Game Theory: how to attack Bitcoin by spreading false narratives
The cheapest victory is narrative-driven enclosure. You don’t kill Bitcoin; you define “safe Bitcoin” as paperized, supervised, and throttle-ready.
Let’s do some game theory.
Here’s the playbook I’d run if I wanted to contain — not ban — Bitcoin. I’ll stick to narratives (memes + talking points) because those are the cheapest levers.
Core containment objective
Keep Bitcoin from scaling as a medium of exchange/self-custody network, while allowing a paperized, supervised store-of-value track that’s easy to tax, throttle, and co-opt.
Phase sequencing (clockwork)
Normalize (“it’s an asset class”)
Alarm (select crises → “we must act”)
Enclose (rules baked into rails, not just laws)
Harvest (paper flows up, self-custody down)
18 narratives I’d push (with purpose, target, and the policy it unlocks)
“Safety First Money”
Line: Most people want refunds, fraud protection, and customer support; only supervised rails can guarantee that.
Target: Retail, consumer press.
Unlocks: KYC wallet defaults; chargeback-like rules; insurer-driven wallet whitelists.
“Child Protection / CSAM Vector”
Line: Unvetted nodes/wallets can relay/store abuse material. (Shout out Bitcoin Core.)
Target: Legislatures, platforms, cloud providers.
Unlocks: App-store & cloud Acceptable Use Policies against non-KYC nodes; ISP filtering; “licensed node” regimes.
“Critical Infrastructure Risk”
Line: Proof-of-Work volatility threatens grids and climate goals; coordinated curbs are responsible stewardship.
Target: Energy regulators, ESG allocators.
Unlocks: Energy-use limits, dynamic curtailment, miner permit gating.
“Illicit Finance / Terror Funding”
Line: Self-custody = blind spot; supervised stablecoins solve AML without killing innovation.
Target: Banks, FATF crowd.
Unlocks: Travel-Rule overreach; mandatory analytics on all exchange withdrawals; address blacklists.
“Tax Fairness / Everyone Pays Their Share”
Line: Unreported Bitcoin gains erode schools and hospitals.
Target: Finance ministries, mainstream media.
Unlocks: Real-time tax withholding on custodial rails; 1099-style global equivalents; punitive penalties for self-custody “non-filers”.
“Climate & Justice”
Line: Your coin, their asthma. Communities of color bear mining pollution.
Target: Cities, NGOs, ESG committees.
Unlocks: Local moratoria; environmental bonds for miners; reputational cost to corporate adoption.
“Corporate Fiduciary Duty”
Line: Treasurers holding keys are violating internal controls; ETFs/funds are best practice.
Target: CFOs, auditors, Big Four.
Unlocks: Audit standards that effectively ban corporate self-custody; board-policy templates.
“Quantum Risk (Evergreen)”
Line: Post-quantum is coming; don’t risk pensions on archaic cryptography.
Target: Pensions/insurers.
Unlocks: Allocation caps unless wrapped in “quantum-ready” custodians; delay on on-chain settlement usage.
“Payments UX Reality”
Line: People just want instant, reversible, compliant payments — stablecoins/CBDCs do it; Bitcoin is a speculative reserve.
Target: Merchants, fintech.
Unlocks: Merchant fee rebates for stablecoins; bank APIs preferring tokenized deposits.
“National Security Autonomy”
Line: Sovereignty requires controllable money for sanctions and crisis response.
Target: Security community.
Unlocks: Preference for CBDC/tokenized deposits; de-emphasis of BTC in public institutions.
“Reputation Hazard for Brands”
Line: Accepting self-custody Bitcoin exposes you to ransomware headlines.
Target: Fortune 500 legal/PR.
Unlocks: Corporate policies that require custodial processors only.
“Custody as a Professional Discipline”
Line: Keys are like nuclear launch codes — leave them to licensed custodians.
Target: Regulators, auditors.
Unlocks: Licensing regimes that crowd out DIY custody in enterprises.
“Decency and Duty of Care (App Stores)”
Line: Non-KYC wallets enable scams; responsible platforms must curate.
Target: Apple/Google policy teams.
Unlocks: Default bans/throttles for non-KYC wallets; de-ranking in stores.
“Clean Capital Markets”
Line: Paper Bitcoin gives exposure without dark-web baggage.
Target: Retail brokerages, Registered Investment Advisor (RIA) channels.
Unlocks: Brokerage nudge-paths: push ETFs/notes; bury spot withdrawal options.
“Insurance & Compliance Premiums”
Line: Lower cyber/tax/AML premiums if you avoid self-custody.
Target: SMEs, fintech.
Unlocks: Pricing that makes self-custody uneconomic for businesses.
“Public Good via Seigniorage”
Line: Programmable public money returns seigniorage to citizens (rewards, rebates).
Target: Voters.
Unlocks: CBDC cashback/UBI — golden handcuffs to supervised rails.
“Open, But Safe™” (False Ally)
Line: We love crypto innovation — inside responsible guardrails.
Target: Crypto industry lobby.
Unlocks: Industry co-signs that help pass perimeter rules.
“Freedom Without Responsibility Is Harm”
Line: Real freedom requires accountability; anonymity is antisocial.
Target: “Thought leaders”, academia.
Unlocks: Ethical cover for ID-by-default payments/internet.
Tactics to amplify the narratives (cheap and effective)
Euphemism engineering: “Licensed nodes”, “qualified wallets”, “responsible self-custody” (that isn’t self-custody).
Proxy messengers: insurers, auditors, consumer-protection groups — not ministries.
Decoy victories: approve ETFs, celebrate “access for all”, later standardize surveillance at the rails.
False dichotomies: Either CBDCs with rights protections or chaos with scams/CSAM.
Wedge the community: PoW vs PoS, “privacy extremists” vs “respectable builders”, self-custody vs ETF holders.
Compliance by default: app store, bank, and cloud policy updates do more than statutes — quiet, global, synchronized.
KPIs (how I’d measure narrative success)
Paperization ratio (ETF/ETP/qualified custodian holdings ÷ float) ↑
Self-custody velocity (UTXO turnover outside regulated venues) ↓
Merchant acceptance via custodians ↑ vs direct on-chain
Node centralization (cloud concentration, “licensed node” share) ↑
Stablecoin/CBDC MoE share in retail & B2B ↑
Regulatory optics: number of “safeguard” headlines per crackdown ↑
Worst-case pressure package (if I needed to force it)
Coordinated app-store policy: non-KYC wallet throttling/removal “for consumer safety”.
Bank choke-points: Suspicious Activity Report (SAR) flags on non-custodial flows; exchange withdrawal limits.
Pool templating: miners/pools adopt templates that prefer screened transactions.
Licensed node regimes in a few big jurisdictions → “best practice” elsewhere.
Strict merchant rules: only “qualified payment processors” allowed for tax/chargeback protections.
Why these narratives work (psychology & incentives)
They trade fear for convenience and swap ideology for defaults.
They shift the battlefield from “Is Bitcoin legal?” to “Which Bitcoin rails are responsible?”.
They let paper exposure boom (everyone feels included) while self-custody withers through friction and stigma — no bans required.
Defensive counters (if you care about sovereignty rather than fiat P&L)
Proof-of-reserves pressure on large wrappers (ETFs/custodians/treasuries).
Self-custody education & UX spanning inheritance and business controls.
Merchant tooling that auto-handles tax/accounting (blunt the “friction” narrative).
Protocol-level fee markets tuned to deprioritize obvious junk payloads; social consensus on policy-agnostic, utility-centric mempool norms.
Alternative distribution for non-KYC wallets (web, F-Droid, side-load guides).
Bottom line
The rational Controller play is not a frontal ban; it’s narrative-led, perimeter-enforced containment that channels demand into observable, steerable wrappers and keeps Medium-of-Exchange usage niche. The messaging above exploits loss aversion, moral shielding, and institutional risk channels — because those predict behavior better than truth claims ever will.