How Bitcoin Changed the World in 10 Years
By ZeAnder Carter on The Capital
Today is the 11th birthday of Bitcoin.
That’s over 4,015 days since the first Bitcoin was created and released to the public by an anonymous developer named Satoshi Nakamoto.
On Jan. 3, 2009, in the genesis block, the mysterious creator published a single message in reference to a newspaper article:
“The Times 03/Jan/2009 Chancellor on brink of second bailout for banks”
Let’s flash back to 2009 for a moment.
The world was falling into a recession. The financial system was collapsing as banks ran out of money. Loan defaults were skyrocketing, and the stock market had crashed more than 50%. Rumors were rampant of the world falling into another Great Depression for years to come.
In the midst of this chaos, Bitcoin was born. Many view Bitcoin simply as “fancy new internet money”. While that is true, it misses the true purpose of what Bitcoin represents, which is something much deeper.
But before going deep, let’s reflect on what Bitcoin has accomplished:
Bitcoin has been the best performing asset in the world for the past 10 years
On Bitcoin’s 3rd birthday, it was only worth $5. Now, it’s worth $7,300. That’s a 1,460x increase. In other words, just $10 invested in 2012 would be worth $14,600 as of today or nearly $40,000 its all-time high.
More money was moved on the Bitcoin network than both Discover and PayPal
Nearly every year, transaction volumes increase. At this rate, Bitcoin is on track to surpass VISA & Mastercard with how much much is being moved annually.
Bitcoin became the most powerful computing network in the world
As I type this, Bitcoin’s network security reached an all-time high. What does this mean?
It means that Bitcoin is more powerful than the top 500 supercomputers combined…and growing daily. In math terms, that’s 120,000,000,000,000,000,000 hashes per second. All of this happening, non-stop for over 10 years with 99.98% up-time.
But Why Does Any of This Matter?
Bitcoin is special because it’s not issued by any country and open for everyone to use. This is the first time ever where people can fully control their money without relying on middlemen like banks. With Bitcoin, there’s no need for banks because the people themselves are their own banks, holding money in their personal wallet. That means no more waiting days for your paychecks to clear. No more overdraft fees (if you don’t have enough money, it just declines). No more accidental double charges at stores by merchants. Payments happen quickly, and people get paid quickly. The future is digital, and the future is here.
Imagine this for a moment.
You clock into work at 10:00am. You work an entire day, and are ready to clock out to go home for dinner at 6:00pm. When you go to clock out, you type in your employee number and scan a QR code to confirm you worked all day. After scanning the QR code, it asks if you would like to “claim” your check and get paid instantly. You politely scan, and within a matter of minutes, Bitcoin is deposited directly into your personal wallet linked to your employee number.
You no longer have to wait 2–4 weeks to get paid because with cryptocurrencies, money flows instantly and you don’t need a bank to “approve” the transaction. Notice I said you clock out at 6:00pm, which is after banks close. But it doesn’t matter.
When you eliminate middleman institutions like banks, PayPal, and others, you no longer have to be at the mercy of business hours. Holiday closes, or weekend delays don’t apply anymore. You can have your money how you want it, when you want it. Now imagine if you could get paid by the hour automatically to your work wallet, without you even having to “claim” it. You simply work a few hours, and the money is there. It’s so convenient, you wonder why people even wait for 15–30 days just to get paid. This is just starting to crack the surface of what is possible with blockchain. This same technology is what powers Bitcoin, and that’s what makes its creation so significant.
Some people argue: well, people don’t need to be paid daily! Getting paid every couple of weeks promotes responsibility!
But they’re missing the point. In the current system, people have no choice. In reality, many people are living paycheck-to-paycheck. To fill the gap between now and the time they get paid, they’re forced to rely on credit cards or deplete their savings to make ends meet. Because of this inefficiency, it puts more burden on the consumer and makes their lives harder. You even have apps like Earnin (disclaimer: no affiliation) where people sign-up and are able to get their paycheck a few days sooner.
We often shame payday loans for ripping off poor people. Yet, we seldom mention how apps like Earnin are finessing the middle class by charging extra fees just so people can pay for the simple things they need. Millions of consumers are willing to take out these micro-loans just to get paid sooner. But instead of fixing the root of the problem, we add more middlemen that take fee after fee and leech off of wage workers.
When you give people the freedom of money — that is, to truly have control of their funds 24/7 and the ability to send/receive anywhere in the world at any time, everything changes. You start to remove rent-seeking apps, then legacy banks, and slowly start paving the way for a world where it’s normal for people control 100% of their finances.
To put it another way…
Why do we need PayPal, CashApp, Venmo, Zelle, Google Pay, Apple Pay, when we can all just use a universal system? Shouldn’t banks allow us to send money anywhere in the first place?
We’ve all been there before. Somebody owes you money, or you have to pay them back.
“Do you have Cash App?”
“No sorry, mine is broken. Do you have Apple Pay?”
“Yeah, but mine isn’t set up. My card isn’t linked correctly or something”
So….how do we pay each other back for buying food yesterday?
The problem is so common, and seems trivial. Most people just accept it as a way of life. But it doesn’t have to be. You shouldn’t have to drive to a store, get cashback over-the-counter, hit an ATM, or walk into a back to get lunch money. It should be as easy as sending money on your smartphone.
Wouldn’t it be better if major companies all used the same, open payment system that allows everyone to send money to each other?
Doing so not only creates a better experience for end-users but companies as well. Apple and Google both benefit from higher transaction volumes. iPhone users can use Apple Pay to send money to Android users who use Google pay. Both companies can take fees on each side of the transaction. Companies win. Furthermore, it forces companies to compete to distinguish themselves with better rewards, more cashback, and merchant partnerships. Consumers win. As we know, increased competition is net positive for societies. It would be as easy as using the web, except with sending money anywhere in the world.
A loose, overly-simplified analogy would be something like: Bitcoin is like the internet. It’s an open system that no single entity owns, and everyone can access as long as they have a connection. Except instead of transferring information like news updates, Facebook posts, or sending photos, people can transfer monetary value back and forth.
You can DM a friend $20 on Instagram, or tip your favorite influencer .99 cents because you like their content. No complicated sign-up, no social security number, just the click of a button. Without boundaries, and without anyone’s permission.
Bitcoin laid the foundation for a new type of internet that many are calling the “Internet of Value”. But what makes it so unique is the technology behind it, which is called blockchain.
So what is the blockchain?
Blockchain is an open record of transactions that can never be altered, deleted, or falsified. Like the internet, once information is published to the blockchain, it’s there forever. Blockchain is basically a record of everything that’s ever happened. Whether it’s somebody paying $1,000,000 to buy a new apartment or a student sending his friend $50 to buy speakers, blockchain is the technology that powers cryptocurrencies like Bitcoin. It’s useful because it makes things open, and transparent to everyone.
You can do plenty of non-money things with blockchain too:
Buying food at the grocery store? Everything claims it’s “organic” nowadays, but how can you really prove it other than trusting a sticker on a box? With blockchain, you can see the exact location of the farm eggs they were grown, how old they are, even the temperature they were stored at. Instead of wondering what food is freshest, you can have full confidence that this information was never tampered with and cannot be faked in any way.
Making Life Easier
Moving to a new place? Instead of contacting old schools, hospitals, or dentists to get all of your records — you can keep them all safely encrypted on your phone. So once you move-in, all they have to do is scan your QR code and all of your information will pop up in their system. Even if you lose your phone, you’ll always have a back-up key just in case.
And no worries, no one can see your private info. On the blockchain, everything is automatically encrypted.
The picture above is what it’s like for an average person looking at a blockchain. They can see that stuff is happening, but not exactly what.
On the Bitcoin blockchain, things look like this:
1A1zP1eP5QGefi2DMPTfTL5SLmv7DivfNa
On the Ethereum blockchain, things look like this:
0xdde0f9ae55c1f8fe35a19e3598347da7e390dd8844d1c755bf3a8760e5f4ac6f
Seem confusing? Let’s break it down.
Those letters and numbers are what’s knows as a public key. That’s how people find your transaction. Let’s say you’re a student trying to transfer colleges from UCLA to NYU. By using blockchain, you don’t have to call the school or give them your name/address/student number/age/first-born child just to update your files. You can just send NYU your University Key, and they can access your transcripts or records easily. Only the people you share it with will ever know it’s you, or what’s inside. Since it’s all public record, they’ll be able to know with certainty that you were a verified student at UCLA, see the date your student profile was created, your current GPA, and any other important information. Public keys are mainly used for money transactions now, but they can represent virtually anything.
Note: this is an extremely simplified version of how it works. A lot more happens on the back-end, but the point is that the entire world can’t see that you purchased a Christmas Gift the night before at 11:13 pm on Amazon. All they see is a string of random letters and numbers, even though it shows up in your personal wallet that you bought something. The numbers make sense to you, and that’s all that really matters.
Looking Ahead
I admit, public and private keys can sound kind of confusing. But over time, the process will become effortless. It’s easy to scan a QR code to send money to a friend in-person. But if they live far away, it gets a little trickier. Fortunately, developers are working today to solve these issues. Instead of copy-pasting long addresses, sending money could be as simple as Bitcoin “usernames”. They would be like social media @ names, but for money.
So if you want to request money from a friend, they might send it to JohnSmith.btc or AshleyWilson.btc. Or if you’re buying a new pair of shoes, you can send your money to NIKE.btc or Adidas.btc and they’ll automatically ship to the address associated with “YourName”.btc
Eventually, cryptocurrencies will be so simple to use that even your grandma or grandpa could pay their rent via a smart contract (a digital agreement on the blockchain). I’ll go into that more in a second.
In the future, your phone will likely have a digital wallet that looks like this:
- “General” tab for everyday purchases and sending/receiving money
- “Work” tab where you can see how much you get paid regularly
- “Personal” for medical records, documents, online logins (no passwords!)
- “Savings/Investing” where you can buy stocks/crypto directly from your wallet. No more needing to have 2–3 different apps to manage money!
It’s like having a Bank + Cash App + Digital Safe + Stock Brokerage Account all-in-one. In the palm of your hand.
Of course, big companies like Bank of America, Wells Fargo, and Capital One won’t just sit back and let all of this happen. They’ll come aboard and start investing heavily in order to maintain relevance.
Before you know it, you’ll slowly start to see your regular banking app add cool new features. It might start with being able to buy Bitcoin, then other cryptocurrencies like Ethereum, possibly even getting cryptocurrency loans for personal use. Who knows the other endless possibilities that haven’t even been thought of yet that will eventually be created one day?
Mind you, we won’t wake up and see all of this tomorrow. Things like this take time. It will happen slowly at first, then all at once. But before you know it, you’ll be using blockchain or cryptocurrencies in daily life effortlessly.
In the world today, there are over 1.7 billion people without bank accounts. In rural or fragmented societies the coordination necessary for bank accounts and maintaining identity systems can be extreme. Without sufficiently developed legal systems, property rights, or access address registries, therein lies a gap for a new generation of digitally native consumers who manage all of their finances strictly from their phone. Africa is already skipping legacy banks, and leapfrogging directly to mobile networks. The shift has already begun and in the millions of users.
For all the crypto skeptics who assert there are no use viable cases and things are too complex, allow me to reference Marc Andreesen — pioneer of the first major internet browser Netscape:
“Critics of Bitcoin point to limited usage by ordinary consumers and merchants, but that same criticism was leveled against PCs and the Internet at the same stage. Every day, more and more consumers and merchants are buying, using and selling Bitcoin, all around the world. The overall numbers are still small, but they are growing quickly. And ease of use for all participants is rapidly increasing as Bitcoin tools and technologies are improved. Remember, it used to be technically challenging to even get on the Internet. Now it’s not.”
— Marc Andreessen, legendary venture capitalist and investor
He often states how revolutionary technology takes decades to build. The internet took more than 20 years to permeate nearly every facet of our lives. Blockchain could take equally as long, though the infrastructure is being built for it to occur much faster.
Quick Time Stamps
- Electricity took 46 years
- Telephones took 35 years
- Radio took 31 years
…before they were all well known and used by the average American.
The earliest PCs and mobile phones were created decades ago and didn’t become ubiquitous until the early 2000s. Those who view the development of the crypto space as slow are simply not using a long enough time horizon. Bitcoin and cryptocurrencies had their first “mainstream” moment in 2017. It’s only been 2 years since. Let’s evaluate the industry in 2027 and see how well opponents claims stand against the test of time. Betting against innovation has seldom been a lucrative venture. And a world with blockchain, AI, IoT, augmented reality, and wearable devices is a reasonable, sound forecast.
Summary
Most people use email every day but have no idea how SMTP works.
Most people use the internet every day but have no idea how TC/IP protocols work. This is normal.
Years from now, most people will use cryptocurrencies and not know (or care) how they function. But for the fortunate few, early adopters have the chance to invest directly in the foundation of a new software network for the first time.
A cryptocurrency could be the force that powers the next YouTube, or Gmail. It could be faster than Amazon’s AWS cloud. Or something entirely new altogether.
Never before have people been able to invest directly in the base-layer of the internet platforms. Typically, you invest in a company that sells things on the internet. Or companies that sell services to consumers or businesses and distribute via the internet. Venture capitalists pay people to build software companies. But until now, the public could not buy and trade software networks 24/7 allowing for better price discovery, faster adoption, while evangelizing early adoptions who come into newfound wealth.
Imagine how rich people would be if they were able to invest in HTTP that powers the internet, or TC/IP that powers email messaging. The upside profit potential is staggering, if successful.
By buying Bitcoin, you own a piece of the world’s biggest decentralized money network, one that currently has the greatest likelihood of becoming a truly global currency. It may fail, and this may end up being one massive social experiment that simply inspires libertarians, tech enthusiasts, and economic junkies. Although, signs point to something more significant.
Let me be clear: I believe over 95% of cryptocurrencies are virtually useless and will fail. I believe the space will culminate in the largest bubble the world has ever seen, and many fortunes will be born and destroyed. Full stop.
However, I simultaneously believe that the companies and protocols of tomorrow will be blockchain-based, and a few winners will form relatively decentralized oligopolies. Network effects are paramount with any form of technology. I doubt there will be thousands of cryptocurrencies highly used, though countless will exist.
It is likely we will have blockchain/crypto versions of Android, iOS, Windows, and Linux as majority leaders. Companies and developers will build upon most popular crypto networks, sprouting niche communities as off-branches.
Bitcoin started a digital revolution. The first successful attempt at something that had never been done before: a decentralized, permissionless currency not issued by any government or financial institution. One that is incredibly hard to confiscate, censor, and impractical to counterfeit.
A currency meant to gain value over time, rather than lose 2% each year due to inflation. It was a bold and unparalleled move and coincided with the dawn of a new technological era.
But for those who will never see or understand the vision, perhaps the best response is one said by the creator of Bitcoin himself:
If you don’t believe me or don’t get it, I don’t have time to try to convince you, sorry. — Satoshi Nakamoto
Cheers to the 2020s, and cheers to 11 years of progress thus far. Happy 11th birthday, Bitcoin.
