TL;DR
Bitcoin is a revolutionary new form of money for the internet age, but to realize its full potential it must become more widely adopted as a medium of exchange rather than just a speculative asset. Achieving this will require making it easier for people to earn and spend Bitcoin in their daily lives.
Understanding the Core: Bitcoin as Modern Money
Bitcoin represents a transformative new form of money, serving as the digital equivalent of what email did for communication. Just as email enabled instant messaging across the globe, Bitcoin allows value to be transmitted rapidly and inexpensively from one corner of the world to another. It is a uniform type of money, not tied to any specific geography or political system.
The Evolution of Money
Throughout history, money has taken many forms as humans sought tokens to represent value – from seashells to precious metals like gold. The key criteria was finding something sufficiently rare, as an overabundant money supply would cause it to lose value. Gold emerged as the preeminent form of money due to its scarcity.
However, gold’s lack of portability led to the emergence of paper banknotes and fractional reserve banking. This planted the seeds for the centralization of money in the hands of banks and governments, eventually leading to the pure fiat currency system we have today. Bitcoin aims to solve these issues.
Bitcoin’s Key Attributes
Bitcoin possesses many of the desirable attributes of gold, such as scarcity (with a fixed supply of 21 million coins). But as a digital asset, it is highly portable and can be transmitted instantly across the world. Bitcoin is also highly divisible, with each coin comprised of 100 million satoshis. This allows it to be used for payments of any size.
The Importance of Increasing Utility
While many view Bitcoin primarily as a store of value and speculative investment, its true potential lies in serving as a medium of exchange. Money sitting idle does not contribute productively to the economy. The real power of Bitcoin will be realized when it is earned and spent by people in their daily lives.
Greater adoption of Bitcoin for real economic activity would make it more resilient to potential centralizing forces, such as large investors and institutions accumulating massive holdings. A robust circular economy of people earning and spending Bitcoin, without converting to and from fiat, is key.
A Vision for the Future
Achieving wider circulation of Bitcoin will require the integration of Bitcoin payment options into the apps and platforms people already use every day to earn income, purchase goods and services, and interact with the digital economy. If a substantial share of economic activity can be denominated in Bitcoin, it would drive significant demand and make the Bitcoin economy more robust and inclusive.
Bitcoin also has tremendous potential to connect the billions of unbanked to the global economy and reduce remittance fees that exploit some of the world’s most vulnerable populations. With the right technical, accounting, and legal solutions it can empower businesses and startups around the world.
We must remain vigilant to potential failure modes, such as the increasing concentration of Bitcoin wealth and influence in the hands of a small number of “whales” and institutional players. Analogous to the philosopher’s stone of legend, Bitcoin may have attributes of an “incorruptible substance” that can serve as an antidote to monetary tyranny – but only if we steward it responsibly.
The path forward is to focus relentlessly on making Bitcoin more useful for more people. All other priorities are distractions. An economy is emergent from the sum total of individual human actions – and therein lies the key to Bitcoinizing the world.
True emancipation from the existing corrupt fiat system will not come from Bitcoin as an investment asset, but rather Bitcoin as the people’s money – a frontier technology voluntarily adopted on the market to reclaim economic autonomy. Let us work diligently and with integrity to make that vision a reality.
Thank you for reading “Bitcoin: Money for the Internet Age“.
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Sources:
- Szabo, Nick. “Shelling Out: The Origins of Money.” http://web.archive.org/web/20210721194224/http://www.fon.hum.uva.nl/rob/Courses/InformationInSpeech/CDROM/Literature/LOTwinterschool2006/szabo.best.vwh.net/shell.html
- Ammous, Saifedean. The Bitcoin Standard: The Decentralized Alternative to Central Banking. Wiley, 2018.
- Peterson, Jordan. Maps of Meaning: The Architecture of Belief. Routledge, 1999.
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