One of the most dramatic changes in our world today is the shift from physical to digital transactions. You can see it everywhere, from the soaring price of the NASDAQ and the rise of Amazon.com to the waves of retail stores going out of business each year. As investors, these trends are critical to understand in order to survive (let alone profit) in a changing world.

However, there are many second-order effects of this paradigm shift that are often ignored. Overarching themes are easily missed as well. For example, digital transactions require some kind of encryption or they would be completely untenable. Imagine if your credit card number was compromised every time you made a purchase online. That’s exactly what would happen if transactions were not secure, it would be like taping your social security card to your forehead for everyone to see or posting pictures of your credit card numbers on Facebook.

Fortunately, we do have encryption and we use it every day without thinking about it. The little padlock icon in your browser lets you know that your information is being transmitted privately. So, what’s the issue here? Well, the thing most people don’t know is that there’s a war being fought over the right to privacy every day and encryption is at the heart of the matter.

Back in the 1970’s, a technology called public key cryptography was created. This technology enabled anyone to send secure messages by using the combination of a public and a private key. Before that time, government agencies considered strong encryption as a state secret and for good reason. Recall that the outcome of WW2 was greatly affected when messages sent from the enigma machine were cracked.

Today however, the war for encryption is being fought on many fronts. Whether it’s the San Bernardino iPhone story, Hillary Clinton’s infamous “Manhattan-like project to break strong encryption”, the most recent hack on Twitter, or the Snowden revelations, the story is essentially the same. On one side you have law enforcement saying “Hey, we’ve got these guys doing bad stuff and we can’t stop them or prosecute them because they’re sending encrypted messages.” And on the other side you have people who have the right to privacy and the fact that backdoors are always eventually used by someone they were not intended for. Additionally, the criminal justice system has a mandate that people are innocent until proven guilty. Are we willing to allow the complete destruction of privacy in order to catch a few criminals?

In the 4th amendment we are guaranteed the protection from unreasonable search and seizure, which includes our person, house and papers. It’s not a great stretch of the imagination that “papers” should extend to digital documents in today’s world. After all, there were no computers at the time the Bill of Rights was produced.  

But what did we actually end up with? A government tap into the fiber optic backbone of the internet. A new initiative by Google and Apple to use our cell phone's bluetooth connection to report our location within millimeter accuracy directly to Uncle Sam for better contact tracing. Who wants to bet that Google’s and Apple’s new tracking fetish doesn’t end once we’re past the pandemic?

Enter Democracy Tech, a kind of impact investing with the explicit purpose of resisting authoritarianism. Alex Gladstein of the Human Rights Foundation and the Oslo Freedom Forum explains that the issues we face in the United States are not unique. In fact, some four billion people live under an authoritarian regime.

Take a look at Venezuela, Syria, Zimbabwe if you have the stomach for it. In China, presidential terms have been abolished and the internet is heavily censored. In Russia, journalists are jailed or simply poisoned. In Nicaragua, the state-owned television was turned off while students were gunned down in the streets.

What does all this have to do with Bitcoin? Simple, Bitcoin is not only the best performing asset of the last decade, but it’s also the greatest tool for human rights that exists today. Think about it.

Bitcoin:

• Cannot be hyperinflated by dictators.

• Sends secure messages by default.

• Enforces strong property rights.

• Resists censorship with unstoppable transactions.

• Protects free speech and is completely oblivious to national borders.

• Unites strange bedfellows from human rights activists, software geeks, gold bugs, libertarians, investors, journalists, the wealthy and the poor.

• Smashes currency controls.

• Is free and open source software.

• Attracts the smartest people in the room from finance and banking.

• Checks the power of dictators.

• Inspires artists.

Bitcoin is a revolution. And as such it also will attract its share of charlatans and conmen. That’s where we come in at Ikigai. Investors need a way to participate in this technological force majeure with a partner that they can trust. At Ikigai we combine a passion for investing with the expertise to make it simple and powerful for you.

I would like to thank our partners for undertaking this journey with us. We believe in what we do. Ikigai Asset Management is more than the place to work or invest, it’s a way to generate great returns while making the world a better place.

Hans Hauge

Head of Quant Strategy

Ikigai Asset Management