The headline of a newspaper article called “Chancellor on green or second bailout for banks” is incorporated in the very first block of the bitcoin blockchain.
It continues to speculate who has added this and why. It can just as well serve as a time stamp to prove on which date bitcoin started. But it is tempting to speculate because the political statement is hard to miss: Banks saved for the second time after the global financial crisis.
Focus on the forest
This message is a reminder what bitcoin users have to offer: a way to arm yourself against the status quo of central bankers. Bitcoin is a way of distancing yourself from the traditional system where a small group is in control of the monetary supply.
It is important to keep seeing the forest for the trees. Yes, the price of bitcoin is extremely mobile in the short term and yes, the user experience is still far too difficult for most. But the principles of the system have proved effective over the course of ten years.
Criticizing the future of bitcoin as a reserve currency and basis for a new financial system, based on current volatility, is like correcting a baby who is just learning to make noises that it is a very monotonous monologue.
Short and long term
A distinction must be made between the short-term price of bitcoin and the long-term characteristics of the network.
In the short term, almost every fiat currency (such as the euro and dollar) appears to be more stable than bitcoin. But in the longer term, a system based on fiat currencies faces the same risks that every other structure in history has experienced: the management of monetary policy by a central party.
Small considerations have major consequences
When a person or group of people is entrusted with the management of the issuance of a currency, they constantly make small decisions to maintain stability in the short term. They can spend more currencies, manipulate interest or implement other capital controls.
The free market of bitcoin, on the other hand, is more mobile in the short term, but this allows the market to discover what the true price should be. Bitcoin has proven that rules without controllers are not only possible, but even effective. Without a central party that constantly monitors and adjusts the rules, bitcoin has:
- 600,000 blocks mined
- 480,000,000 transactions executed
- 18,000,000 bitcoins paid as a reward for miners
- 117 billion euros worth
- 10,000 full nodes have joined
- Bitcoin has been working 99.98% of the time since going live
- Higher price lows for 10 consecutive years
The existence of a robust network as a bitcoin without central control shows that there can be another way in which the global economy can be built.
Governments and banks to reduce volatility in the short term and extend periods of economic expansion are bought off with more debt. Governments and banks are well aware that debt is a problem. A commonly used method to solve this debt problem is by printing more money, or with inflation.
And this comes at the expense of purchasing power.
Time for bitcoin
The time is therefore ripe for an independent currency such as bitcoin. Just like gold, it is a value premium that cannot be recognized by a government. Bitcoin is a type of gold that weighs nothing, takes no space and is resistant to counterfeiting or seizure.
A user can verify the total number of bitcoins in the entire universe with extreme precision and calculate how much of the total stock he or she owns. And you only need an internet connection and hardware worth 100 euros. That may sound like science fiction, but this is what bitcoin has to offer.
Due to the rise of the internet and the introduction of bitcoin, governments and central banks are starting to investigate the possibilities for their own digital currency, so-called CBCDs. This gives authorities more control over citizens and businesses. These are not permissionless (without permission) and open monetary networks such as bitcoin. They are closed systems that allow innovation only with the permission of the authority that manages the systems.
Struggle has previously been won by open networks
Perhaps the best example in which a permissionless network loses out on a free network is internet versus intranet. When the internet was just getting big, banks and companies built their own intranets or networks that you couldn’t access without permission. Entire business sectors only used the intranet for their daily activities. In the long term, the intranet appeared to offer no competition. Everyone knows, trusts and uses the open protocols of the internet.
The choice is yours.
This is an edited version of an article from Bitcoins Rhythm.
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