I wish more people knew about Bitcoin’s connection to the bank bailouts. Bitcoin unfortunately does not have the best brand ambassadors. This week is a great opportunity to tell your friends about it, because it matters.
The 2008 bank bailouts were a major motivator behind the creation of Bitcoin. The first block ever mined even contains a reference to it: The Times 03/Jan/2009 Chancellor on brink of second bailout for banks. During the bank bailouts, the government just printed a bunch of money and gave it to the banks, around 700 billion USD. They did this because it was politically expedient, well really because they had to or the whole damned system would collapse. And the 99% ended up paying for the mistakes of the 1%. All of us were made to pay for the mistakes of a very small, incredibly powerful and wealthy segment of society who made reckless investment decisions. People lost their homes, their jobs, their livelyhoods, their savings, and yet not a single one of those bankers went to jail. Instead, they took the bailout money and gave themselves extravagant bonuses. Yet the problem is not new, throughout history, every nation that has ever failed, has had their currency end in hyperinflation. The temptation to print money is too strong. Perhaps it is something that should not be entrusted to politicians or even humans at all.
Satoshi, in his wisdom, created a system by which no new money could ever be printed. No corruptible, tempted authority could use it to turn on the money printer and rob entire generations of their wealth or force them to pay for wars they did not support. He made a currency which cannot be corrupted and cannot be hacked, with 99.9% uptime, with instant transfers across borders. It is neutral technology open to anybody with a phone or a computer and access to the internet. Which is much less than you need to open a bank account. Bitcoin doesn’t care about your credit history, or whether or not you can provide a reliable mailing address. Bitcoin doesn’t close on weekends and will never charge you exorbitant fees to use your own money. You never have to wait days for a payment to clear. Bitcoin puts you in charge of your money and nobody else. And it makes sure nobody can print away its value.
But then a bunch of people came along selling get-rich-quick schemes based on crypto technology, and everybody goes “crypto bad”. Satoshi gave a gift to the world. He didn’t stick around to get rich off it, he didn’t use it for celebrity, he just made Bitcoin and disappeared. Thank you Satoshi for your gift to the world.
Bitcoin can’t solve theft and has never claimed to. Neither can our existing banking system. Bitcoin can guarantee that money can only be in one place at a time. The only theft Bitcoin can solve is the theft of government’s inflating the money supply and reducing your dollar’s purchasing power. It can change the theft of irresponsiible central banks. That’s it. All a transaction on the blockchain tells you is that the person with that private key can own the money, it doesn’t establish who that person is or should be, the same way if you have $5 USD and spend it at a hot dog cart, the hot dog vendor has no way to know how you acquired that $5 or who the that $5 “should” belong to.
I have nothing nice to say about the NFT marketplace or any of the actors in it. NFTs are a joke. Interesting tech but in 99% of cases used for completely garbage purposes. And no, some random startup running a NFT website shouldn’t be in charge of your ownership of your coins or NFTs or anything. Like many things that are bad in crypto, people think Bitcoin = stupid monkey JPG NFTs = Ethereum = Dogecoin. They are all different things but they get painted with the same brush in the media unfortunately.
It’s more nuanced than that but, sure. Bitcoin makes it a lot harder. A lot harder. It’s much easier to simply inflate the money supply and spend that money without people’s consent than round up people, point guns at them (or use some other, less direct form of coercion) and tell them to give up their Bitcoin. The state controls the banks, BTC puts you back in control of the economic power those banks hold. Ultimately, if the state asks the bank to turn over your funds, they will, you cannot control that. You can control whether or not to say “no”. If you stick to it, and they kill you, they still do not get your BTC. Let me ask you, if Putin had to send his goons door-to-door in Russia to collect funds for his invasion, don’t you think that reaction from people might be a little different than if Putin just turns on the money printer and slowly eats away the savings of his people? How might the vietnam war have gone differently if not only was there widespread opposition but the government had to double the tax rate or confiscate people’s BTC? Through a particular lens like this, BTC can be a tool for global peace. Wars of aggression are much harder to start without central banks backing them. It does not make war impossible, but it changes the rules of the game and the scales which can be tipped.
No. The state has many important jobs which we currently cannot replicate any other better way like paying for common goods (roads schools etc), providing an imperfect but important check against runaway effects in the capitalist economy (market aggregation leading to monopoly, destruction of the environment for profit, etc). I hope humanity will continue to experiment with, iterate on, and improve what we think the state’s function is and how it should function, just as we should with money and our economy.
It’s bad, I have no love for centralized digital currencies. Decentralization is key to cryptocurrency being something which enables access to democratic and open markets.
Haven’t heard about this and don’t care about it. NFTs are a joke.
#1. I agree the bailouts were necessary given the circumstances. The way they were carried out wasn’t great for example bankers giving themselves massive bonuses with bailout money, but something had to be done to prevent the collapse of the banking system in insert_country_here. The question is how to we avoid getting into those circumstances in the future? Part of the answer is having hard currency. The second you start making promissory notes, lending, and especially allowing the private sector to be involved in lending, you will inevitably end up in situations where banks fail. So the central bank becomes their backstop. But what happens when the central bank fails? This happens. The reality is that anytime you have fractional reserve systems, you run the risk of a bank run. You can have the safest economic policy in the world as I would argue the US is generally seen as having, but there are economic shocks you simply cannot prepare for, and when those happen, you will have bank runs. With BTC, if you hold BTC, you don’t need to worry about that because nobody can print more to bail out unelected, irresponsible bankers for making decisions you had nothing to do with.
#2. If fiat and Bitcoin are to continue to co-exist, I imagine the government would still print their way out of the problem. Or perhaps they would raise taxes. Bitcoin isn’t concerned with how to solve the problems of other economic systems, it’s only concerned with providing a strong, robust currency which it has faithfully done for 15 years.