This is an opinion editorial Wes Craik, a freelance Canadian author and host of the Finterpreter YouTube channel.
Central Bank Digital Currencies (CBDCs) will soon become operational in various countries and it is important to note that they are a form of money with internal programmability. Rules can and will be laid down for how these central bank liabilities can be spent. Over time, CBDCs are the elimination of cash and, thus, private exchanges. They are also the most “slippery slopes” ever seen.
In the wrong hands, the ability to program money is horrifying and will be used to varying degrees of authoritarian ends. Picture China – a leading country in CBDCs – applying its dystopian social credit system directly to the digital yuan: allowing spending only on government-sanctioned goods and services, offering interest rates that are unfavorable to the Communist Party of China (CCP). and provide money. With expiration dates, forcing spending instead of saving.
Simply put, that’s not money; This is a central bank lever For economic influence and social control. It is a means of energy exchange that offers the user little optionality, which is highly undesirable and is, in fact, somewhat antithetical to the concept of money. It goes without mentioning that these currencies will already represent increasingly perishable fiat notes that are actively siphoning off the stored vitality of their users to fund government initiatives.
Thankfully, as the global population begins to grapple with these fundamental violations of their privacy and property rights, they will have the option to store and transact their monetary energy, an international and indestructible wealth governed by rules. for the first time in history, not for rulers – bitcoin.
You can design a pose however you like, but you cannot force people to value it. The free market has historically been the one to seek and select a desirable currency when the old ones have failed them. People instinctively gravitate to more robust media of exchange When current weaknesses or abuses are manifested with seriousness.
Gold has historically been a base-level monetary asset used by societies in most instances. It is an easily identifiable and durable mineral that can be melted, split and reconstituted with almost zero loss. Gold is also relatively short in supply because its extraction and refining requires highly kinetic proof of work. Its issuance is not arbitrarily decided by any ruler or person of authority.
So gold checks a lot of boxes! It is relatively divisible, although it certainly has its limitations. It is durable enough to transmit energy through time and its scarcity ensures that it performs reasonably well as a store of value.
However, it has a scalability problem. It is difficult to transact gold on a large scale and fine scale. Both transportation and storage of gold requires considerable power projection capability, “lest the ROI” [return on investment] to seize [it] prove very attractive to your local [barbarian] To ignore,” Jason Lowery frames it.
Carrying gold coins around to buy milk is cumbersome and restricts the flow of human exchange. We should note that human exchange is the basis of civilization, as it allows for an ever-increasing division of labor and specialization of crafts that provide a higher yield per unit of energy expended. This is why Layer 2 paper money, which is considered convertible to the underlying asset of the economy, was such a successful technology. The paper notes allowing for the large scale and granularity of energy exchange between humans with very little friction. This and the Medici family’s double-entry laser system are two shining examples of money as an ever-advancing technology.
It is when the supply of these paper notes or entries in the private ledger are misused and/or decoupled from the underlying asset that is actually valuable that the monetary supply becomes toxic. This has historically led to hyperinflation and currency collapse.
Bitcoin is a base-layer monetary network more scarce than gold, with a clearly defined and immutable finite maximum supply of 21 million. It is highly divisible, is immediately verifiable with zero error and is durable for the rest of the time. Its release schedule for the next approximately 118 years is not known with certainty, which will never be released after that. Bitcoin also has low or zero carrying costs and cannot be confiscated – even through violence – when stored properly.
Interestingly, being the first and major digital commodity directly linked to proof-of-work mining, bitcoin – the first and, so far, only digital commodity – is actually the lightest real commodity we have ever discovered. This allows transactions to be enabled without permission. Near lightspeed without any intermediaries. As noted by Knut Swanholm, this weightlessness technically makes bitcoin “element zero on the periodic table.” This enables it to be a base-layer monetary asset for the digital age and beyond.
We have once again advanced our tracks of human energy exchange, but this time in a way where individual self-interest serves to enhance the property rights of everyone else. By attacking bitcoin, you simply crystallize its defense and increase the potential energy of all its users in real terms. Michael Sayer noted that bitcoin is “antifragile”. As such, it encourages cooperation as opposed to attempts at coercion or sabotage. This mechanic is an important revelation that bitcoin brings to the fore, one that lullaby call”mutually assured protection,
Bitcoin represents the hope for a more equitable human future based on our newly discovered universal constant: 21 million.
Fix the money, fix the world.
This is a guest post by Wes Craik. The opinions expressed are solely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.