10 years ago today on October 31st, 2008 Satoshi Nakamoto announced the creation of Bitcoin in his technical white paper called “Bitcoin: A Peer-to-Peer Electronic Cash System” to the cryptography mailing list.
3 Months later, when the Bitcoin network launched in 2009, very few people understood its significance. Today, a decade after the white paper was released, Bitcoin’s market capitalization stands at over 100 billion dollars. The reason for this price, is because of the world wide demand for bitcoin and the features that it has.
Satoshi’s creation is the most important innovation to money (itself the most important good in any society) in a thousand years. Never in the history of the world had it been possible to transfer value between distant peoples without relying on a trusted intermediary, such as a company, bank or government. The invention of bitcoin allowed this for the first time ever.
In the digital age, when you can instantaneously transfer messages, images, files and video etc person to person, bitcoin is a solution that can do the same for value and is ‘money built for the internet’. While sending a picture or file to someone over the web means that you and the receiver both have a copy of the file, the invention of bitcoin enables for the first time sending information where the sender no longer has what is sent, and only the receiver has it.
Bitcoin was born out of necessity in the aftermath of the 2008 financial crisis, and as they say, ‘necessity is the mother of invention’. After the failure of numerous banks and financial institutions which had to be bailed out by governments at the expense of the tax payers, bitcoin was born. The world needed a money for the digital age that is not controlled by any country, a faster, better money with a better monetary policy, that would anyone anywhere in the world could use.
Bitcoin vs Central banks
Now a decade later and the financial establishment is slowly beginning to see bitcoin as a threat to the monopoly that it has created over money for the last century. The threat is not from anonymous transactions, or illicit transactions of kids buying drugs on the internet, but instead is from people around the world moving their wealth into censorship resistant money with a known inflation rate that cannot be debased.
The danger to central banks is that bitcoin is still here 10 years later, bigger than ever, better than ever. In the beginning they tried to ignore and dismiss bitcoin, but in recent years they started to take note of bitcoin. In the past it was unlikely to ever see a news article about bitcoin, whereas today bitcoin is on the covers of world wide magazines and newspapers. World news channels broadcast updates about bitcoin, and its price to millions of viewers regularly. From humble beginnings, bitcoin is fast becoming a force to be reckoned with.
The hype cycles that bitcoin goes through on a regular basis is a precursor to it being widely used as an alternative to the USD as it will begin to threaten the central banks monopoly over money. As bitcoin climbs in value, it is only natural for people to front run the price and buy up bitcoin to sell for a profit in the future, causing another hype cycle. This cycle will continue to repeat itself as time goes on.
With every year that goes by, more and more people see the potential of bitcoin and become ‘Hodlers’, who store their bitcoin for some time far in the future. This means that even with boom and bust cycles of the price, the highs are higher, and the lows are higher too, like stairs in an upward trajectory.
Buying bitcoin is participating in a global peaceful protest against corrupt governments and banks.
In the past people would be able to flee to hard currency such as gold to save their wealth from the effects of inflation and failed policies of central banks. Gold was and still is a great store of value against fiat currencies that lose value as they are inflated year after year.
Bitcoin is an alternative for people across the world to keep their savings in a form of money that is free from currency controls, and can never be confiscated or inflated away over time.
More and more people are using bitcoin because they NEED to use it. The currency controls, runaway inflation, corruption, bank charges and many other problems force the hands of citizens who often have no choice but to use a better system than they currently have available to them. Bitcoin is not there to save people, it is there so that people have a way to save themselves.
Now banks are slowly trying to get onto the bandwagon, and they push the word ‘blockchain’ as the exciting technology behind bitcoin that they are really intested in. Some banks are even looking to create their own blockchains, but they will all fail to be what bitcoin is, and that which is appealing to its users. The idea of being de-banked, and outside of the control of the banking system is what users desire, and that is what banks will never provide.
Banks and fin-tech companies are still looking for ways to use ‘blockchain technology’ in any meaningful way a decade later, while bitcoin continues to prove itself over and over again.
Bitcoin users believe the killer-app of blockchain is already here in the form of bitcoin: an uninflatable, deflationary, censorship-resistant, fixed-supply asset, that can’t be shut down by any governments, and operates without any trusted third parties on the most reliable financial system ever created.
The writing is on the wall for the current financial system already, and it does not matter what blockchain banks will attempt to create and use. As long as the reasons that people use bitcoin still exist, it will continue to grow and thrive outside of the legacy financial system.
Since the 2008 financial crisis, nothing has really changed, and things seem to be falling into place for a repeat of the exercise. Another financial crisis appears to be looming, this time bigger than before, the difference is that this time we have bitcoin as an option.
More people around the world will flee to bitcoin as time goes on and legacy financial systems fail. Governments around the world will continue to be corrupt, oppress their people, enforce currency controls, debase their currency, and increase debt.
Bitcoin does not need to do anything other than stick around long enough, and it might even take over as a world reserve currency. Everyone around the world would like to be free and enjoy censorship resistant money that is out of the control of any third party, and this is what bitcoin provides and what banks will not.