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Some thoughts on Bitcoin
Its quite disappointing how so many ‘intelligent’ commentators completely miss the reality that its not “Bitcoin” as a currency that offers us the “Golden Egg” to the next generation of the internet.
Attacking the “value” or durability/volatility of Bitcoin as “not real money” is akin to trying to persuade an early Polynesian tribesman looking at a pile of Dollar Bills, burning on a fire next to his families trading pile of Shell “money”, that your “money” is of any value. As someone who would have spent his whole life trading in “real things” – ie shells – as currency for all his needs , he would say to you “how can your paper money be of any value, I’ve just burnt it , its gone, its not “real”
I don’t intend to go through all the arguments you could have used to try and “persuade” that tribesman that your “paper currency” was indeed valuable. ( But it would have been far easier to convince him of that before Central Banks uncoupled money printing from the physical backing of Gold Reserves )
However, over time, as the variety of uses that this strange concept of “valuable pieces of paper” would bring to the trading life of that tribesman and his community would mean that subsequent adopters of paper money in the jungle community would have no trouble accepting it. The Network of Transactions, insurances, ( he can claim for his burnt Bills ) ownership of goods and production innovations, credit for trade etc that this brought to their society would confirm to them the value of this “funny money” (as it would undoubtedly have been called when it first arrived in their society)
So, just as all those ‘tangible’ things that we accept lie behind the concept of paper money as its real value, Its the Network of the Blockchain protocol, its verification and “proof of existence” of ANY transaction that makes Bitcoin the most valuable innovation since the creation of the Internet itself . When the internet first arrived what it did was allow existing human inter-action, whether it be financial or social, to occur at incredible speed ( the power of the chip ) However, In our economic and financial world the internet was used, primarily, to reinforce the existing book ledger accounting methods that has been in existence for hundreds of years. Agreed it made it immensely quicker to undertake commercial activity, allowed the computation of complex transactions and led to the growth of the “consumer society” But Bitcoin and the Blockchain Protocol is a completely new method of interacting that is going to revolutionize how the World develops in the next decade.
Think of The Blockchain as a super commercial and social ledger – of infinite size – in which everything is recorded, in real time, and all transaction are visible, irreversible and offer proof that a contract has occurred between two or more parties. The “Hand” writing in, and thus verifying, those contracts in the ledger isn’t an aged Dickensian clerk, ( of the Industrial Revolution Age ) or the legislative and financial policies of Governments, Politicians or Central Banks (as in our current Sovereign States Age ).
The mechanism that verifies all this activity lies in the Mathematical Algorithm of the Blockchain Protocol , that sits within the connecting nodes of the internet itself. It is part of the inner structure of the internet , running continually, linking endlessly, 24/7. Without any Third Party ( dictatorial governments, repressive states, etc ) being able to dictate how this protocol works, who can benefit from it, or influence transactions that are built onto the Blockchain. Its development therefore will truly be “Democratic” – in the purest sense of the word – by peer-to-peer acceptance of all transaction methods, and mass adoption of the useful applications built on the Blockchain , and rejection of the less so.
The Democratic Nature of Bitcoin and its infrastructure as it develops will define how “work” will be rewarded in the future, ordinary people, wherever they live in the World will have a real choice and control over the fruits of their labours, without any interference from corrupt third parties.