Perspective

Bitcoin, the people’s champion!

People do not think twice about money. They want it but they do not understand it, or in most cases wouldn’t care if they did. What is value to you? A $20 dollar bill in your hands? or maybe a gold necklace? When a country is brought to its knees from hyperinflation like Venezuela is right now, who do you point the finger at? People, who work for the Government? maybe… or should you point the finger at the underlying technologies that run the systems currently in place?

The move from gold coins to IOUs written on paper and signed by the first “banks” before they were called banks was a natural transition. New technologies are created in steps and the transformation of paper holding value as an IOU was a logical step from carrying your heavy gold bars around. But when a system has reached its final stages before the complete collapse of a civilizations means to transfer value, a new and better method arises. This is Bitcoin, and for the average joe who does his 9 to 5 and works for the weekend, while following all the rules that are set in place by people who know better, is just a way of life. He could not care less about some nerds internet coins because he has cash in his hands and can spend it anywhere. Yes this is true, Bitcoin is not accepted everywhere but can you imagine going up to someone in the days when shiny rocks like gold and silver were the main form of currency, and saying to the man with three fish for sale “Heres a piece of paper with a scribble on it, you just need to go see Frank over the hill at the bank volt, he will give you the gold bars for the paper” A look of shock and laughter would have followed. Every advancement in the evolution of value and money faces the same criticism. Imagine now if Frank over the hill was now creating more pieces of paper with scribbles on it than he had gold bars to back them up with? Now, how much value does your piece of paper hold? I imagine Frank would end up in a lot of trouble sooner or later… or would he? If everyone came at once to get their gold bars, in exchange for their pieces of paper, he would fall short and a lot of people would be left without any gold bars.

This is literally the system that the world is running on right now. A whole lot of empty promises, in fact, 21 trillion dollars worth is the USA national debt! The government prints more IOUs to pay for more things it can’t afford. This is INSANE! but was an eventuality of giving pieces of paper real-world value. The system would have seemed revolutionary when it was first conceived, but when the bank found out it did not have to have the gold to pay for things with the paper, things got a bit out of hand. This is the classic dig yourself out of a hole trick and you’d think it would be illegal to create wealth out of nothing, well it isn’t when its the government doing so and they legally print more and more money to “spend” where they feel fit.

These issues were created in the evolution of money, but there’s a new technology called Blockchain. It solves the double-spend problem, this is to say that if you give me that IOU piece of paper that represents the gold bars, how do I know you haven’t just created the IOU paper without depositing the gold bars? If I turn up to Franks bank and he says “Unfortunately that’s not one of our legitimate gold backed IOUs OR one of our own fraudulently created IOU’s, so I’m sorry to say it’s worthless”, I can imagine you’d be pretty pissed. Isn’t that incredible that the bank can create fake value but if old mate Jimmy down the road gets his printing press out and starts printing cash, he goes to jail!

When I first really started to understand how the world runs on empty promises was when I discovered Bitcoin. Bitcoin uses cryptography and an open source code base to ensure that the IOUs are not being fraudulently created and if it detects a transfer that attempts this, it rejects the attempt and goes on its merry way. This is REAL VALUE and is, in fact, a form of deflation, not hyperinflation, which is what the governments and federal reserve (and is, in fact, a private company! That has never been audited?!) does by pumping more fake value into the system which literally steals from your back pocket and legally diluting the money supply! This is the point where I laugh at myself for how religiously converted I am with cryptocurrencies and their underlying technology, but at the same time, very convinced that all the elements are there to back up the conversion. It’s not blind faith, because the evidence is freely available to view code.

The last economic collapse was in 2008. It took the taxpayers money to bail out the banks who created this mess with over lending at 700 billion dollars, and by 2009 the Federal Reserve committed 7.7 trillion dollars (with a T!) to rescue the financial system from complete collapse. Imagine the scenario with Frank and his bank situation used above, Frank has done everything wrong and caused the collapse of the bank and its fake promises and worthless pieces of paper, but instead of the people getting their just value back and withdrawing their gold bars, the village elders say that instead, you have to give some of your IOUs back to the bank to make it whole again.

Bitcoin may not be the final solution and there may be something better that comes of this technological breakthrough which overcomes the double-spend problem, but for now, this technology has been running since 2008 without an “I’m sorry the networks down, you can not use your credit card right now”, since the day of inception when Satoshi Nakamoto released the software into the wild west of the internet, packed full of hackers and code breakers which have not devised a way to successfully break the Bitcoin code. That’s a pretty good track record, and I’m thankful to be able to witness this shift in the way we transact. Don’t trust, Verify.

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