Some revolutions announce themselves with a bang: crowds on the streets, shouting slogans, throwing stones and burning buildings. Other revolutions happen quietly and slowly. They take years or decades, during which time they dig themselves deep into the fabric of society, changing it fundamentally.
Bitcoin is the second kind of revolution. It has no face and no location. There are just bits, bytes and anonymous users. It makes no noise, it burns nothing and it occupies no building. It’s just here, and it won’t go away. In 2009 money began a new stage of its evolution – with a revolutionary outcome.
→ Banking without banks – cash with wings.
Banking without banks – cash with wings
Cash is something you physically possess. No one else is needed to exchange it for goods or services. You have it in your hand and you give it to the merchant. Money in a bank account, however, is not something you truly possess. When you want to use it, you need your bank to cooperate. Sending money over a long distance – whether as a cheque, a bag of gold or a bank transfer – has entailed trusting a third party for as long as money has existed, whether that third party is a courier, a credit card company or a bank. But in 2009 the rules changed. Bitcoin transfers need no third party. This is in its very nature: it is innately transmissible. Bitcoin is cash with a built-in teleport.
→ Global money – the Internet as a monetary union
Global money – the internet as a monetary union
Bitcoin doesn’t overcome or tunnel through borders, it ignores them. Sending a Bitcoin to my neighbour in Germany means exactly the same as sending it to someone in New Zealand. Today, Bitcoin is already used in more countries than any other currency. When I engaged a Chinese author to write for this blog, I sent him his fee and he received it in ten minutes without any transaction costs. Just as the gold standard enabled globalisation in the 19th century, Bitcoin can unleash a new era in the globalisation of trade and services. Bitcoin transforms the internet into a monetary union.
→ Anonymous transactions – the essence of privacy
Anonymous transactions – the essence of privacy
Cash is anonymous, but bank transactions are not. Your bank knows who you send money, and so do the intelligence agencies of the world. Digital money means, in contrast to cash, that payments are monitored and, if necessary, stopped. In 1992 in the Cypherpunk Manifesto Eric Hughes called for ‘anonymous transaction systems’. This idea ‘empowers individuals to reveal their identity when desired and only when desired; this is the essence of privacy.’ Bitcoin has made this vision come true. The user has the choice as to whether their identity is revealed.
→ The first real market-currency, determined by mathematics
The first real market-currency, determined by mathematics
Currencies are issued by states, as they have been forever. The consequence of this was described by Friedrich August von Hayek, the patron saint of libertarians: ‘With the end of the age of the gold standard every government in history has used its exclusive right to issue money to defraud and plunder its people.’ Hayek asserted that one of the purposes of the market was to end the state’s monopoly on money and to regulate money itself. Bitcoin, as you may have guessed, has realised this aspiration: the first genuinely market-regulated money has arrived. Nobody orders it into being, nobody controls it: it is determined purely by mathematics. There will never be more than 21 million Bitcoins.