Satoshi's Sidewalk #24: Pay the Man

Once a year you receive a special bill. This bill is unlike every other bill. For if you don't pay, you'll have nowhere to receive any kind of bill.

Most people don’t understand the first thing about owning real estate: you don’t own the real estate. That’s right, folks. It ain’t yours.

To properly describe the situation the local county government announces your claim to everyone else in the county by recording your deed. Courts protect valid deeds. You also purchase title insurance in case your deed is invalid or clouded by unknown issues (happens all the time). The same county authority levies taxes - property taxes - on “your” real estate in exchange for services rendered.

By doing so, the government has done two things:

  1. Usurped your ownership of a piece of real estate

  2. Charges to perform services you may or may not want

A little more detail on #1. The purpose of property is for humans to exert control over a thing - thus ownership. In the Lockean tradition when you mix your labor with unused, nature-given resources like land, that land becomes your property. This is more commonly known as the Homesteading Principle. Today, most land is already spoken for and is transferred by the seller drafting and signing a deed to property. Unless you have been given temporary rights to control a piece of land by contract or easement, you are not allowed to use and do not control the property. You therefore do not own that property. If you have a deed and are required pay a fee annually to keep the property, is it really yours?

What happens when you don’t pay the fee?

The dilemma begins. If you have to pay to keep property you own then, my friend, you don’t really own anything. We’re familiar with term sovereignty defined as complete and total ownership over oneself. The most basic level of property ownership is owning oneself, one’s body. Without this ownership no other forms of ownership can follow.

We own property but must pay an annual fee - property taxes - to the local governing authorities (the State). By refusing to pay we have placed our ownership in jeopardy. The State is not much one to tolerate lack of payment. After a specific amount of time passes, the State begins their recuperation process by either: recording a tax lien on your property, selling the tax lien to a third party, or by filing a lawsuit to foreclose you out of your own house. All because you failed to pay your rent…I mean property taxes.

Property taxes in the US were very limited until coerced government education became the norm. Property taxes, after all, are the main funding source for public educational systems. From there, clever bureaucrats were able to expand the scope of collections to pay for other governmental “needs” (one lawsuit at a time). Now, property taxes are the norm and are unescapable.

Generally, property taxes are for:

  • Local infrastructure & services

  • Local assessments (voted on by your lovely neighbor)

  • County infrastructure & services

  • Sometimes state infrastructure & service

If the State wants additional funds they bury new fees in property taxes and make disputing changes cumbersome, expensive, and impractical. This also varies by region. Texas has much higher property taxes due to not having and income tax. Arizona property taxes are limited to 5% annual increases and must be disputed on a per line item basis. California passed the infamous Proposition 13 in 1978 which limits property taxes in both assessed value at 1% total and limits annual increases to 2%. Proposition 13 created a total clusterfuck.

Let’s compare the ownership of real estate to ownership of bitcoin. This can be exemplified by the bitcoin mantra “not your keys, not your coins.” Without control of your wallet’s keys you no longer have access to or control over the bitcoin in that wallet. Unless you mishandle your keys, post them online, give them up voluntarily or involuntarily, no one can gain access to and therefore control your bitcoin.

Bitcoin is extreme ownership. No one is going to save you if you lose your keys. You must take the necessary precautions and protections to prevent key loss. Avoid single points of failure with multisig. Write down your keywords and store them in a safe place. Backup your wallet. There will only ever be 21 million bitcoin and you own some fraction of it. Do what you have to do to protect the only finitely scarce asset on the planet.

Real estate is a bit different. It’s difficult to physically lose land. Jurisdictions are (typically) good with record keeping and maintaining a publicly-accessible database of deeds. Title insurance is a required practice when transferring real property from one party to another. Chains of title can be verified with publicly available information. Aside from coercive transfers and failing to meet contractual obligations, your title to the real estate is very unlikely to be taken from you. This situation, however, rests on the strengths of property rights in your jurisdiction. Expropriation cannot be arbitrary and must be done through eminent domain. (Disclaimer: there are many nuances to property tax and eminent domain which are not useful to this discussion. No point in going over jurisdictional minutia.)

The gist is your claim to title of real estate is a function of: the State’s ability to protect your rightful claim, the hurdles in place to prevent the State from taking your property, and the State’s satisfaction with your annual property tax payments.

Bitcoin is none of this chicanery. You are encouraged to run your own node to verify wallet balances, keys, and the entire transaction history of bitcoin’s blockchain. Ownership of bitcoin is not reliant on anyone else but you. Want to secure your bitcoin holdings? Run an economic node. Want to secure the bitcoin network? Contribute hashpower to the network by running a miner using (non-ESG) energy.

In general when it comes to property taxes and whether or not you own your property, your relationship to your property and the State more closely resembles this:

The game has changed with Bitcoin. Absolute property rights now exist in the form of bitcoin ownership. The new response to the above gif is eloquently stated by the Gigachad himself.