral (Terra/UST May 2022) failed hard.

CBDCs

❓ Service upgrade or control completion?

Can improve settlement plumbing (especially wholesale). Retail CBDCs enable finer freeze/programmability than cash. Adoption often weak when voluntary (eNaira pattern in book). Dual track possible: CBDC compliance rail + open exit rail—if exit remains legal and usable.

Re-break summary

Every exit can recreate breakage: stables recreate dollar hierarchy; CBDCs recreate freeze power; custodial crypto recreates deposits; expressive DeFi recreates leverage casinos on new rails.