The Complex Side of Bitcoin
The non-technical aspect is what deters most people from learning more about Bitcoin
“She says.. hey, babe, take a walk on the wild side” — Lou Reed, Transformer, 1972.
Learning about Bitcoin has been a challenging task. As a developing technology that is only fourteen years old, few quality resources currently exist that explain the “why Bitcoin” question. Besides the novelty of the technology, understanding Bitcoin entirely, something I wonder if any human can even do, involves many different disciplines and topics. There are two facets of Bitcoin understanding, technical & non-technical.
From a technical perspective, Bitcoin combines elements of cryptography (such as SHA-256 hash functions), computer science (software coded in C), and mathematics. Anyone with a background in engineering, math, or computer science could easily understand the inner workings of Bitcoin. Bitcoin’s white paper outlines the entire system’s operation and is only eight pages long. From this angle, the answer to “why Bitcoin” will involve something related to an electronic payments network that settles transactions peer-to-peer without going through intermediary parties, such as banks, credit-card companies, asset managers, or credit unions, to name a few. In other words, Bitcoin eliminates many intermediaries currently involved in processing and settling transactions.
The general public is usually not concerned about how money in their checking account can arrive in someone else’s account and what parties and fees are associated with this process. For example, when you buy a coffee at Starbucks using your VISA card, it can sometimes take up to 90 days for that transaction to finally settle between all parties involved. Additionally, fees are required to settle these transactions, and trust is needed that each intermediary is honest because clearing payments between accounts happen through private servers. We are at the mercy of centralized corporate entities to tell us how much money we have received or paid, which for most people, it does not matter since all they care about is that they got their coffee after Starbucks ran their card.
The purely technical understanding of Bitcoin is still valuable, primarily as layer two technologies, such as the lightning network, are being developed and are on track to provide a new payment alternative besides just cash, VISA, Mastercard, Discover, and American Express. However, only understanding the technical side of Bitcoin does not let you see the true magnitude, potential, and implications that Bitcoin poses on a global scale. The only way to understand this is by taking a ride on the non-technical side of Bitcoin, honey.
Bitcoin gets truly interesting from a non-technical perspective. I believe mass adoption will occur only through a non-technical understanding of Bitcoin. Understanding Bitcoin from this viewpoint requires knowledge of economics, history, finance, geopolitics, political science, philosophy, finance, anthropology, sociology, and even physics. From this angle, the answer to “why Bitcoin” is much more complex and illuminating. It takes an absurd amount of time, energy, and effort to go through resources of multiple disciplines and string together highly abstract concepts. Knowing what you are even supposed to look for within each domain related to the non-technical understanding of Bitcoin is even more problematic and time-consuming.
Here are a few concepts and topics I wish I were even aware existed or were ideas that related to Bitcoin in some capacity:
- Cantillon Effect
- Austrian economics (Menger, Hayek, Mises)
- History and function of the FED
- Central Banks, IMF, World Bank
- M1 supply & its relation to inflation
- Money as preservation of energy & time
- Previous debt crises
- The Bretton Woods Agreement
- Moores Law
- Inflation vs. deflation
- Global debt & Credit default risk
- p2p vs. client/server
- Market Capitalism to Collaborative Commons paradigm shift
- Appropriate Technology Movement
- Communication/energy/transportation infrastructures
- This list can go on.
By naming specific concept names, I hope to provide at least a starting point for your journey into the wild side understanding of Bitcoin. As always, thank you for reading, and I hope this content was helpful.
