Decentralization and Localized Manufacturing: Bitcoin, AI and 3D printing

In the 1997 book The Sovereign Individual, William Rees-Mogg and James Dale Davidson make a convincing case that again and again throughout history, the dominant power of the day was disrupted by new technologies. Advances in agriculture meant that people and their property were often geographically stationary, making them sitting ducks for “specialists in violence”, the predecessors to modern governments, who back then, were both the plunderers and protectors against plunder. The stirrup, contoured saddle, spur, and curb bit had a combined similar disrupting effect, shifting power away from heavy cavalry to a single armed knight. The Gunpowder Revolution disrupted the feudal order of the day, reinforced in those days by the Catholic Church. Rees-Mogg and Davidson write, “the Church tended to make religious virtues of its own economic interests, while militating against the development of manufacturing and independent commercial wealth that were destined to destabilize the feudal system.” The printing press disrupted the Church even further: causing it to lose its monopoly on biblical narrative. The result was a major loss in its influence and power, which gave way to the modern nation state.

Rees-Mogg and Davidson argue that the microprocessor would inevitably disrupt the nation state in the same way that the printing press disrupted Christendom a few hundred years ago. The internet itself (a globally-interconnected community) and public key cryptography (which protects both communications and property of Bitcoin) are made possible by microprocessors.

The present and future

One major battlefront for decentralization is fought on the currency front. Since Bitcoin’s 2009 inception, we have been able to transact permissionlessly, borderlessly, and (often) anonymously. Nation states have long been jealous of any challenge to their monopoly on money, and they will spend vast sums of money to ensure that there are no serious monetary rivals. Bitcoin serves as an alternative to that trap, which is why it is under attack by the likes of politicians and the crumbling legacy media.

But to transact on Bitcoin, you need miners. No doubt, regulators in the United States and Europe observed as China outlawed Bitcoin mining in 2021, which only resulted in the majority of the hashing power moving from that country to the United States. So while they would probably wish to ban it in the United States and Europe outright, they know that they would only lose both regulatory control and tax revenue from Bitcoin miners by doing so. Thus, for now, not even Elizabeth Warren – the most Bitcoin-hostile legislator in Washington – proposes to outright ban Bitcoin. Instead, she proposes to expand know-your-customer (KYC) rules to essentially all parties within the Bitcoin ecosystem as well as discourage self-custody and privacy-enhancing technologies.

Bitcoin does have an important weak point of centralization (for now): the hardware. The University of Cambridge produces industry reports on Bitcoin mining and communicates that, hardware-wise, the overwhelming majority of Bitcoin miners report to use an “ASIC” chip for mining Bitcoin’s SHA-256 hashing algorithm produced by Singapore-based company Bitmain, with competitors MicroBT and Canaan trailing behind. Regardless of where Bitmain produces its ASIC chips, the ideal scenario for Bitcoin’s decentralization would be that production of ASIC miners (and the mining itself for that matter) would be dispersed around the world so that no specific region could have a definitive advantage, taking the majority control of the hashing power. A reasonable compromise would be one in which ASIC miners were produced, at scale and in high quality, by at least more manufacturers than there are now, especially across countries that are not politically aligned with one another so that collusion between them would be increasingly unlikely.

A second major battlefront for decentralization is fought on the Artificial Intelligence (AI) front. I once attended a conference in which Peter Thiel participated as a speaker. He said something very close to the following (quoted from my memory): “Bitcoin is a technology that, on net, favors the individual. AI is a technology that, on net, favors the state.” It is the latter technology and its favoring the state that emphasizes the importance of getting it into the hands of as many participants as possible if we are to build a truly decentralized world.

One risk to AI’s decentralization is one that Bitcoin has in common: a potential future scenario in which hardware is monitored and must be registered by law. In the case of Bitcoin, that would mean miners must register their ASIC chips. In the case of AI, it could mean that even you or I would need to register graphics processing units (GPUs) above a certain capacity (or, in the case of software, that matrices must be registered). Guillaume Verdon, the name behind the now doxed alias @BasedBeffJesos, highlighted this risk in a podcast with Lex Fridman, arguing that this could “[stop] the open source ecosystem from thriving… by executive order, claiming that open source LLMs are dual-use technologies and should be government-controlled.”

Although executive orders could not kill Bitcoin (but could discourage some people from using it), similar reporting requirements for miners would likely, to some degree, impact Bitcoin’s open source ecosystem.

A third major battleground worth highlighting is 3D printers, assemblers, and other tools in the “maker” arsenal. This “maker” movement hints at a future solution to the problem of centralization tendencies for Bitcoin and AI.

Imagine a world with 3D printers and accompanying tools in most people’s homes. If you could print your own high-quality ASIC Bitcoin miners and GPUs for running large language models (LLMs), decentralization is light-years ahead.

We can ignore for a moment the futuristic scenario in which 3D printers and other “maker” tools are used to produce hardware for Bitcoin and AI applications. Even at present, at least one government is looking at the 3D printer with the same skeptical eye that the Catholic Church had for the printing press in the 15th and 16th centuries. New York State’s Assembly Bill A8132, if passed into law, would require criminal background checks, with fingerprints sent to the FBI, in order to purchase 3D printers “capable of creating firearms.” It is reasonable to expect that various governments, fearing loss of their own centralized power, will continue to push registration and “KYC” requirements to maintain control of real-space tools that facilitate decentralization in cyberspace.

Note: The Soviet Union had similar controls on seemingly harmless products such as books, photocopiers, fax machines – all of which facilitated the spread of information, and thus, threatened the regime. There were similar efforts to control the sale of fabric that could be used to build hot air balloons in East Germany, to stop people from escaping to West Germany. (See the 1982 American film Night Crossing and the 2018 German film Balloon that both document a real escape).

Localized manufacturing, whether at home or in a so-called community fabrication laboratory or “fab lab”, is likely to come under increased hostility by various governments as 3D printers and other “maker” tools are able to produce even more sophisticated electronics. But, for now at least, fab labs are growing exponentially in number, with well over 2,000 of them spread around the world so far, and even receive various levels of support by governments. These fab labs, by the way, don’t account for the many more personalized labs in people’s homes.

Neil Gershenfeld at MIT’s Center for Bits and Atoms tries to understand what the world looks like when almost anybody can make almost anything and when machines can make other machines, even machines more sophisticated than themselves, and often with locally-sourced materials.

Gershenfeld argues in a podcast appearance that localized manufacturing doesn’t scale and that production is generally for personal use, not commercial sale. But when many thousands of people around the world learn how to locally produce their own 3D-printed and home-assembled Bitcoin miner and then combine their individual hashing power with others in a mining pool and coordinate with one another over the Tor network… then the world starts to look much more decentralized.

Conclusion

Bitcoin, AI, and 3D printers share a common theme of decentralization and disruptive potential for the nation state. As both Bitcoin’s ASIC mining chips and GPUs used to run LLMs exist in real-space where nation states are most dominant, governments may become increasingly hostile towards such hardware: requiring criminal background checks, KYC, etc. Interestingly, 3D printers, assemblers, and other “maker” tools could be used now or in the future for localized manufacturing (whether at home or in so-called “fab labs”), enabling a much more decentralized world.

Meanwhile, on the policy front, criminal background checks and registration requirements for 3D printers and other “maker” tools such as those proposed in New York’s Assembly Bill A8132 deserve a skeptical eye and strong political pushback.

This is a guest post by Emile Phaneuf. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.