Many arguments against Bitcoin can be summed up as, “But it has no intrinsic value!” But what is value, even? The world is currently in a timeline where the President of the US is Donald Trump, and tweets stuff constantly like “We have a bigger nuclear button than Kim Jung Un and North Korea,” yet some people still don’t see the value of Bitcoin versus having our finances completely tied to this insanity. It’s comical that reporters ask CEOs of big banks like JP Morgan’s Jamie Dimon for their opinion on bitcoin, and they call it a fraud, as they themselves are being accused of serious money-laundering. The real fraud is that the archaic legacy financial system that has remained stagnant with little to no innovation.
Bitcoin has been called every name in the book: a scam, a fraud, a Ponzi scheme, and even a bubble. Despite all of these claims and proclamations of its death it is stronger than ever. Some people dismiss it, saying governments can just ban Bitcoin. Such a claim is as ludicrous as saying one can ban the light bulb or printer press. A technology cannot be banned. Once the genie is out of the bottle there is no law or regulation that can make something that objectively exists just disappear from the world. Bitcoin doesn’t have to prove anything or attempt to take over the legacy financial systems. It just needs to exist. “Bitcoin is and that is enough.” The fact that there is now a technology/new financial system that acts independently on its own from the legacy financial system cannot be understated enough. Is it the ideal system, with no flaws? No, of course not; however, what’s important is that there is now something else, there is an alternative, if needed. There is currently immense volatility and it’s a path into the unknown; however, it is an option. For some, it is the best option right now. Bitcoin is the battle cry that enough is enough. “We had a quarter century that was dominated by finance. By 2007 half the profits in the country were being made by banks and financial institutions.” -Peter Thiel
In this day and age where people have information flowing through their fingertips, quite simply, they are not going to put up with any funny stuff. In the current top-down system for society, institutions have had most of the control. In the future, maintaining this power will become increasingly difficult, unless it is merited. Far too long, ordinary folks have put up with the naivety of individuals who think they can centrally plan an economy, as if economics is science and completely objective. “The problem is that by creating bureaucracies, we put civil servants in a position to make decisions based on abstract and theoretical matters, with the illusion that they will be making them in a rational, accountable way” — Nassim Taleb, Antifragile: Things That Gain from Disorder. Humans are flawed. When people allow individuals like Janet Yellen or Mario Draghi to have immense power over the financial system, the decisions they make can have massive repercussions.
If 2008 has taught the world anything, it is that the elite or large institutions do not pay the price for their recklessness. Under the legacy system it is always the common man who will. If the government, supposed to represent the people, won’t hold banks and large institutions accountable, that’s fine. However, it should not come as a surprise when more and more people choose to participate in systems like Bitcoin. The majority of ordinary folks don’t want their whole net worth and portfolio at risk in a sham of a financial system, only to be preserved (sometimes only partially) by an urgent bailout of a bank. They want accountability that would’ve prevented all of this from being neccessary in the first place. “Consider this in terms of economic and institutional life. If nature ran the economy, it would not continuously bail out its living members to make them live forever. Nor would it have permanent administrations and forecasting departments that try to outsmart the future — it would not let the scam artists of the United States Office of Management and Budget make such mistakes of epistemic arrogance.” Nassim Taleb, Antifragile: Things That Gain from Disorder. Bailouts, artificially inflating interest rates, QE, these are all just bandages that won’t fix society’s growing distrust and anxiety. Fiat currencies are being debased at expedited rates; global debt is over $220 trillion. Around 100 trillion of that debt is from just 2007! Actual growth through innovation is how an economy actually thrives; not just artificially pumping money into the economy to give the appearance of growth. Snapchat, Blue Apron, Juicero and the newest, hottest unicorn company are not going to lead to the next industrial revolution.
A study in Italy, Spain, Greece, Argentina said that more than half of 18- to 34-year-olds would participate in an uprising against the generation in power. The sample size was 580,000 respondents in 35 different countries. This isn’t something that is secluded in a tiny part of the world, this is a global phenomenon. It’s also no coincidence that the three highest polling countries are all ones that have extremely high government debt- Greece, Italy, and Spain.
There will come a day not-too-distant in the future where will look at separation of money and state as importantly as separation of church and state. The “idea” of bitcoin was important. The idea of money being apolitical that can’t be controlled by any government or entity. The idea that any governments political or monetary policies don’t have to directly effect the individual’s financial wealth. The idea of decentralized and financial sovereignty. In the old days, only one man could be King of a country, with Bitcoin you are your own King, no one can steal from or tax you against your will (unless they’re next to you with an Iron Wrench). Yuval Harrari in his book Sapiens puts it best, “In order to change an existing imagined order, we must first believe in an alternative imagined order.” That alternative order is Bitcoin.
No government has the right to limit how free individuals wish to personally spend their hard earned money. That is the antithesis of freedom. In an inter-connected world things like capital controls will not be able to continue as easily without major scrutiny. Greeks have learned the hard way that just because you have money in a bank account that doesn’t mean it is yours to use and have access to as you deem fit. In the recent banking crisis, seemingly overnight, banks closed for nearly 3 weeks and citizens were and still are limited to the amount that they could withdraw from ATMs to prevent a bank run and total collapse of the currency. It’s not really your money, nor was it ever, if your government can just decide on a whim that you can’t have access to it. Sadly, most of us ignore this fact if it’s not happening to us or if it doesn’t seem like an immediate possibility. This is also not just limited to Greece; most countries of the EU are ready to do this at a moment’s notice. Just recently the European Union has proposed measures that would temporarily prevent people from withdrawing money to “prevent bank runs.” It’s your money, but you can’t have it!
For most Americans, however, worrying about a bank run when it does not seem likely is not an immediate concern. There is however a very disturbing trend that has been gaining steam, civil forfeiture. Under civil forfeiture, Americans who have not even yet been accused of a crime can be stripped of their property including: cash, cars, and even houses. Since 2001, forfeiture revenue has exploded nearly tenfold. In a span of 14 years, the amount seized has gone from less than $500 million to more than $5 billion. All of this in the “Land of the Free” where you are supposed to be presumed innocent until proven guilty in court. This just proves the major importance and value of Bitcoin. It is money that no one can rob, no one can seize and no one can freeze. Possession of Bitcoin equals true financial sovereignty.
India is another example where over night the government can decide that 86% of all its money in circulation is now outlawed by banning its high denominated notes. Indians rushed to bank waiting in lines for hours to turn in these notes. If they didn’t these pieces of paper would soon be worthless. Why, because of intrinsic value? No, because the government decided so.
Some will say, but what is it’s “intrinsic value?” This question doesn’t make much sense, though. What makes a $100 bill intrinsically worth more than a $1 bill? They’re made of the same exact materials. What makes a $100 dollar bill worth more is not intrinsic value but the shared belief and faith that it is indeed worth 100x more despite being made up of the same ink and paper. The difference now with Bitcoin is no central authority is telling us how much 1 Bitcoin is worth. It is completely determined by the free market. The US dollar is backed by the full faith of the US government. Bitcoin is backed by the math and consensus of individuals that are partaking in the network. There is no need for trusting central banks, government officials, etc. With Bitcoin, where everything is open source, there is no need to trust an individual or individuals. The value can be agreed upon through consensus rather than being told that something is worth a certain amount “just because.”
At the end of the day, Bitcoin is simply a ledger that records all inputs and outputs without any central authority. However, historically ledgers have had extreme importance and have wielded immense power to whomever had access to them. With large networks of people it becomes crucial and necessary to be able to store and process large amounts of data. Writing was designed by the Sumerians crucially for record keeping. “Alas, the first texts of history contain no philosophical insights, no poetry, legends, laws, or even royal triumphs. They are humdrum economic documents, recording the payment of taxes, the accumulation of debts and the ownership of property.” — Yuval Harrari, Sapiens. Central authorities who have controlled these databases have had immense power, as they do to this day. Bitcoin and its blockchain allows for the ability to decentralize much of this, freeing up the flow of the information in a fully exposed and open-source manner. Most of society today is still built off the archaic structure of a top-down system. In order to acquire more knowledge and gain more power one would have to climb the social ladder. Institutions such as banks, churches, universities, and governmental officials were the ones who held the keys to such information. In our world today, with huge numbers having easy access to the internet, software, and decentralization, much of this is changing. Social class is beginning to and will continue to lose meaning as humankind puts more gravity towards merit. The internet has already changed most people’s lives, in how they gain information and learn new things. This is just the beginning and Bitcoin will have just as big of an impact if not more on finance, creativity, and how people transact and trade with foreigners abroad.
None of this is new, as the idea of Bitcoin and use of encryption for economic activity has been around since the internet itself. It’s criticisms were well documented even before its emergence. “The state will of course try to slow or halt the spread of this technology, citing national concerns, use of the technology by drug dealers and tax evaders, and fears of societal disintegration.” (May, 1988) With predictions this accurate by Timothy C. May dating back to 1988, people will likely start to realize that there actually is some value here and see how big this will be. Computer technology and encryption is on the verge of being able to provide the ability for individuals and groups of people to be able to interact economically with one another in a completely free and anonymous manner.
Much of this will provide for a wealth transfer to an entirely different class of people. Individuals who have an edge in the world of information and technology will be sitting on extreme amounts of wealth. “Something that is inevitable is the increased role of individuals, leading to a new kind of elitism. Those who are comfortable with the tools described here…” (May, 1994) This can drastically change what society focuses on. Specifically in what types of research receives funding, such as renewable energy, space travel, medicine. These industries and others can be better funded in the future, if the value of Bitcoin is realized.
“Crypto Anarchy and Virtual Communities.” Bitcoin as a Store of Value, Unit of Account, and Medium of Exchange | Satoshi Nakamoto Institute, nakamotoinstitute.org/virtual-communities/.
HARARI, YUVAL NOAH. SAPIENS: a Brief History of Humankind. VINTAGE, 2018.
Taleb, Nassim Nicholas. Antifragile. Penguin Books Ltd., 2012.
“The Crypto Anarchist Manifesto.” Bitcoin as a Store of Value, Unit of Account, and Medium of Exchange | Satoshi Nakamoto Institute, nakamotoinstitute.org/crypto-anarchist-manifesto/.