Why Bitcoin, though?

The injustice explained

Bitcoin is not about getting rich, although the earliest in, will – It’s about a monetary revolution. A revolution of the people (of the entire world) who are enslaved to the oppressors, the central banks, and the people that own these banks. Bitcoin will help EVERYONE, except central bankers.

It is a very powerful thing, being in control of the money. Forcing people to use it (legal tender laws), and even creating more of it at will (quantitative easing, money printing, fractional reserve lending), without cost, and spending it on anything, including war. It is a form of theft from the people who are forced to use that money. 

If you don’t believe me or don’t understand, consider a game of Monopoly. Imagine you and your friends are playing, and then a new player enters the game. The new player opens a fresh packet of Monopoly Money from a different set and brings it into the game. If he starts losing, imagine he opens another packet of money and brings it into the game, so he can’t ever lose. This gives the new player an unfair advantage, hurts all the other players, and makes all the property more expensive – because there is more money floating around in the game which is competing to buy scarce resources. 

This is quite similar to what is happening in real life. Money is being created out of nothing, prices are going up, and people who work for money and have savings are losing the purchasing power of those savings (a form of time-theft). Another blow is that wages tend to not keep up with price inflation, and people get poorer. Scarce assets go up in value, but people storing wealth in those lose a large portion to CGT (capital gains tax). They are being stolen from – a silent tax through inflation, loss of income through insufficient wage growth, and loss of assets through capital gains tax.

People were upset after the 2008 financial crisis, but didn’t actually know the root cause of the problem: fiat money

Knowingly or unknowingly, economics professors (paid by governments) will hand-wave, and overcomplicate the description of what is happening, which makes it harder to understand. But if you step back from the details, look at the overall picture, this is what is happening, and it can be deduced from first principles.

This monetary system, designed to steal your time, should outrage you. The solution is Bitcoin, and I’ll explain.

The solution

For many years, freedom-loving people have tried to resist this. They realised that using the money of their choice was the way to escape the oppression and theft. So they tried to create their own money. But doing so is punishable by the law. Even barter is illegal. You must use the “master’s” money.

Using gold was thought to be a solution (which was illegal from 1933). Gold is effective at resisting time-theft because it is difficult to create more gold, so being relatively scarce, storing wealth in gold gives some advantages. However, it is not a great medium of exchange across distances. It is difficult to transport and store safely, which led to it becoming centralised – stored in banks, and paper/digital promises of this gold were created for ease of spending and storage.

Thus, fiat money was created. It became law to use it. Physical-gold ownership by citizens (not banks) became outlawed (order 6102, in 1933). Eventually, the backing of fiat money by gold was abolished (1971, by president Nixon). Many versions of fiat came into existence as each country made it law to use their particular currency (legal tender).

“I have directed Secretary Connally to suspend, temporarily, the convertibility of the dollar into gold or other reserve assets, except in amounts and conditions determined to be in the interest of monetary stability and in the best interests of the United States.” – Nixon, 1971

In a free market, one where a money is not forced on the people, they will tend to choose the money that most other people are using. This is the safest strategy for protecting wealth. You would accept as payment something that you are likely to be able to spend. ie the most saleable good. Over time, this leads to ONE money being the most dominant, as society moves away from barter. We only have multiple monies today because we are not free to choose/create our money.

Sometimes, groups of people choose a poor form of money; one that is easy to create (easy money). These people lose their wealth as more and more of their chosen money is brought into existence, and their portion of the overall pie held gets smaller and smaller. Other groups of people who choose hard money (hard, meaning hard to produce), protect their wealth from dilution, and by natural selection, only the wealth of people with the hardest money remains. This is why hard money always wins against easy money.

The cypherpunks

For decades, the cypherpunks were trying to fight back for our freedoms. It began with the internet, and then privacy on the internet with pgp (the first form of public/private key cryptography, which later led rise to gpg, an open-source version now freely available). This was close to being banned by the US Government, enemies of privacy, but they lost in court. Cypherpunks also attempted to create digital money in the 90s – but it needed to be centralised, necessary to oversee and prevent double-spending. This centralisation made it easy for the overlords to come in, find who was in charge, and put a stop to it – No threatening our current lucrative monetary system, thank you very much.

The cypherpunks persisted, and in secret, created Bitcoin (I suspect Satoshi Nakamoto was a group of the same cypherpunks, choosing to remain anonymous due to lessons previously learned). A magical invention, that not only created something digital and simultaneously scarce but also decentralised to the point that it can not be shut down.

There is an excellent four-part documentary on the cypherpunks which I highly recommend.

Perfect money?

Bitcoin has all the essential features of a perfect money, orders of magnitude better than any physical money like gold, or “competing” cryptocurrencies:

— Absolutely scarce

— Digital

— Easily transferable

— Fungible (not quite on the base layer, but good enough presently)

— Divisible

— Portable

— Recognisable and easily verifiable

— Difficult to counterfeit

— Easy to store (not requiring a 3rd party)

— Difficult to seize

— Decentralised (no leader, so no target for governments)

— Difficult to shut down the payment network

— Difficult to manipulate the total supply

— Anti-fragile (gets stronger if attacked)

— Always available

— Censorship-resistant (regarding transactions)

— Permissionless (Anyone can access without ID)

— Open-source (no secrets and anyone can contribute to improving it)

These are mostly properties of the money itself, but Bitcoin is also the payment network as well; a combination of payment processing technology AND money. If you think of the dollar, it has a payment network of VISA, Paypal, Swift, Venmo etc. But Bitcoin has its own network, the Bitcoin Network. To learn more, read the section on Bitcoin Nodes here.

The network of people

For a free-market money to be the dominant money, it not only has to have the best properties and be sufficiently hard to produce, it must also have a network of people that use it. Money is technology, but it is also people – similar to the components of a language-of-meaning (money is a language-of-value by the way). English, for example, is made up of symbols, signs and rules (the “technology”), but English also lives because there is a group of people that speak it. You can’t expect a language to become dominant just by making the language better, more beautiful, or easier to learn.

Then why do I think Bitcoin will overtake all other money on the planet? Because Bitcoin isn’t just better than the most dominant money, it is VASTLY better – being vastly better is the only way to overtake a dominant network effect. It is also the ONLY choice available to people who want a money that can not be shut down by governments, or have their savings diluted away by some central group of people or person in charge of the monetary policy (eg The Federal Reserve with USD, or Vitalik Buterin with Ethereum).

Vitalik Buterin – created Ethereum, and awarded 70% of the supply to himself. He and a close circle, direct the monetary policy and any changes to the system, much like the controllers of the USD, The Federal Reserve.

The network is an absolute must, but it is not reasonable to expect a large network of people to use a brand new form of money (or language) instantly, even if it is vastly superior to the current dominant money. That network, to instantly adopt a new money, needs to be forced by law; it’s not possible if left to the free will of people. So no matter how good Bitcoin is, even if it exceeded your wildest expectations of perfect money, in a free world, it will not be understood and adopted by everyone all at once, and therefore necessarily will be volatile in price, or attacked by the media (mouthpiece of the central banks and governments who are threatened).

Bitcoin is close enough to perfect. All that needs to happen is for people to accept it. Many people do, and once they realise how important it is, they don’t forget. They teach others. And the network of people, the crucial missing component of a new perfect money, gets stronger every day.

Some people find it difficult to understand why Bitcoin Only will win and why it is inevitable. For them, I direct to one of my earlier pieces explaining it all.

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