Today marks ten years since Bitcoin’s whitepaper was published by its enigmatic creator(s). What better way to celebrate than to look at some of the ways in which Bitcoin has managed to achieve its original vision; and why we need it now, more than ever.
1 year after the start of the economic crisis that shook the world and turned the global economy inside-out, an unknown individual (or group) known as Satoshi Nakamoto, released a whitepaper entitled: “Bitcoin: A Peer-to-Peer Electronic Cash System”.
The white paper detailed a form of indelible electronic cash, promising to revolutionize the way we use money and disrupt the status quo of traditional finance. This revolutionary monetary system claimed to be completely decentralized, requiring no third party in order to execute a transaction; truly, the people’s money.
Whoever or whatever Nakamoto is or was, their intentions were made clear within the first keystrokes of the whitepaper:
“Commerce on the Internet has come to rely almost exclusively on financial institutions serving as trusted third parties to process electronic payments. While the system works well enough for most transactions, it still suffers from the inherent weaknesses of the trust based model.”
Three months after publication, Nakamoto mined the genesis block, – the inaugural block on the blockchain – leaving a simple, but powerful message:
“The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.”
This was in reference to a story in The Times newspaper which told of the financial crisis and how instead of facing consequences for the decimation of the global economy banks in Britain were being bailed out - again. This was a perfectly appropriate way to prove that no BTC had been mined before this date, but it also showed just what Nakamoto intended when creating the ‘internet of money’.
Luckily he didn’t opt to go with: “Detox in style: The best spas on the planet” …
It was this necessity for a trust-less system that proliferated Bitcoin to where it is today, we may be a way off from its original intention but we’re facing the right direction.
Since 2014 Venezuela has been battling hyperinflation, leaving many citizens choosing to save what they can of their finances by jumping into a relatively stable foreign currency or safe haven asset. However, in a failed bid to save the embattled Bolivar, the state set controls and restrictions upon buying foreign currencies, leaving citizens little to no choice but to weather the storm.
Enter our savior Bitcoin (along with other altcoins) providing Venezuelans with an unrestricted store of value. Though this has far from eased Venezuelan woes, it has made a significant and positive impact on many people and continues to do so. According to Coindance, Venezuela is now the second largest buyer of Bitcoin with 12.5% of all Localbitcoins volume coming from within the country.
Bitcoin is increasingly advised and used as a safe haven asset; as people start to see its potential, we start to see fiat’s crown slipping ever so slightly. Many people have suggested that the next financial crisis will be the tipping point for the mass adoption of cryptocurrency, where investors look for a relatively stable (even lucrative) asset to place their capital in while the banks and traditional fiat stumble.
Interestingly, analysis by Wall Street giant, JPMorgan found that the next financial crisis could happen as soon as 2020. Something the International Monetary Fund (IMF) seem to agree with.
Weighing in on the topic of financial chaos, The IMF recently chastised global governments for a failure to protect the economy from the kinds of reckless behavior responsible for past crashes, citing complacency in regulatory reform. With global debt level far beyond the levels of 2008 risk of a crash triggered by unregulated parts of the financial system.
Without such checks and balances in place, institutions are free to partake in the kinds of ‘reckless behavior’ the IMF warns against, leaving the economy extremely vulnerable. Given this current climate of uncertainty it's unsurprising to see institutional investors seeking a new form of trade in Bitcoin with the stock market suffering as a consequence, and although the blame can’t be entirely placed on banks, they share the brunt of it, along with the incompetencies of governments and regulatory bodies.
Such third party institutions have been a necessary evil for time immemorial and turning a blind eye to their indiscretions and scandals has been the norm for years - not out of apathy but from a lack of control; perhaps it’s time to try something new…
In the words of the mysterious designer:
“The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts. Their massive overhead costs make micropayments impossible.”.
Satoshi Nakamoto created a fair, egalitarian monetary system, free of debasement and forgery, in the creation of this democratic currency, Nakamoto catalyzed a re-distribution of wealth which continues to give hope to millions. Here’s to the next ten years.