The genius of cryptocurrencies, such as Bitcoin, is the decentralized nature of the platform and the transparency of the transactions between the users of the platform. Bitcoin is a decentralized database which keeps track of how much money each user of the technology has mined and/or purchased. It also allows each user an opaque view of the transactions and individual stockpiles of each users, while still maintaining their anonymity. Value can then be traded securely, in a user to user transaction, without a third party institution reaping a financial benefit or fee from the transaction. Each time you make a purchase from a store, be it online or in person, the currency you are using to make the purchase is created out of thin air. The currency produced by our current banking institutions is printed with interest and then each transaction is subject to a service fee. The amount of money generated through this process has made moguls of the men that created the monetary system as it stands. I believe that cryptocurrencies will do away with this current model. Bitcoin is like a phoenix arising from the ashes of a rapidly burning down archaic institution.
Monetary power, up until this point, has been localized mainly to the institutions that create and distribute a nation’s currency. The Federal Reserve System is a privately owned company which became the central bank of the United States in 1913 resulting from a coercive plot, enacted by a select few, manufacturing a currency panic in 1907. This deceptive system currently in place is due to a false flag financial crisis. The ultimate result of this crisis was the creation of one of the most manipulative and deceitful institutions perpetrated upon the American people.
Throughout history, the value of a nation’s currency was usually based upon the gold standard. In 1933 America abolished the gold standard because the amount of money in circulation could only be increased in relation to the gold reserves backing it. The gold standard was put in place to theoretically regulate government spending and inflation. In an effort to stimulate the economy during the great depression, the first steps were taken to abolish the gold standard and by 1971 it was completely abandoned. The U.S. has since had what is known as a fiat currency which means the dollars value is not linked to any specific asset. Its value is simply based on a collective belief or rather cultural hallucination that it has value. With the excessive and irresponsible printing and inflation of this fiat currency, its value has plummeted with each successive generation.
The revolution will not be televised, it will be decentralized. The revolutionaries are mounting the revolution on the fringe corners of the internet. The new financial revolution has manifested in the form of blockchain technology and is being applied though the practical use of decentralized currencies. So what is it that makes blockchain technology and decentralized currency more valuable than fiat currency? First off, much like gold, which previously gave value to currency, decentralized currencies, such as bitcoin, must be mined out of an algorithm with computers which have extremely high processing power. The currency cannot simply be printed out of thin air. Effectively the value of the currency is derived from the arduous process of mining the algorithm, not to mention the millions upon millions of dollars worth of processing power and computation used to mine the coins. The additional value of the decentralized currency stems from the anonymity of it’s purchasing power and the transparency of it’s location and collectively agreed upon transactions.
The future is decentralized with bitcoin
In recent years, we have seen other developers take the bitcoin model and run with it. Many other cryptocurrencies have erected themselves out of the same conceptually architectonic structures of bitcoin’s ground breaking blockchain technology. Ethereum is a blockchain technology which uses a similar platform for the use of collectively reinforced and agreed upon contracts between users of the platform. Essentially, a landlord could use Ethereum to establish a contract with a tenant and the contract would be impossible to destroy or manipulate. In the same way, it could be used for a prenuptial agreement before marriage or even a record contract between a record label and an artist.
Cryptography is a tool that can mathematically prove that people are agreeing or disagreeing with each other. The blockchain is like a receipt that confirms the established collective agreement. When you create organizations on top of the blockchain, you catalyse a system that operates itself based on the consensus of the users that own the currency which is connected to that blockchain. This organization then becomes a blockchain with it’s own currency, and the offerings of that organization hold their value in that currency. The market value of the currency is then determined by the demand of output of the organization. The state and ledger of the organization is determined by the collective agreement of the people mining the decentralized currency. Almost everything on the internet can be run using this revolutionary blockchain mechanism. This technology has the potential to create an internet that is based around creating micro incentives for crowdsourcing the many tasks a non blockchain company would need to do. Tasks such as, posting valuable content on a social network, storing files, or even lending your opinion on a dispute. An internet built upon the blockchain principal can be censored only by the public themselves.
Where I see the future of this technology heading is in the establishment of a decentralized government. Essentially with the use of blockchain technology, the citizens of a country would be provided an e-wallet filled with ballots to be used to vote on issues presented on the blockchain. Each citizen could then vote on each issue as it arises while still maintaining their anonymity. The concept of voting for a representative leader, once every four years, in hopes that they fulfill their campaign promises, is archaic to say the least. This antiquated form of democracy was relevant only when people needed to ride horses to the capital, in order to cast their ballots to elect a representative they believed would enact their particular political views. The problem with this model is that politicians say one thing, and once elected, do another. The future of democracy will be decentralized, and will do away with the now obsolete representative model. With the application of this technology upon the political landscape, it will allow for a sort of hyper democracy, or democracy 2.0 if you will. This more immediate form of democracy will then instantaneously enact the changes which represent the moral and socio economic concerns of it’s citizens.