Bitcoin and Us
Without anyone's permission, Bitcoin—the now infamous Internet money—was birthed 10 years ago as an open software project.
Since then, it has been silently turning into an un-stoppable form of value accumulation and transfer.
It is now clear that Bitcoin is an un-seizable liberty for anyone to opt-out of the legacy and elitist financial system. Nobody is behind Bitcoin, but anybody can participate. It is a truly open and organic monetary evolution. As a new form of money for the digital age, Bitcoin has a predictable inflation schedule with an unalterable pace leading to a hard cap limit of 21 million units that will ever be created on the network. It is undeniably and absolutely scarce. Owning one full bitcoin is an ultimate privilege that will soon be a long-gone fantasy.
Bitcoin is as scarce as time in a human life. As a living organism, it has a sophisticated mechanism secured by powerful computers to process transactions roughly every 10 minutes, each time creating new units as blood flows from a heart beat. Expensive to power, Bitcoin requires substantial amounts of energy to be expanded in the form of electricity, which guard malicious actors at bay. Abused monetary policies perpetrated by central banks to finance national debt at the cost of the currency holders exists no more. An open protocol to verify ownership, Bitcoin is a way to store, exchange and measure value, globally via the Internet. It is a new universal currency, free of any central control, local regulation and national borders.
Bitcoin completely neglects obsolete concepts of country borders, making money a universal phenomenon free of government intervention. It is ushering a new era of commerce with truly open, fair and free markets. Money is finally divorcing from the State with an unstoppable currency. Should it continuously gain adoption, Bitcoin will morph our world towards global economic prosperity, where money and capital flow freely to productive endeavors creating unseen collective marvels.
Today's financial system relies on elite bureaucrats, opaque institutions and blind trust. We tend to take the financial stability of our banks for granted, which is a fallacy as we've unfortunately experienced glitches in the past, most recently in 2008's subprime crisis. Tomorrow's financial backbone may very well live on top of open-source money: a delicate alliance of secure cryptography, distributed computing and behavioral economics. In the last decade, Bitcoin has shown a robust 99.98% uptime, which is unprecedented in legacy banking. A once isolated but unshakeable minority belief held by a few will turn into an indisputable majority public opinion: Bitcoin is not going away, it is here to stay. With multiple death obituaries, the now infamous Internet currency has repeatedly proven many to be wrong.
Up until now, fiat money has been geographically limited by monopolistic central banks issuing different national currencies within their borders. Currencies such as the US Dollar, the Euro or the Argentinian Pesos have been protected by governments' legal tender laws. Imposing citizens to use fiat for their savings, to get payroll or pay for their taxes, these artificial barriers have been attempting to isolate local currencies to protect them, which has no more reason to exist with economically-networked social markets.
Similarly to language, money has a strong natural network effect. English today is 30% of the Internet content. The Internet gave a platform for English to thrive as a global communication protocol, even though English-natives only account for 4.5% of the world's population. Being an Internet-native currency, Bitcoin has followed similar tendencies. An inescapable gravitational force will then absorb the world's financial value away from centrally-controlled fiat currencies, converging it into a reserve currency for global wealth: Bitcoin. Gradually, it may very well dethrone the politically-exposed US dollar, which to this day has been centrally managed by the opaque and unpredictable Federal Reserve. The USD recent and temporary position as a global reserve currency has been artificially secured through its now-defunct gold convertibility and current exclusive conversion to petroleum, the commodity responsible for the fast industrialization of the late 20th century.
During that journey towards a reserve currency, multiple serious roadblocks will spawn attempts to stop Bitcoin in its natural monetary evolution. Armed with ferocious power, nation states will try to ban it to protect obsolete fiat currencies. Letting go off a decades-long monopoly on the printing press will have painful withdrawal effects on overly-inflated economies with addictive tendencies to easy money-fueled stimulating debt. The demonetization of fiat currencies will be painful, but inevitable. As a hard to swallow medicine, Bitcoin will successfully unchain global free trade between people. Every day, billions of individuals will enjoy free, instant and easy payments to buy what they deem useful at the moment. Countries will rely on its finality, security, and apolitical nature to settle multi-billion dollars international transactions. Small experiments have already been settled in Latin America between Argentina and Paraguay. Consumerism will slow down as people come to appreciate the unalterable scarcity of this new form of money and start saving further, only buying things they truly need or desire and storing the rest for rainy days. Investments into productive assets and activities will flourish, forcing capital allocators to solidify how long-term returns on investments are evaluated. Once isolated, local communities will now be able to trade with distant economic neighbors. Basic goods and services such as food, housing, education and healthcare will become truly commoditized as yield in these sectors decrease, pushing investors to allocate capital towards innovative fields with higher yield.
A simple realization will become evident: hard money in the form of Bitcoin will enrich productive hard work, no matter who you are or where you live. And rightfully so. Today, Bitcoin is still a social experiment that is neglected by large traditional institutions and governments. At most it is a 10 year-old multi-billion dollar software bug bounty program. It is a transparent glass window with a fortune that is still up for grab. This experiment simply cannot be ignored anymore.
In 2029, bitcoin will be 20 year-old and at this point in time, Bitcoin will be an unquestionable institution that people will not only tolerate, but accept as durable and ever-lasting.
In 2039, our world before Bitcoin will be an embarrassing collective memory, tracing back to the aberration of central and fractional reserve banking, which fed wars, economic crises and above all–tarnished all of us with greed and impatience.
At a rough estimated world population of 8.8B people in 2040, owning a full bitcoin will mean being in the 0.19% top wealthy, leading to the largest wealth transfer phenomenon the world has ever witnessed. An asymmetric bet that was once available to all, everywhere. After having evolved from its early days as a scarce digital collectible sought after by the computer geeks and libertarians, Bitcoin will have accumulated a material portion of global wealth trending towards a global store of value. As the issuance rate of new units reduces over time and demand for Bitcoin increases with mainstream attention picking up steam, the network will morph into a more stable and reliable store of value worth trillions of dollars. Central Banks may very well start accumulating bitcoins on their balance sheets as a way to hedge their own fiat currency risk and diversify their assets.
Sovereign wealth and pension funds will come to realize that allocating bitcoins to their portfolios is the most reasonable decision to hedge against inflationary pressures of unstable fiat currencies, and the resulting overly inflated asset classes that their portfolios are composed of. This will be the era where the future retired days of the elderly turn to become denominated in bitcoins. At that point in time, volatility will be long gone. Having achieved over a hundred trillions in market capitalization, Bitcoin's economic upside potential will have diminished, shying away speculative behaviors. Other asset classes that used to act as a de facto store of value will have started to shrink substantially, leading to a healthy reduction in prices of inflated service categories such as housing, healthcare and education. More people will be able to afford basic human needs. Global well-being will peak as food, shelter, health and education are finally something we can take for granted, globally.
Having reached a point of equilibrium, Bitcoin will be universally used as a stable way to save value and buy and sell goods and services using sophisticated layers of technology built on top of the monetary network. Most of its technology will be abstracted away from users who will solely enjoy a fluid financial system with open, fair and social principles. Unstable fiat currencies will sunset, some gradually and abruptly, until every printing press is put to sleep. Relying on an immense collective computational effort, Bitcoin's digital scarcity and its immutable monetary policy will be the first and only form of verifiable trust that humans can blindly rely on. This careful orchestration of kinetic energy conversion into value will make it the first free money the world has ever experienced. Major prosperity will result, letting humans focus on fundamental problems of the 21st Century such as aging, energy, transportation and more.
It will only be Bitcoin and us. And that will suffice.