“This article was written in March of 2025”

Bitcoin has emerged as a massive disruptor to the current financial paradigm by offering individual people the ability to transact freely from censorship, and protect their savings form dilution via inflation. The fabric upon which it was created is deeply cypherpunk, libertarian, and anarchistic. As Bitcoin evolves, I see a future on the horizon that seems all but unavoidable, a separation of Bitcoin users between “Sovereigns/Elites” and “Serfs/Plebeians”. This is not a distinction between people that have adopted bitcoin and those that haven’t, but in a world that is hyper-bitcoinized. My proposition that Bitcoiners will become the new aristocratic class rests on the following assumptions.

• Demand for scarce block space causes fees to rise
• High fees are sustained and are cost prohibitive to small amounts of bitcoin

If you would like to skip past my brief explanation of the technical limitations of Bitcoin you can go ahead to the section that is titled “The Consequences”.

Blocksize

One component of Bitcoin’s architecture is its blocksize limitation. This cap, originally set at 1 megabyte (MB) and later expanded to 4MB with segwit, has profound implications for transaction fees and accessibility to the base layer. With each block being mined roughly every 10 minutes, this translates to a throughput of just 2,000 to 3,000 transactions per block, or 200 million per year. Immediatley you can see the problem we are facing here, block space is finite. Not every U.S. citizen will be able to make a single transaction throughout year, for a global financial system…

Now before you accuse me of entertaining increasing the blocksize limit, I will just breifly say this is not going to solve the issue in any meaningful way. Even if we 100x the block size and use 100MB blocks, we are looking at 20 billion transactions a year which is enough for each person on earth to send 2.5 transactions in a year. All while increasing the size of the ledger by 1 GB every ~2 hours. Completely untenable. This dilemma was fought over in 2017 (See “The Blocksize Wars” book for more detail around this topic). The solution was to scale Bitcoin transactions in layers such as the Lightning Network.

Scaling in Layers

Lightning allows a person to “open” a channel by entering a ”two-party agreement” that locks Bitcoin into a contract that can then be abstracted away into the Lightning network. Bitcoin can move millions of times between the two parties with no footprint on the base layer and thus no base layer fees. For more technical insight as to how this works I will refer you to this article.

What’s important to understand is that only a single tx needs to take place for then unlimited use in this layer 2 technology (liquidity not being an issue). This potentially reduces the need for onchain txs and keeps block space less scarce and desirable. Far from a panacea but helpful, we still have to address the fee rates that potentially arise in a hyper-bitcoinized world.

Block scarcity

Hopefully I have illustrated how scarce block space is and that there is no practical way around this without compromising on Bitcoin’s core tenets and ethos that have allowed it to gain adoption and survive. If fees skyrocket then people with UTXOs smaller than the current fee won’t be able to send their bitcoin in a timely fashion. You may be fine with consolidating a $50k UTXO for a $1k fee and waiting 2 months for the fees to frop low enough for this to get confirmed in a block. However, wanting to purchase a $50k car and havin to pay $10k in onchain fees to have it confirm in less than a day would be cost-prohibitive.

This might not materialize in the near future, but we have seen 100k sat - 1million sat fees be paid in times of congestion. This is while Bitocin is a nascent money and not used for actual economic transactions whatsoever at scale. People will get emotional and pay irrational fees to satisfy their time preference. The time of sustained high fees will likely come and go, and one day, might stick around.

The Consequences

When Bitcoin becomes money for everyone, this does not mean everyone will interact with the base layer. By the nature of the system, as I explained earlier, new users will need to be onboarded to higher layers such as Lightning. This presupposes there is someone with onchain UTXOs that opened a Lightning channel and allowed you to use their liquidity to transact with. Using Lightning is fundamentally different than using on chain bitcoin. There are trade offs of security, decentralization, and counterparty risks that don’t exist with on chain bitcoin. This is in order to obtain the benefits of faster tx speed, increased privacy, and lower fees.

This means that if you hold UTXOs right now, you will be in the vast minority of people, and you will have outsized sovereignty from those that don’t have that ability. You will have the option to become a “bank” in the future, unlocking your bitcoin as liquidity for others to use. A digital parallel to the “feudal lords” that allowed its serfs to use and work the land owned by the lord, to grow crops, in exchange for the lord turning a profit.

The Politics

This may sound horrifying to the libertarian audiences that make up most of the Bitcoiners today, but I struggle to see how it doesn’t play out this way. A new form of “elites” or “aristocrats” will emerge; sovereign individuals, if you must. In Aristotle’s “Politics” he makes distinctions of the types of governing bodies in a polis. The following writing encapsulates the ideas I would like to elaborate on.

”The first criterion that is used to distinguish among different kinds of regimes is the number of those ruling: one man, a few men, or the many. The second is perhaps a little more unexpected: do those in power, however many they are, rule only in their own interest or do they rule in the interest of all the citizens? “[T]hose regimes which look to the common advantage are correct regimes according to what is unqualifiedly just, while those which look only to the advantage of the rulers are errant, and are all deviations from the correct regimes; for they involve mastery, but the city is a partnership of free persons” (1279a16).”

”Having established these as the relevant criteria, in Book III Chapter 7 Aristotle sets out the six kinds of regimes. The correct regimes are monarchy (rule by one man for the common good), aristocracy (rule by a few for the common good), and polity (rule by the many for the common good); the flawed or deviant regimes are tyranny (rule by one man in his own interest), oligarchy (rule by the few in their own interest), and democracy (rule by the many in their own interest). Aristotle later ranks them in order of goodness, with monarchy the best, aristocracy the next best, then polity, democracy, oligarchy, and tyranny (1289a38).”

”People in Western societies are used to thinking of democracy as a good form of government – maybe the only good form of government – but Aristotle considers it one of the flawed regimes (although it is the least bad of the three) and you should keep that in mind in his discussion of it. You should also keep in mind that by the “common good” Aristotle means the common good of the citizens, and not necessarily all the residents of the city. The women, slaves, and manual laborers are in the city for the good of the citizens.” (https://iep.utm.edu/aristotle-politics/)

This dynamic is illustrated in the table below

The purpose of making these is not to make a value judgement on these forms of governance or to declare that Aristotle was correct in his ranking of them. My argument is that most Bitcoiners, and Americans, have a strong aversion to any form of authoritarian power or governance. What I would suggest is that authority and power is not inherently bad, but what it aims to achieve can make it so, as described by Aristotle. There is a very clear distinction between a Monarch and a Tyrant as defined by Aristotle, as one aims to benefit the common good of the citizens of the polis and the other aims to enrich and empower themselves.

My belief is that there will always, in every society, exist classes of people belonging to “The One”, “The Few”, and “The Many”. The term Aristocracy and Monarchy is often misunderstood because the members of “The One” and “The Many” in today’s society more closely resemble tyrants and oligarchs. This aversion also has its roots in classical liberalism with the idea of “Individualism” and is deeply rooted in American politics and culture but in my opinion is a straw man argument. The American Republic could arguably be a fusion of the 3 ideal forms of government that Aristotle defined. The President = the Monarch, The house, senate, and Supreme Court = the aristocrats, and the citizens = the polity. Aristocrats can also consist of people with large amounts of wealth and influence. Often the wealth is passed down generationally allowing the family to hold some level of power throughout time.

The New Aristocracy

If Bitcoin becomes global money I have no doubt of the benefits it will provide to humanity, even for those that don’t hold their own keys. We must confront the uncomfortable truth that not everyone can hold their own keys, and there is nothing we can do to change that given the current conditions. Owning your own UTXOs will be seen as an elite privilege. With this privilege comes an immense responsibility on the shoulders of those bitcoiners. It will be no small task to manage wealth at that level if Bitcoin becomes as valuable as we all think it will. You will have a duty and responsibility to those around you to properly manage your bitcoin and hypothetically create liquidity for them through layers like Lightning. All of this to ensure Bitcoin’s utility and properties extends beyond those privileged few.

We, as early adopters of Bitcoin, have to come to terms with how to most ethically provide financial services for those that adopt Bitcoin and don’t have that luxury. Banks of today fractionally reserve our money and central banks can endlessly dilute us. These were conscious decisions made at one point in time by the “One” or the “Few” at the expense of the “Many”. As the new aristocracy, bitcoiners will need to operate in ethical and sound ways to ensure the “many” are taken care of. Make no mistake, some of the existing elites will retain power through this transition to a Bitcoin standard. They will bring their same malicious games along with them and try to subject and oppress the underprivileged. We must refuse them of this monopoly. Bitcoiners must take a stand and look after those that can’t use the base chain by not playing fractional reserve games and diluting people’s holdings with IOUs.