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Since I stumbled upon Bitcoin in 2011, I have regularly heard countless Bitcoin funerals. Every week since then some guru appears (usually a graduate of a university that teaches MMT and often with an award he/she received from an entity he/she advised), saying that Bitcoin is dead, and that it cannot function, and that the whales are hoarding all the available BTC, and that BTC uses a lot of electricity and is not compatible with the environment, putting the planet on terminal red alert, and that it only serves for money laundering and drug trafficking (competing with commercial banks), and that it has no backing (as if fiat money issued by the state had any backing), and that it has no intrinsic value (and what intrinsic value does fiat have?), and that it has no a physical representation (as if the 0 and 1 engraved on a piece of silicon were not a physical representation), and that since it was born it has not had any progress, and that having the limit of 21 million it does not serve as a means payment, because as the armed forces of the entire planet say, economies must be expansive and must have some inflation (!), and thousands of other nonsense. A young MMT defender told me about 5 years ago that a bitcoin was not very different from a ticket to enter a musical show. A true visionary.
The new narrative is apparently based on high transaction fee costs and scalability, which extended to the Lightning Network, which many also consider dead.
I don't know anyone in such health who has died so many times.
Look, the truth is, there is no free lunch. If the fees that miners need to keep the most secure decentralized network in the world safe are “high”, in any case, they are infinitely lower than the fees that we all pay for having to be forced to use an inefficient and cumbersome international financial network, which only leaves fabulous profits for elite banks and financial operators. The cost of maintaining an invention such as a digital asset that many compare to gold, is at the moment, so to speak, “high.”
But beware. To say that Bitcoin is dead because transaction fees are high is to greatly underestimate the developers. Every time someone underestimates developers, they get a huge surprise, because critics tend not to be on the intellectual level of those who are criticized.
Every time detractors try to underestimate cypherpunksChaos Computer Club, they get a very unpleasant surprise, because they usually do not live up to the necessary intellectual requirements.
For those who say that the ecosystem has not developed in recent times, I invite you to read this article by Shinobi in Bitcoin Magazine. I mean, if you read the nonsense that is written or said in the mass media designed to control the public opinion, you are missing an important part of the movie. And when people realize that they are being used by large financial and banking corporations, it may be too late. Before talking about the death of Bitcoin, please find out about projects like Taproot, Ordinals, inscriptions, BITVM, timeout three, ARK, ZEROSYNC, CIV KIT, and several others.
In any case, the discussion is centralization versus decentralization. Centralized power is aware of this dilemma, and for the moment, has enough power to control all the nodes of the networks that they skillfully wove for decades. This means that, by controlling all the mass media, they can spin the narratives wherever they want, and pay pseudo-analysts and Nobel Prize winners in economics to make the speech about the inevitable death of Bitcoin.
Just as an international financial system was developed based on the gold standard for almost a hundred years, from which countries could only issue currency if they had enough gold in their reserves at a certain exchange rate, I mean, is it possible that, since for many (myself included) Bitcoin is something like “digital gold”, ?an international financial system based on the “Bitcoin standard” be considered?
If it were possible, this system would be very different from what mankind has known throughout its history, because Bitcoin radically changed the perception of what is considered “money.”
Gold was used by the Egyptians 3000 years ago. The successive hierarchies that humanity created due to its enormous need for guides and hierarchies, took gold as a reference due to its scarcity and particular characteristics, and minted coins to trade, which they later devalued, by reducing the amount of gold that a coin carried, minting and filling the gap with shit material. Gold today continues to be a very important store of value. Humanity has known it for 3000 years. The decentralized payment system called Bitcoin is only a little over a decade old, and it has already reached a status similar to that of gold, but with many advantages.
Gold is difficult to extract from the planet's soil and its production is basically in the hands of two companies, also considering that this extraction is achieved by irreparably damaging to the ecosystems surrounding the mines. The amount of gold that will be available in a given period cannot be predicted, although it can be estimated, nor can the amount of gold that is available on the planet be known with certainty. In fact, many known gold mines cannot be exploited because they are worth less in gold than it costs to mine. All this without also taking into account the enormous cost of the infrastructure necessary to extract the gold, in machinery, equipment, personnel, maintenance, and others. On the other hand, Bitcoin has a relatively simple ecosystem in terms of infrastructure, and it is known with mathematical precision how much will be produced in a given period, until the last satoshi in 2104. Some insist that Bitcoin mining causes ecological damage, but they are those who have not yet done the calculations that show that the obsolete and inefficient banking system we have today spends much more.
Gold is very difficult to store, both by weight and volume. To store Bitcoin you need an Internet connection and a simple and relatively cheap device to connect.
Gold is very easy to be stolen. A common thief without much knowledge, even without any type of education, can steal gold. To steal Bitcoin you have to have a high degree of knowledge, and even so, you have to overcome the barriers that highly incentivized guys put up so that the network does not suffer any damage. In fact, in almost 14 years, Bitcoin has never suffered a successful attack.
Gold cannot be easily fractionate to be used as payment. One cannot “grate” some gold from a bullion to buy a can of tomato puree. However, you can do so with a simple Lightning Network wallet accessible from your smartphone.
One cannot pay for a trip and a hotel reservation with gold. You can simply do that with a non-custodial wallet by transferring bitcoin instantly from your smartphone, tablet or laptop. You cannot take a gold bar on the trip to pay your expenses because it could neither be stored nor fractionated. With your Bitcoin wallet you can do what you want and spend what you want without problems in your trip.
Gold can be confiscated very easily by government decree. Roosevelt confiscated gold from American citizens, associations and corporations in 1933, without congressional approval. On the other hand, there is no force in the entire universe that can confiscate your bitcoin. They will always be yours.
Gold is undoubtedly an excellent store of value. Bitcoin too, and, in addition, it serves as a flexible, practical, secure payment system, without permissions, without borders, without the possibility of being confiscated, without worry about transport or fractioning, and with security much higher than that of gold, due to the incentive that miners have to secure the network.
The gold standard served as the basis of the international financial system for almost a century, until the United States could no longer finance its adventures in Vietnam with gold and decided to unilaterally abandon the gold standard agreement that had been signed at Breton Woods. From there, only half a century ago, the sinister party of fiat money at discretion that prevails on the planet today began. Today, even the least educated person knows that fiat money is theft perpetrated by politicians who hold the government hierarchy of different countries, and the main reason for its existence is the financing of wars to obtain power and resources. If, for example, the central power imposes the abominable CBDCs on us by decree, that would be equivalent to a confiscation, or worse still, total Orwellian control of every individual on the planet. In that case, what they would be launching would be nothing other than the emergence of alternative markets. The main problem is that politicians and those in power in general believe that they are more lucid than people, and in reality, it is exactly the other way around.
The devaluation that our ancestors carried out by putting less gold in the coins they minted, today is carried out by politicians with a “please print” telephone call to their central banks, which results in a substantial loss of the value of the currency that they print at their discretion and without any support.
But if we are going to think about an international financial system with a Bitcoin standard replacing the gold standard, we have to be aware that this system is going to be totally different from the one that exists today. I mean, the actors are going to be very different and they are going to rearrange themselves on the chess board. One cannot think of commercial banks or central banks, at least with the functions they perform today. You cannot think of a system similar to the one that existed with a gold standard that supported the issuance of cash, because handing over the most secure network on the planet, (aka the Bitcoin network), to the political establishment, would be like taking your teenage daughter to the county jail rapist section.
Bitcoin changed the perception of what we call “money.”
Transactions are between two point-to-point addresses. Neither of the two addresses requires that any intermediary have to give any guarantee or authorization. You don't have to pay anything or be forced to go through an ominous network of intermediaries who take a huge part of the pie. Therefore, it is not necessary for any state office to accumulate bitcoin and then support the issuance of a fiat debt paper with that asset as collateral. It is individuals, companies, institutions, that can own bitcoin, not states. Individuals would no longer need any central power to tell them how much their money is worth, if a debt paper can be considered “money” according to the new rules of the game.
Individuals could sovereignly lend and borrow their bitcoin at an interest accepted by the parties, without the need for intermediary banks, and could make all types of financial transactions without depending on anyone to endorse them, as has been widely demonstrated in recent years by the DeFi ecosystem, in which Bitcoin is being successfully inserted.
The new identity of the individuals is a pair of cryptographic keys. That is all they need to access their wealth, and no one, absolutely no one can interfere.
Starting with the unilateral change in the rules of the game imposed in 1971 by abandoning the gold standard, slowly and until today, a “new gold” appeared that took the place of gold to act as a reserve of value: real estate. Unable to use an unbacked currency as a reserve of value, savings were massively poured into real estate, with properties being the only asset recognized as reliable. The result of this is the excessive growth in property values that distances young people from the possibility of buying a home. The Bitcoin pattern once again solves this problem, since it has enormous advantages over real estate, especially in the speed of settlement. It may be that a property serves as immediate support to obtain a loan, but if what is needed is liquidity, properties can represent a big headache, whether for its valuation or its sale. Settlement with Bitcoin is immediate.
But what happens to fiat in a new paradigm like this?
Mass adoption of Bitcoin is not going to happen overnight, and it is not going to be seamless. Quite the opposite, it will be achieved through one of the bloodiest wars that humanity has ever experienced, because the establishment is very powerful and will not lay down its weapons without fighting until the last breath. Therefore, we are going to have to get used to living with fiat for a long time. Corporations will accumulate bitcoin, and will be able to lend it, borrow it, and use it as a means of payment. But I believe that most of the large operations, let's say exports, imports, loans between states and the like, will continue to be carried out with fiat money, while slowly the chess board is rearranged so that a decentralized network is definitively established on the agendas of power. It is the instantaneousness of the operations and the low cost they have if they are carried out within a decentralized network, which finally will lead to mass adoption. But until that happens, the hegemonic media, paid for by the same corporations they are part of, will continue to say that Bitcoin is a mechanism to launder money and finance terrorists.
What the establishment does not want to fully understand is that we are facing a disruptive change in technology that has Satoshi Nakamoto's White Paper as its starting point, but that began to be visualized a long time before, when decentralized systems were invented, when open source systems were invented, and when the Internet appeared as a new communication paradigm. Bitcoin is not a game of cypherpunks, but a technology devastating to the value transfer systems established in the last two hundred years. As long as they insist on not understanding, there will be no truce.
It is also fair to accept that, until mass adoption does not occur, a payment system like Bitcoin has some disadvantages so that world economies do not become conflictively destructured. First, the limited supply (at most 21 million) may not fit with growth plans that are underway or within a long-term agenda. Secondly, some economies may enter a cycle of recession and their politicians, in order to do their business, need to print money to “stimulate” their economies and not be out of step with other economies that are in expansionary cycles. Third, countries with large fiscal and/or trade deficits may find that Bitcoin does not allow them to quickly adjust their accounts and would then face unemployment rates that can only be solved in the short term with fiat issuance.
In her book Broken Money, Lyn Alden suggests that innovations in communication technologies has restructured prevailing financial systems.
In fact, she shows us with great clarity that the arrival of the telegraph in the mid-19th century marked the course towards the adoption of fiat money, allowing transactions to occur at the speed of electricity and profoundly changing the gap that existed between a financial operation and a settlement. As long as the latter did not exist, the operation could not be considered completed. The telegraph was the key to this process.
In the international financial system that prevails today, an operation has to navigate a swarm of intermediaries composed of issuing banks, verifying banks, correspondent banks, clearing houses, SWIFT, IBAN, all with an apparently fundamental “function” in the process. As a result, a transaction can take weeks, has very high costs, and, as if that were not enough, involves large amounts of risk between the parties. None of this happens in the Bitcoin ecosystem with instant settlement and ridiculous costs compared to those of the current network. Bitcoin not only transfers value, but it transfers it instantly and records it indelibly and forever on its blockchain.
It is the new generations, the children who are being born today, who cannot be fooled with an inefficient and expensive network like the current value transfer architecture. The chess board will rearrange itself, excluding any actor being able to exercise the slightest power over the personal wealth of each individual.
Thank you for reading! Decentralize yourselves as much as you can, and much more! Work for yourselves, not for others. When you work for someone else, they pay you what YOUR POSITION is worth, when you work for yourself, they pay you what YOU are worth. No one achieves financial independence by working as an employee. Live long and prosper!
Never forget:
As usual, none of the things written in this post are financial advice and are not intended to replace personal research. My sole intention in writing this post is informative. Several of the things discussed here could be wrong, so in no way can this post be construed as financial advice, and in no way should it replace your own research.
If you have any questions or comments, please feel free to leave them down below
You can also contact me at [email protected]
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