Bitcoin Separates Money from Government – Bitcoin Magazine
This is an opinion editorial by Ryan Bansal, a professional software engineer and author of a Bitcoin newsletter.
“The computer can be used as a tool to liberate and protect people, rather than control them.” — Hal Finney
Technologies are only amplifiers, not arbiters of morality. Extrapolating from the quote above, it is fair to argue that any technology can be both a tool for either tyranny or for freedom depending on who has their hands on the lever of power.
The principle of checks and balances shows that in any system that relies on concentrated power, the central institution becomes the honeypot for malicious actors. Also remember the democratic principle that more distributed decision-making is more robust and fair for any society. So it sounds like a no-brainer that the best way forward is to develop and adopt technologies without a single ultimate 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 notes and now a central bank controlled fiat digital currency, the distribution of power has gone from being more decentralized to being more centralized to the point where governments have been able to establish a coercive monopoly on money.
Now, I think it’s a pretty non-controversial statement to say: Government corrupts everything it touches. Sure, the convenience of digital money is unmatched, but it’s also important to understand the other side of it, i.e. the counterparty risk, which means you have to rely on a custodian to secure your assets – along with the fact that the historical track record over keeping this trust is not great.
But fortunately or unfortunately, this breach of contract has recently begun to happen more widely and openly. Take, for example, a developed democratic country like Canada freezing the bank accounts of its citizens to protest COVID-19 restrictions, or a country like Russia placing restrictions on people trying to withdraw their money after the country invaded its neighbor. In a world run only by physical cash, this kind of power to unconstitutionally violate private property rights would be impossible to carry out.
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Apart from the worsening economic censorship and geopolitical sanctions – a relatively new phenomenon now that money has become almost completely digital – the corruption arising from the use of fiat money and its problems go back further to 1971. What do I mean? The plethora of metrics one can use to measure the health of an economy such as the index fund price-to-income ratio, the Gini index for wealth inequality, the consumer price index for inflation and cost of living, the ratio of income growth to productivity growth, individual home ownership rates and many others have all gone wild since then-President Richard Nixon decided to go off the gold standard.
If you haven’t guessed the next move by governments by now, let me introduce you to central bank digital currencies (CBDCs). Do you think today’s digital money is bad enough as it is? Now imagine if it was also programmable?
You can say goodbye to any last shred of financial autonomy. Before we know it, we’ll be living in a surveillance state with social credit scores, just like Chinese citizens. If you’ve seen politicians trying to put them in a positive light by casually throwing around buzzwords, like “blockchain,” go back to the top of this article and reread the first line.
The problems that the government creates can be talked about at length, but let’s move on to the solution: How to take control of money out of the hands of the politicians and give it back to the citizens?
“I don’t think we’ll ever have good money again until we get it out of the hands of governments.” —Friedrich Hayek
Imagine if our monetary system had the privacy and autonomy of cash; the convenience of being instantly and digitally transferable across the globe; all the while also retaining the properties of gold ie no one can steal your purchasing power over time by arbitrarily manipulating the supply just to serve their perverse political incentives?
Also, what if it also ran on an open source codebase and used a public database that makes it globally accessible, completely transparent, and completely auditable by anyone? Plus, what if it also allowed anyone with an internet connection and a computer the ability to weigh in on monetary policy?
Finally, what if the proposed system was also decentralized in a way that it becomes impossible to stop, control or destroy by anyone due to the lack of a single point of failure or by a central authority?
Sounds like a monetary technology on steroids, doesn’t it? Well, in 2008 a solution to these problems was proposed by someone using the pseudonym of Satoshi Nakamoto. I would also like to emphasize that it didn’t just come out of the blue, it has been in production ever since the governors of the central bank established control over the money. More precisely, it took almost 40 years of research and several failed attempts to construct this masterpiece. The following visuals are more tangible:
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I would like to conclude by repeating that the idea of separating the money from the state may seem radical to you at first, but in fact it is not. As I mentioned before, the monetary technologies we have used throughout most of our history were far more outside of government control than current fiat money. Somehow the State managed to catch them. Gold is the best example of such a non-sovereign asset that people used as money for the longest time, but it had obvious attack vectors in the form of various physical limitations, i.e. hard to store, hard to secure and hard to move.
Historically, there has been a tug-of-war between fiat and non-fiat money. Therefore, the real issue is not a question of “if” money will separate from government control, but of “when.” With Bitcoin, I think the moment is finally here.
If this article has failed to fully convince you how 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 it is something worth taking a closer look at.
This is a guest post by Ryan Bansal. Opinions expressed are entirely their own and do not necessarily reflect the opinions of BTC Inc. or Bitcoin Magazine.
