Bitcoin continues to fascinate me.
I’ve been reading, Satoshi’s Vision: The Art of Bitcoin by Dr. Craig Wright. Dr. Wright claims to have invented Bitcoin using the pseudonym Satoshi Nakamoto. While many people find Dr. Wright to be a rather prickly person, I find his honesty to be refreshing. He is part philosopher, part perpetual academic, part computer forensic scientist, and part entrepreneur. He holds many advanced degrees. He has something like 30+ masters, PhDs, and other certifications. He seems to have infinite interests. For example, he was a pastor holding a master’s of divinity and also has an advanced degree in culinary arts.
When Bitcoin was first released in 2009, it was released as a digital cash system that enabled instant peer-to-peer micropayments on the internet. The idea was to allow instant, small, programmable transactions on the internet. It allowed for the monetization of content and services previously only possible through charity or large paywalls. Tiny payments allowed businesses to create new opportunities to make a profit on the internet.
Bitcoin’s utility as cash for the internet was obvious. The ability to easily send a one-cent payment to a writer of an article or a fraction of a cent for service on the internet was incredible. For example, search engines could charge users a fraction of a penny per search instead of generating revenue with annoying ads or selling your personal data. Bitcoin would enable products and services hitherto unimaginable to become viable businesses on the internet.
Credit cards typically charge 2.9% plus 30 cents per transaction. Products and services that were below a few dollars were not possible because of the huge fees. Bitcoin changed this.
The original Bitcoin code also included the ability to use it as programmable money, aka “smart contracts”. This made it easy to create contracts, tokens, and future payouts for things like royalties, and other payments where multiple parties were involved.
As Bitcoin’s prominence grew, it began to be taken over by central planners, aka computer programmers, who believed that they knew what was best for Bitcoin. These ugly central planners began to strip away much of Bitcoin’s key features. They kneecapped Bitcoin’s ability to make tiny payments, stripped its function as programmable money, and instead focused on the oxymoronic phrase: “digital gold”.
Because the meddlesome central planners arbitrarily limited the block size, they made Bitcoin impossible to use for small transactions or to function as digital cash for the world.
The iteration of Bitcoin that people know by the ticker symbol, BTC, bears little resemblance to the original promise of Bitcoin and has regressed to a bastardized form of digital money with large fees associated with each transaction.
To remedy the artificially created problem, an alternative was set forth by the ugly central planners involving something known as the Lightning Network. Even if it worked, which it often doesn’t, the Lightning Network reverts back to the old model of using trusted third parties to process payments. It is not the peer-to-peer network that Satoshi envisioned. To onboard onto the Lighting Network requires on-chain transactions which are hampered by the central planners.
An alternative to BTC exists known as BitcoinSV (BSV) which implements the original vision that Satoshi had of providing digital cash to the internet. It can process the transactions needed to provide digital cash to the world. It can be used as programmable money with contracts and tokens. You can send fractions of a cent to others on the internet for a negligible fee (1/1000 of a cent).
If Bitcoin cannot function as a medium of exchange then it will remain an idiotic Ponzi scheme reserved for grifters.
Austrian economists Murray Rothbard and Ludwig von Mises both knew that for a thing to be considered money, it must function as a medium of exchange.
In the book, What Has Government Done to Our Money, Rothbard wrote:
“Many textbooks say that money has several functions: a medium of exchange, unit of account, or measure of values, a store of value, etc. But it should be clear that all of these functions are simply corollaries of the one great function: the medium of exchange.”Murray Rothbard
In The Theory of Money and Credit, Ludwig von Mises wrote:
“Many investigators imagine that insufficient attention is devoted to the remarkable part played by money in economic life if it is merely credited with the function of being a medium of exchange; they do not think that due regard has been paid to the significance of money until they have enumerated half a dozen further “functions”—as if, in an economic order founded on the exchange of goods, there could be a more important function than that of the common medium of exchange.”Ludwig von Mises
The vision of Bitcoin is still alive, but you won’t find it in BTC.