Two characteristics of decentralized blockchain/PoW/PoS systems are:
- It is a highly experimental environment, where you are learning all the time, finding new, exciting and progressive ideas all the time, which makes you rethink your believe system and the basis of the world we are all living in.
- You starting asking yourself "What are money?".
Most of us spending huge portion of our free time in order to earn some money, but do we have enough time to dig in a bit in order to find out what exactly is the nature of money. What are they? If you ask your friends or some random people "What are money?", the answers you will receive will vary from odd, to inadequate, to uncertain and unclear. Actually most of us cannot hold a 10 minutes conversation with a child about money.
The appropriate answer to a child's question about money, supposed to be something like "I have no idea how exactly this ancient technology, called money is functioning". Thus you will not open his eyes, but at least he wont be confused with common myths that we all sharing about money.
Bitcoin does not provide standart answers to this questions, it makes you rethink the whole definition about money instead, and to question the whole social model we are existing in. It is very easy to confuse the meaning of the word "money" with the form of money that we are using in the last century. Money as a technology is a much more abstract and profoundly meaningful system than what we currently accept for money - banknotes. Banknotes are a very odd iteration of money. They are not a sustainable form of money - basically they are a debt instrument. In this iteration and shape, money is around from several centuries and will not be here after few decades. Bitcoin forces you to look at this controversial topic and rethink whether the concepts you have in your head makes sense, and if so, how happens something that has no physical expression to inflate our conventional currency by several thousand percent for the first 8 years of its existence. Bitcoin is a monetary system that partially resembles the characteristics of gold, excludes some of its flaws and replaces them with unique properties in such a specific way that in the first clash with something so radical, abstract and different, the normal reaction is simply to turn your head to the other site. Such skepticism has a healthy touch, but only if are curious enough to continue this research down the rabbit hole.
Bitcoin is a system that adds some specific features to the money that human history does not know so far in such a balanced proportions:
- Decentralized
- Open
- Neutral
- Borderless
- Based on a clear, mathematical rules
Such a system cannot be explained in few lines. However, I will try the following analogy: the Internet allows us to communicate freely with everyone, a continuous and unlimited stream of information, text, photos, videos, and what not, and this stream of information takes place for a fraction of a second without permission, no matter where and who you are. Imagine now that this idea of unrestricted communication is applied to the money. Or rather on the transfer of value and ownership. Imagine if you can transfer your funds and property wherever you decide at any time, no matter yours and recipient's location, no matter what time of the day it is, no matter the language you are speaking, no matter your age, sex, religion and political views, no matter what is the official currency of your country and what is the volume of your transfer. Imagine that you can avoid all the bureaucracy that accompanies such operations in our "modern" world.
In fact, you do not need to imagine it because such decentralized platforms are already a fact and you can start using them right now - without additional permission, no license, no diploma, no certificate, no qualification, no censorship are needed. They have no working hours and do not care who you are. If you have technical skills, you can more actively participate by turning your ideas into code and if a critical majority of participants in the network like your ideas, they will become part of the consensus protocol. This is close to the idea of democracy, but it's a little bit nicer, because on top of all that beauty there is no central point where it can be pierced.
For many people, the words decentralization and trust can hardly coexist in one sentence. With the magic of cryptography it becomes possible. Bitcoin is not just a new payment system or a fancy paypal. Bitcoin is an invention that allows two or more parties to exchange value and ownership without trust and without even knowing each other. You, as everyone else in the network, only need to rely on consensus rules. And they are mathematically guaranteed and transparent. Yes - humanity has not had such technology up to now. What can be built on this basis? "Everything, and the market will decide what makes sense.
The miracles of our "modern" banking
Do we really need so many intermediaries in our financial communication? What is the problem if I want to buy with cash. Why financial institutions and regulators have problems with that. Is this all about our security? Our society switches to a fully digital payment method with one mandatory condition - payment must go through a mediator - banks and financial institutions. Using cash begins to be forbidden, and suspicion is seen on it. It does not matter whether money is yours or not. These laws, regulations and requirements quietly push us into a way of payment that has considerably departed from peer to peer payments. Card payment creates an illusion that it's a direct payment, but it's not. The payment goes from me to a corporation, to a corporation, to a corporation... and then to you. Every single participant in this payment between us asks me for all my data and keeps record of it. It keeps it in a database. And databases are vulnerable to attacks. All databases are vulnerable to attacks. The question is not "if" but "when" the attack will happen.
Have you ever been translating money out of your country with modern banking systems? You are will be charged at least several times plus and exchange rate, which you can be sure will not be in your favor. If you are lucky enough and everything goes well, you have to wait 3 to 6 business days, if the payment has not stuck anywhere for a mysterious reason, and if a number of conditions are present, you finally managed to transfer your money. The year is 2017, almost every transfer of information occurs with minimal friction instantly, but not the money transfers.
Credit cards, in our well-known format, have existed since the late 1950s. Innovations in this sphere are barely visible. And here is the most serious innovation - you no longer need to put the card in the terminal, you can simply swipe. Where have I been all those years?! Great! Great?! It would be great if the year was 1960.
Such innovations are the technological expression of the advanced financial world, proposed by the those with power and legalized by their clerks. Even with my pink glasses on its pretty clear our financial communication screams frantically for change.
I like p2p communication for financial transactions.Bitcoin translates this communication to a digital level without the need for intermediaries. There is no need for a third party to guarantee the authenticity of the money, because the network takes care of it. If you receive a coin, you can be sure this unit is real. How? The software you are running independently verify if the transaction is valid and if so it got executed. No need for trust or ID. Just p2p with mathematical warranty by the network.
Nothing is as powerful as an idea whose time has come. - Victor Hugo
There was a similar dynamics when the internet appeared. What was so special about the Internet? There were media, newspapers, magazines, libraries at that time. What problem did internet solved?
The Internet has allowed us, for the first time in our history, to create and access a stream of information instantaneously, without asking anyone for permission. The only requirement is to have the technical knowledge and a computer to access the technology. Internet in 1990 Is difficult to use - the geeks were the only one used it. It took more than a decade for a mass adoption. Every problem that has arisen in front of the technology during its first decade was a niche waiting to be conquered. Whoever conquers it wins. Wins a lot. All corporations whose services we are using on a daily basis have stepped into an unfilled market niche at the right time before they become the giants of today. Similar is the dynamics in the Blockchain space. But with a substantial difference. On the Internet, the idea of peer-to-peer has not fully succeeded - the reason for this is centralization. Every attempt for some sort of digital payment, which is not through a banking institution, was stopped in one way or another, because banks do not like competition. Now, however, the situation is different. The decentralized, cryptographically security model of distribution of data cannot be stopped.
Bitcoin and all the other technological platforms that are yet to rise and fill the open market niches, are resolving the centralization problem. The Internet will be built again, but this time on decentralized platforms.
Money as instrument of control
Despite all of the above-mentioned shortcomings in modern funding, we are among the small part of the world's population that has the privilege of taking advantage of "super-banking." That's about 1.5 billion people. What about the other 6 billion? Those who, due to the fact that they were born in the wrong place, do not even have ID? Or those who do not have access to clean water, what is left for banking? Or those who have had the misfortune to live in countries where financial wars and the corrupt governments have left them without savings. These are not isolated cases here and there. These are billions of people who are totally excluded from the financial flow.
Try asking some guy in Argentina, Venezuela, Palestine, India, Ukraine, Spain, Turkey, Cyprus, Greece, Vietnam what is the feeling when the value of your money evaporating by hours. What is the feeling when the value of your currency fall so quickly you don't know what you can buy with your salary at the end of the day or month? Im a Bulgarian - any Bulgarian can ask their parents how the savings, they have worked for a lifetime have evaporated for a few weeks in front of their eyes and there is nothing to be done because they are a victim of the currency war and the attacker is far from reach. Even if you are far-sighted to turn your money into gold or dollars, they are hard to find during such crisis plus it is not so legal. That's what happened in the 90's also in my country Bulgaria. Of course it is also not an isolated case. Such geopolitical currency games are constantly being played, and you can be sure that the first to get out of these games with a lot of profit are usually those who sign up under the documents that start the financial wars at first place.
We have another very recent example from India last November. One day Indian interior minister Narendra Modi announced that the two most widely used banknotes with the largest denominator, those of 500 and 1000 rupees, are no longer a valid currency. This new state rule enters into force 4 hours after his announcement. With this act, the government removes 88% of banknotes in circulation in a country, where more than 90% of payments are cash, in which more than 60% of the population has no bank account and where more than 25% do not even have an ID. Such financial games and currency manipulations have led to humanitarian catastrophes on a massive scale, holding for hundreds of millions of financial hostages for a very long period of time. Make no mistake - there will be more experiments like that and your country may be next.
Financial wars have different expressions and national currencies are one of the main weapons. As you probably know almost all countries are in debt. In many cases, the amount of this debt is in direct proportion to their economic development. Debt is measured in the respective currency, so the less expensive this currency is, the smaller the debt of the current government. In this line of thought, the confiscation of savings through higher taxes, printing and tapping money and inflation does a very good job for any debtor who has access to such financial instruments. Unfortunately, these financial games are at the expense of the saviors who puts their savings on paper with colored symbols and coat of arms.
This financial games will no be presented to you like "Our plan to repay the debt is to destroy the middle class and the savings via shadow taxes and confiscation of wealth to save banks and lighten public debt." Instead, you will hear something like "This measures will reduce unemployment, increase the profitability and solvency of the population, plus economic terminology that none understand, thus and bring about an overall improvement in the state's finances. Hooray.". Will you buy that?
When the financial turmoil approaches, everyone is looking for the exit. Until 2009, the exit were available only for thos in highest echelon of power. Times have changed. For growing number of people, no matter their nationality, Bitcoin and decentralized systems are the exit. With this approach you can be a sovereign even when your own country loses its sovereignty.