This is an opinion editorial by Ryan Bansal, professional software engineer and Bitcoin newsletter author.
“The computer can be used as a tool to liberate and protect people, rather than to control them.” —Hal Finney
Technologies are only amplifiers, not arbiters of morality. Extrapolating from the quote above, it’s reasonable to argue that any technology can be both a tool of tyranny or freedom depending on the hands on the lever of power.
The principle of checks and balances shows that in any type of system that relies on concentrated power, this central institution becomes the honeypot of malicious actors. Also keep in mind the democratic principle that more distributed decision-making is more robust and equitable for any society. So it seems obvious that the best way forward is to develop and adopt technologies without a single power lever?
That said, let’s now talk about one of the most important technologies of all: money. In the evolution of monetary technology from barter systems to shells to metal coins to gold-backed banknotes and now a central bank-controlled fiat digital currency, the distribution of power has shifted from more decentralized to more centralized to the point where governments have managed to establish a coercive monopoly over money.
Now, I think it’s a pretty uncontroversial statement to say: government corrupts everything it touches. Of course, the convenience of digital money is unmatched, but it’s also important to understand the other side, i.e. counterparty risk, which means trusting a provider of custody to secure your assets – plus the fact that the historical record track to keep this trust is not great.
However, fortunately or unfortunately, recently this breach of contract has started to happen more widely and openly. Take for example a developed democratic country like Canada, freezing the bank accounts of its citizens for protesting against COVID-19 restrictions or a country like Russia imposing restrictions on its people trying to withdraw their funds after the country invaded its neighbour. In a world run solely by physical money, this kind of power to unconstitutionally violate private property rights would be impossible to enforce.
Besides the worsening of financial censorship and geopolitical sanctions – which are a relatively recent phenomenon now that money has become almost entirely digital – the corruption resulting from the advent of fiat currency and its problems dates further back to 1971. What do I mean? The plethora of metrics that can be used to measure the health of an economy, such as the price-earnings ratios of index funds, the Gini index for wealth inequality, the consumer price index for inflation and the cost of living, the ratio of income growth to productivity growth, individual property rates and many others have all gone haywire since then-President Richard Nixon , decided to move away from the gold standard.
If you haven’t guessed the governments next move yet, let me introduce you to Central Bank Digital Currencies (CBDCs). Think today’s digital money is bad enough as it is? Now imagine what if it was also programmable?
You can say goodbye to any last slice of financial autonomy. Before we know it, we will be living in a surveillance state with social credit ratings, just like Chinese citizens. If you’ve seen politicians trying to put a positive spin on them by randomly throwing around buzzwords, like “blockchain,” go back to the beginning of this article and read the first line again.
We can talk at length about the problems that government creates, but let’s get to the solution: how do we take control of money out of the hands of politicians and put it back into the hands of citizens?
“I don’t believe we will have money again until we take it out of the hands of governments.” —Friedrich Hayek
Imagine if our monetary system had the secrecy and autonomy of cash; the convenience of being instantly and digitally transferable around the world; while retaining the properties of gold, i.e. no one can steal your purchasing power over time by arbitrarily manipulating its supply only to serve its perverse political inducements?
Moreover, what if it also ran on an open-source code base and used a public database making it globally accessible, completely transparent and fully auditable by anyone? Moreover, what if it also allowed anyone with an internet connection and a computer to influence its monetary policy?
Finally, what if the proposed system were also decentralized in such a way that it became unstoppable, controlled or corrupted by anyone due to the lack of a single point of failure or by a central authority?
Sounds like monetary technology on steroids, doesn’t it? Well, in 2008, a solution to these problems was offered by someone using the pseudonym Satoshi Nakamoto. I would also like to point out that it did not come out of nowhere, it has been in the making since central bankers established control over money. Specifically, it took nearly 40 years of research and multiple failed attempts to craft this masterpiece. The following visual is more tangible:
I would like to end by reiterating that the notion of separating money from the state may seem radical to you at first sight, but in reality it is not. As I mentioned before, the monetary technologies that we have used throughout our history were far more outside of state control than today’s fiat currency. Somehow the state managed to capture them. Gold is the best example of such a non-sovereign asset that people have used as money for the longest time, but it had obvious attack vectors in the form of various physical limitations i.e. difficult to store, difficult to secure and difficult to move.
Historically speaking, there has been a tug of war between trust and non-governmental funds. Therefore, the real question is not “if” the money will separate from government control, but “when”. With Bitcoin, I think the time has finally come.
Now obviously if this article has failed to fully convince you that Bitcoin was designed to be a truly democratic and inclusive monetary system and if you still insist on calling it a scam, I hope you will at least consider that’s something worth taking a closer look at.
This is a guest post by Ryan Bansal. The opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.