Introduction to Bitcoin: Money & Our Debt-Based Society
Bitcoin presents itself as an option at worst and the solution at best to supplant what we know as money.
Money is a standard that everyone can agree on — the exchange of value for money and the promise of its future utility. The earliest forms of money were short-lived, embodied by livestock, grains, seashells and feathers. Precious metals like gold and silver then became the norm for thousands of years. Today, we live in a debt-based society stemming from trust in third party institutions. Governments and central banks around the world have been building enormous amounts of debt with their seemingly unlimited access to credit. Money previously required the blessings of third party institutions and one can argue, they haven’t been the most responsible or reliable with their powers.
President Richard Nixon took the U.S. off the gold standard in 1971. Since then, the dollar has been backed by the full faith and credit of the United States of America or in other words, our military. Essentially, the most superior empire thus far in all of history has an established a limitless line of credit. Is it really a debt ceiling if the ceiling keeps getting raised?
Once the US threw away the gold-constraint of moneymaking, many governments followed suit with their own central bank currency and the assembly line production of global debt began. More recently, the injection of fiat currency has been aggressively expanded throughout the world by way of quantitative easing — a method where central banks purchase government bonds in particular — driving interest rates to 0% or negative in some developed economies. As central bank’s assets rise, so does the available money supply. In millennial terms: central banks began printing money fast AF.
In technical terms, this is how the current centralized system continues to work: to obtain capital, governments issue bonds that central banks purchase, transferring fresh fiat to bond-issuers thereby increasing the base money supply. Governments run out of money, raise the debt ceiling, issues more bonds when more money is needed, central banks print more money, over and over, rinse and repeat, all-the-while performing these monetary operations in a virtual 0% interest rate environment. If a promise to pay is not much more than borrowed, it makes sense to keep borrowing. With the outlier of China’s artificial economy and heavily controlled Yuan, developed economies’ debt-to-GDP ratio is absolutely mind-boggling.
Similarly astonishing is the big bank bailout in 2008 of corrupt and fraudulent financial institutions. Evident in JPMorgan Chase’s $13 Billion settlement for their deceitful mortgage lending practices. Bank of America Merrill Lynch, Morgan Stanley, Goldman Sachs, and Wells Fargo also received slaps on the wrist. Rank-and-file employees get fired, collateralized debt obligations & mortgage-backed securities devastate average Americans, taxpayers are burdened, no one goes to jail, and the game goes on. The exploitative nature of banks racketeering-for-profit at the cost of ordinary citizens is infuriating. Banks privatize profits for themselves if they are successful, while if shit goes haywire, like it did, then the consequences get socialized to the public.
What naturally should have happened in 2008 was to let the banks remain underwater and go bankrupted. That is the risk they are supposed to take when toying with the economy by making bad loans to feed their bottom line. Instead, our leaders were committed to the slogan that banks were too big to fail even though they were the ones that caused the previous recession. Banks took zero risk, screwed the pooch, and wall street gets bailed out instead of main street. Nothing has really changed since, as banks continue their fraudulent behavior. Our politicians and banksters are constantly in bed, comfy with each other.
There is no doubt that economic inequality is widening while social injustices continue to plague the melting pot of American society. The design of today’s centralized monetary structure has an endgame and it will be agonizing for the majority. The leaders in Sweden and Japan have a small enough constituency to introduce negative interest rates. Thats right, if you are residing in Japan or Sweden, it costs you money to keep it with the bank. Venezuela and Zimbabwe are two extreme examples of hyperinflation due to government and central bank irresponsibility.
It is nonsense to pile on debt for future generations to payoff, a damn near impossible feat. Our current economic and monetary system is gamed to only benefit a small minority. The centralized power of elites control financial decisions for the public and camouflage it as a way to solve a massive, fiscal coordination problem.
When President Nixon took the U.S. off the gold standard, each country’s economic foundation was built on accumulating debt, inflating their currency and reducing purchasing power for individuals. It is becoming clearer that the era of quantitative easing and fractional reserve banking does not work. In each nation, third party institutions control money and they do as they see fit.
Money is a unit of account, store of value, and medium of exchange. Money is an accounting system to track creditors and debtors — who owns and who owes money. Money is not the value itself, rather, money is exchanged for the value. When I buy a bowl of phở with my cash, the bowl of phở is the value itself, not cash. That piece of paper is then used by the cook to exchange for other products or services of value. Money is what upon which people agree can be exchanged for value. Money, fiat, piece of paper, numbers on a page or webpage needed a trusted third party to make sure the moolah is legit. For far too long, we have let the few control money for the many.
Decentralized. Immutable. Open-Source. Incorruptible. Non-Manipulative. Borderless. Permissionless. Trustless. Fungible. Neutral. Blockchain. Bitcoin.
On January 3, 2009, an anonymous person by the pseudonym of Satoshi Nakamoto released the Bitcoin software and launched the biggest socioeconomic experiment. Bitcoin is a computer protocol, governed by a consensus-algorithm, mathematics and game theory. Bitcoin is a global peer-to-peer network allowing for the exchange of money that is unseizable and deflationary by design. Bitcoin’s code is 100% transparent, anyone can contribute, and no one nor one group of individuals are in control. At the core, Bitcoin is an open accounting system of money with a distributed ledger or database, identically stored on tens of thousands of computers worldwide and for the first time in history, Bitcoin allows for the exchange of value without needing a trusted third party, government, or central bank.
You cannot hack the code, you cannot forge the authenticity, and you cannot simply create more Bitcoins. The technology is still in its infancy, giving birth to an unprecedented new asset class. Our digital age has brought about the next evolution in money, away from the control of financial institutions by disintermediating the middlewoman, providing for a direct person-to-person payment channel. By doing so, Bitcoin increases transaction speed while simultaneously lowering the associated costs. Bitcoin is trustless because it does not require trust in any one central authority, but instead, placing trust in a public platform. Centralization by default, grants a single point of failure that can prove to be catastrophic for the rest of the network. Bitcoin is censorship-resistant and is gradually becoming the ultimate store of value through its exceptionally secure system of decentralized computation and distributed network.
In 2017, Japan, Australia, and South Korea became the first countries to officially recognize Bitcoin as a legal form of payment. Overstock.com, Expedia, and Microsoft began accepting Bitcoin for years now. What the Internet did to the spread of information, Bitcoin is doing to money and the present financial system as we know it. The Internet liberated information, Bitcoin liberates money by bringing financial control and power back to the individual. Banks are well-aware of this threat and the potential result à la the death of the printing press via the Internet. In fact, the power-hungry, corrupt scumbags at JP Morgan Chase are so afraid that they tried to patent blockchain technology +175 times and have been rejected +175 times. It is indeed true that some criminals use Bitcoin because of it’s legitimate characteristics. To say that Bitcoin is only for criminals is to say that the United States Dollar never participated in illicit-drug transactions. Yet, International Monetary Fund (IMF) Chief Christine Lagarde states “in many ways, virtual currencies might just give existing currencies and monetary policy a run for their money”. The Bank of Finland published a 56-page research paper claiming Bitcoin is revolutionary. The Silk Road days are gone, and the media’s foolish and predictable attempt, to portray Bitcoin as only a means for illegal activity, has failed. Bitcoin is much more than that, and slowly, thousands of individuals across the globe are coming to the realization that I am trying to share with you. Bitcoin is a better, more honest form of money and it represents an exit from the current system.
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1.2 — Bitcoin’s Security Model: How Does Bitcoin Mining Work?
1.3 — What is the DAO Hack: Ethereum, Immutability, Consensus-rule & Forks
1.4 —Geopolitics and Bitcoin: What would happen if Bitcoin was banned?
1.5 — Bitcoin’s Substantive & Technical Road to $100K (Top Hit)
2.1 — Introduction: Leaderless Crypto Movement Will Rival Hierarchical Governments
2.2 — BIP-148 UASF First Year Anniversary: A New System of Governance
