“Bitcoin: Taking back our financial control”

BHB Network
Dec 5, 2017 · 8 min read

By Simona Macellari and Giulio Mazzanti

“Bitcoin is not just a currency, a commodity, or a convenience. Just like the Internet gave information back to the people, Bitcoin will give financial freedom back to the people.” — Bitcoin declaration of independence

Humanity has always had an awkward relationship towards technology: on the one hand, we wanted to improve it to live longer, more satisfying lives, achieving our desires and ease the harsh existence of human beings.

More efficient technologies, starting from stone tools up to the steam engine, have allowed us to free up our time, reduce the working hours needed to sustain our lives and turn our economies away from heavy physical labor to ideas and creativity.

On the other hand, groups of people have violently opposed specific technological improvements: the so-called “Luddites”, with the justification that it creates unemployment, placing a burden on the working classes. The fear of being substituted and becoming useless.

The goal of this article is not to argue whether the claims of the detractors of technological development are true or false. More-so is to try to understand the profound psychological reasons behind their behavior, mostly the concept of being in control, and how this relates to the perception of Bitcoin.

It is going to be divided into four chapters to allow the reader to skip between different sections freely.

  • The mania for control: How humans are concerned about losing control over their lives and in various political situations.
  • Our interconnected lives: How the Internet has created rational incentives to lose control
  • Bitcoin as a true competitor: How Bitcoin is a competitor, not just to central banks, but even to traditional financial institutions and how this allows people to take back financial control.
  • The decentralized paradigma: How the dream of cypherpunks is becoming increasingly a reality, which gives back control (and responsibilities) to everybody.

The mania for control

This section doesn’t want to express any political opinion by the author; its goal is just to show the political/psychological motivations of some people regarding various very pressing issues of these years.

With the recent developments in artificial intelligence technologies, we have seen new opposition, even from intellectual circles, it’s being advertised by many as a jobs-killer innovation, different from the previous ones.

Those sentiments are linked and strengthened by the fear that a fully conscious AI will not be under control of humans, that it will become fully autonomous with its own rules, possibly in contrast with human interests.

We have mentioned “control”, and this is a keyword, humans want control over their own world.

This concept can be seen in many aspects of human life. We are under a democratic system of government because people feel the need to be in control of their political process.

As the government is, in theory, controlled by the people, there is a historical psychological pressure towards more control by the state over the human activities themselves.

Socialist movements have risen to impose control by the public over the private sector, corporations and firms, often associated with the concept of the elites. Its proponents always advertise the communist world as a way to put the workers in charge. After this illusion vanishes following the formation of a bureaucratic apparatus even more elitist than what the society had before, the crowd rebels and the new system falls apart (e.g., the Soviet Union).

People are usually so uncomfortable with the concept of elites precisely because they seem to escape and avoid public control:

Huge banks playing with incomprehensible financial practices that seem to create damage to small owners, “technocrats” taking the role of politicians, often overriding public vote, distant international institutions replacing the local government’s authority.

It’s not so surprising that alongside the rise of institutions such as the European Union we have seen the rise of the old forgotten nationalist movements.

Catalonia independence is an example of the profound need to take back sovereignty from a centralist government, which, in this case, it’s Spain.

The hate towards immigrants is caused by the fear of a phenomenon that is not under control, the supporters of anti-immigrant policies continuously talk about the lack of knowledge and inability to screen foreigners, plus they fear violations of the law.

Our interconnected lives

The more interconnected reality softens the control over our existence.

The division of labor, no matter how efficient, tend to remove direct responsibility. The market allows us to work less for a greater deal of products, but without the myriads of spontaneous actions going on in the world we, as individuals, would be helpless.

Nobody today could live the same lifestyle as we have right now, by producing everything on their own from nature. We need all the services provided by our supermarket, by our bank, by our plumber, by our electricity, internet provider, and so on..

With the arrival of the Internet, this is even more evident. We use products built by others for most of our communications. Whatsapp, Telegram, and Wechat to reach out to our friends. Instagram and Facebook to see what’s going on in their lives. Amazon, eBay, and many others to provide increasingly essential products.

We don’t really know the people who built those products; we don’t even know if they are using our data, the code is not open, we have no grounds to trust it.

Bitcoin as a true competitor

Bitcoin has been defended as useful on many grounds, allowing payments censored by states, protecting capitals and overriding all the harmful consequences of fiat monetary systems. It’s true that at first sight, it would seem a system which is not under control by anybody, not regulated and not regulable by the government, this creates fears over the general public.

We have to understand that this is a strong sentiment that must be avoided for it to be well perceived and accepted by the masses: fortunately, we can do this by enlightening what kind of control it can give back.

Most importantly, a catchphrase used many times when talking about Bitcoin is “Be your own bank”, and this is precisely the point.

With Bitcoin you don’t have to trust a financial institution to keep your own money conveniently, you can be your private vault. You can have total control over your money. Of course, this requires responsibility, and you are accountable for all your errors, however, the “safe”, the trusted option is still available, this just gives you an additional possibility.

Under the current banking system, your possessions are under the menace of a highly regulated and crippled cartel of banks: working over the same fixed conditions and earning scores of money by lending your own money at interest.

There is no denying that such scheme will be useful and utilized even under an entire bitcoin-based economy. After all, even the client of a bank has advantages over this process.

However, if competition between banks is good because it can make the best practices win, Bitcoin adds a new incredibly strong competitor, practically inexistent before, the client itself.

If storing cash under a mattress was risky and completely unpractical, with Bitcoin, it’s the opposite.

Banks will have to work hard to keep their clients’ money, who have a great and safe(r) alternative of running their own nodes on their own wallets, which they can choose among a wide selection with many different incredible features and safety standards. (from mobile wallets to cold storage and hardware wallets)

Banks can only keep their clients if they offer better services, if they actually protect the deposits of their clients, if they provide safeguards and guarantee the safety of the funds held.

Bitcoin will not eliminate the centralized financial realm, but it will inevitably force it to be more efficient and to respect its users.

If we advertise Bitcoin in this way, if we can show its astounding potential of giving back financial control to the masses, we can appeal to people’s deep psychological instincts.

The decentralized paradigma

The atmosphere surrounding the Bitcoin development was not born with Bitcoin itself. It’s part of a more long-standing tradition of open-source software, a decentralized community of developers, cypherpunks, and hackers, whose objective has always been to maintain a free and open internet, where all the software is independently auditable, and every user is in control of its digital life.

This is just part of the digital environment though, on the other side of the spectrum, we have the issue of network centralization that the internet has brought. Thanks to inexpensive communication and extensive data management, the web has allowed firms to incredibly reduce the barriers to entry, those new companies have almost entirely eliminated the need for physical (expensive) infrastructures.

This has counter-intuitively contributed to the formation of even larger corporations (i.e., Google, Amazon & Facebook), that instead leveraged the marketing possibilities offered by the internet to form solid brands. Users turn to them for many of their daily activities (something just as simple as a search query) while the companies collect a lot of data that they can sell at enormous profits. With social networks, it is, even more, the case: when a social network has more users, everybody is incentivized to use it, and the users become increasingly dependent on it.

In stark opposition to this kind of phenomena, we have the typical hacker community, which favors the use of decentralized services. One would think that it’s only a thing for a minority of people, not related to mass scale use, is this true? Let’s take as a simple example torrent.

A purely peer-to-peer network, the foundation of decentralized file-sharing, which became widely used by many (i.e., uTorrent, Emule) to share their own files, songs, videos, software, and partly freed up the internet from the gatekeepers, avoiding proprietary software restrictions and patents. (linked to the controversial concept of intellectual property). This has created an entirely new dynamic environment focused on creativity and intense collaboration among peers, through open-source. The point was no more to build something to sell at a profit but to contribute openly to groundbreaking projects in a sort of open “crowdsourcing”.

No wonder that p2p is also at the foundation of Bitcoin. It could be said in some way that with the invention of this cryptocurrency application, it has been released the power of the decentralized paradigma. This time entering in one of the main aspects of everybody’s life: their financial control. In the same way p2p freed up the intellectual creativity, Bitcoin frees up your own money, and at the same time, it puts you on the same level with the banking and financial institutions. No more masters are allowed in the crypto-space.

Bitcoin is built as a tool aimed to empower people, to truly enhance their involvement in what is going on in their lives.

This allows us to “in-source” an aspect of our existence, instead of delegating it as it happens with almost everything else in this digital age. A paradigm where taking responsibilities and studying on our own can help us protect our finances. One of the few occasions where doing things ourselves can actually give us an astounding advantage. At the same time, in this way, we can genuinely feel a sentiment of self-ownership.

This technology can combine the positive psychological satisfaction of being in control with true rational benefits. This is Bitcoin.

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