“Money is dead: to begin with. There is no doubt whatever about that. The register of his burial was signed by the clergyman, the clerk, the undertaker, and the chief mourner. Scrooge signed it: and Scrooge’s name was good upon ‘Change, for anything he chose to put his hand to. Old Money was as dead as a door-nail.”
Some of you might recognize the above as the start of ‘A Christmas Carol’, by the late Charles Dickens. And except for the word ‘Money” (which needs to be Marley), it is analogous to the story we’re about to tell. The story about money as we know it and the role it has played throughout history. Money might be on the brink of death, and that might be entirely Scrooge’s fault 😈
To start off.. 🚀
It has been a very vibrating year for all us working in technology. As it always is of course 😏. Every year there’s new stuff to get excited about when you’re working in an industry that is moving at an increasingly rapid pace. But this year was maybe sort of different. For some (the ones old enough), it felt like the early years of the internet. And that has everything to do with Satoshi Nakamoto’s #Bitcoin. The technology enabling Bitcoin; #blockchain, has even been called the decentralized successor of the internet itself. So everybody probably has heard of Bitcoin by now. In the news. The media. You know. And everybody seems to be having an opinion about it. Is it a good thing or is it bad you might wonder? And why is this happening right now? How much revolves around bubble-forming and how much is actually stone-cold science? All are probably true in some way or another. But that immediately shows the complexity involved with the rise of digital currencies; the first being Bitcoin.
That is because cryptocurrencies mean so much more, not just in value, but in societal meaning as well. It amplifies the sentiment of wanting to take back control of something we feel we’ve lost as a society. With digitization and globalization, it was supposed to get all better. But people often feel like they’ve been lied to and that they’ve been cheated out of; both their trust ánd their money. And lately, money reveals itself more and more as a collective illusion at scale. Only being upheld because we have to accept the value of it, forced upon us by governments, central banks and the toxic cocktail they form together; politics. So why have we accepted the status quo as it is for so long? Allowing regulators to scheme us out of our money by dishonest and forced upon ruling, inflation techniques to devaluate our hard earned money and other ways to rob us of our incomes through tax rulings with the goal to save the fraudulent institutions that brought us the 2008 crisis 🏦. So why haven’t we stood up?
Inflation ⚰️
The simple answer is: because there was no alternative. Up until now. As one of the earliest members of the Bitcoin community Nick Szabo (Google him; promise you he’ll be worth your time) puts it: ‘’All money mankind has ever used has been insecure in one way or another. This insecurity has been manifested in a wide variety of ways, from counterfeiting to theft, but the most pernicious of which is probably been inflation.’’ Something we can all agree on is that it’s not really the Christmas spirit. Still, this lawful theft has been going on for hundreds of years and only until recently, the grand scheme to push us out of our money by just printing more and more, seems to have stopped working. Very sad indeed. Luckily this story has an alternative and possibly even happy ending for us; the people. Because first of all, inflation will never happen to Bitcoin as Satoshi Nakamoto (its famous inventor), ruled out inflation by capping the supply on 21 million Bitcoins to be in circulation around 2040. There no extra printing by central governments or anyone else after that. And it’s just the stuff like this that what makes the case for Bitcoin so incredibly strong.
So what actually is Bitcoin and the famous blockchain technology behind it?
Bitcoin is a cryptographically secure digital currency, enabled by blockchain technology. It’s a store of value and is seen as the digital gold for Millennials. A generation particularly mistrusting towards financial institution as they directly experienced the negative consequences growing up during the financial crisis. The Blockchain element though is the real revolutionary part of Bitcoin. Blockchain is a decentralized distributed database allowing parties to trust each other without the necessity for involving a powerful intermediary to establish that trust.
It’s a direct threat to a bank’s right of existence and that same goes for all other industries where middlemen are a necessary means to provide trust. They are simply no longer needed with Blockchain, that trust is stored in a decentralized ledger, encrypted with complex mathematics, so-called hash codes. The ledger is not controlled by any single person or organization (hence decentralized), but at the same time accessible by everyone giving the whole network access to all the information and transactions ever stored on the ever growing chain of blocks.
What goes around… 🌚
So what does this Blockchain technology mean for you and me in a practical sense? Well, the technology itself is first and foremost about taking away friction. Banks, to use the same example, are a typical form of friction. Because they guarantee the trust necessary for the two parties exchanging money. Blockchain cuts away that middleman, establishing trust through cryptography, hence the term cryptocurrency. Banks and other financial institutions never really cared about the intrinsic concept of trust in the first place, as they were mostly busy enriching themselves over taxpayers backs, that now comes back to haunt them. People remember the crisis caused by big banking and their insatiable greed, especially that moment when the crisis lead to bailing out the big banks with the money of taxpayers. Without their consent. To save the banks responsible for the crisis. While banks and financial institutions where maximizing profits, in parallel, they were minimizing our trust in them. It almost seems like a perfect circle. What goes around comes around. It’s also called karma 😃.
So back to the bitcoin
For who has been following the cryptocurrency lately; Bitcoin has steadily been pushing its valuation and price higher and higher at an increasingly rapid pace. And we believe the price will continue to rise over the long term, like the waterbed effect. Slowly we’ll make more and more money flows from financial markets into Bitcoin (and other cryptocurrencies), generating a network effect among traditional money owners, increasing the stream of value flowing into Bitcoin, even more, driving up prices further and slowly devaluating good old fiat money controlled by governments, banks, and central banks. And there won’t be any going back. More cryptocurrencies will thrive on the waves made by Bitcoin. And of course, making a quick win on the short term is tempting because right now it’s basically Christmas for everyone. But when we are looking at the price of Bitcoin in the short term, and are calculating how much money you can make over a very insecure short term of time; you are definitely missing the point. Bitcoin is not what it represents in terms of money. That’s a hard one to wrap your head around because our brains and thought-patterns are hardwired in Keynesian thinking and old economic models. But it’s a good start to see Bitcoin as one of the many successors of money. Not controlled by anyone, and thus a far safer store of value than money ever will be.
So here is Bitcoin 💰
Your digital gold. Offering you a safe decentralized place for your assets. Enabling you to be free from whatever trickery banks and governments have in there high capitalistic hats. You can be safe, as the Blockchain technology behind it is mathematically proven with zero fault margins. It’s also why there still is a lot of negative news around Bitcoin being a bubble. It’s coming from the PR machinery of governments and banks rapidly losing their power. They had us locked in in their own carefully manufactured bubble. And of course they want to keep us in. It’s their raison d’être. But their financial dome is about to burst. It’s over with their little Truman show as we, the main character, are about to escape their Scroogy, money grabbing fingers. And that will lift humanity as a whole as it enables us to take measures into our own hands ones again. Not just for us, but also for people in developing countries, as they mostly didn’t have access to financial services (but that’s another long story). From a technological perspective we all become equal, as we’ll all have access to the same services. It’s what makes Bitcoin kinda like a Christmas gift for humanity. It has the promise of a newborn child. A child saving us from the tyranny of central governments and bankers. Technologies’ Christmas gift to the world.