Decentralized Consensus
The future of storing value
Last updated
The future of storing value
Last updated
A disruptive open source technology now called blockchain which was designed as a currency transfer system was released for free to the public and went unnoticed for years by most people.
A mysterious developer known by the alias Satoshi Nakamoto created Bitcoin, a decentralized and anonymous virtual currency.
Bitcoin introduced the idea that Second Layer internet technology (blockchain) could be applied as a Monetary System.
It demonstrated a trustless decentralized consensus mechanism which could not be hacked or turned off and which eliminated the need for an intermediary (like a bank) to be able to almost instantly store and transfer digital currency, with incredibly low fees, anywhere in the world, through the internet.
Well, think about scarcity a little bit. The air we breathe is everywhere and nobody can bottle it and sell it because everybody can just breathe it all around, there is no scarcity of air. The same with a spring river, if water is close and readily available, you would never buy it. Now, things that are hard to make, things which take time and resources to produce, those are more scarce and people are willing to pay currency for them.
Now what is the relation between scarcity and Bitcoin or crypto currency? After all Bitcoins are just digital numbers in digital ledgers and numbers are infinite.
Well, for the first time in history, Bitcoin, a digital peer to peer currency system demonstrated that it can emit (through a process called mining) 21 million units of Bitcoin as a fixed digital representation in an encrypted ledger that can never be changed or hacked as a whole.
Individual accounts in this system are controlled by their owners alone. Unlike fiat IBAN accounts that can be accessed by the banks themselves, by governments or by hackers.
That means that for the first time in history, a digital resource was created to be scarce, impossible to steal or reproduce and limited in supply. There will never be more Bitcoins and therefore a fungible currency limited in supply is now valuable and people are fighting for a piece of these units of currency, for a piece of internet history or digital gold as some say.
Bitcoin was just the first of many. People could soon use a very simple crypto wallet app to store or transfer their cryptocurrency or tokens instead of using banks for storing and transferring fiat currencies like Yens, Euros, Dollars, Pounds, etc.
By using this new technology you become your own bank through a simple secure app. The system is in essence a network of copies of an ingenious open sourced software hosted on computers and servers across the world which are maintained by people that don't know each other.
This is where the trustless quality comes from. Nobody owns the system. The power of decentralized open source software is disruptive but revolutionary if used correctly.
This new blockchain system is able to store all the copies of an ever-expanding ledger (an extremely encrypted database of all the accounts and transactions in the system that ever happened and that ever will happen).
This ledger basically manages itself without having any points of access to its accounts for anyone inside or outside of it. In other words, the people hosting all the open source software of Bitcoin don't have access to any other account except their own accounts, and nobody can spend more than they have or create more units of Bitcoin.
In essence, Bitcoin solved the double-spending problem and added peer-to-peer (global decentralization) to the system. It was the perfect example of a digital currency system worthy of the start of the age of interstellar travel.
In such a system, the code is publicly maintained and developed by volunteering developers.
We are talking about a totally different type of database, a way of storing information in a network that cannot be turned off due to its decentralized nature (like torrents) and in a way such that the records or information of any account can never be manipulated by anyone, ever.
In this system, you are the only one with the key to your account and if you lose that key, nobody will ever be able to access your account and do transactions with it, period.
The system emits units of currency by rewarding all the people supporting the hardware infrastructure which validates all the transactions between the accounts.
These people are called “miners” and the activity of miners is called mining. The process of mining is defined by a PoW (Proof of Work) protocol, basically an Adaptive Method of Currency Emission.
In other words, instead of giving power to bankers to unfairly distribute money into circulation by creating infinite amounts of money out of nothing and forcing us to work years of our lives to pay back the debt, we can see an alternative was demonstrated through this PoW system where the money is distributed directly to those who participate in the support of its infrastructure (hardware and software).
Companies, Countries, and all of us together should really be more grateful and rewarding to the people building and maintaining the infrastructure.
There is one big environmental problem with PoW though, the network of computers supporting the Bitcoin software consumes as much electricity as a few developed countries combined.
Unfortunately, this is unlikely to change soon, as "whales" now have a big influence on the Bitcoin mining activity.
Only 21 million units of Bitcoin will ever be emitted in circulation.
And sadly, because many of the early adopters or investors of Bitcoin did not believe it will gain such traction, they lost the keys to their wallets and today, over 6 million Bitcoins are blocked in accounts that will never be accessed again by anyone, thus making the max supply of bitcoin less than 15 million Bitcoins.
Having a fixed monetary supply means that the price of Bitcoin will always appreciate over the years since more and more users agree that it's a better system and exchange their fiat money for Bitcoin.
Finally! A better, future-proof alternative to the corrupt fiat money system was demonstrated and anyone could exchange some of their fiat money into Bitcoin which would always appreciate over time as it is a deflationary monetary system, just like the dollar was when it was on the Gold Standard.
Many early Bitcoin adopters that mined or purchased Bitcoin became multi-millionaires. Software developers and tech gurus started paying attention. Tech people will be the majority of billionaires in the near future.
It's sad that the banking elite intervened here as well. They are behind most brokers and exchanges and they are always accumulating most of the supply, creating extreme volatility and creating artificial economic bubbles that have a negative impact on the price.
Their manipulation is making it impossible for people to use Bitcoin as short-term value storage as their money can sometimes (in some years) depreciate up to 50% over a few days, making them panic sell, and lose hard earned value.
From pebbles to Bitcoin, it doesn't really matter when was the first time the idea of money appeared in our collective unconscious or in our species' consciousness, what is important is why ...
Not why it appeared, but why did it persist?
I suppose to make life easier people have always looked for ways to store the results of their efforts into smaller objects that they could carry around more easily. This is why currencies appeared, and with the passing of time they became so small that they vanished completely, virtual symbols took their place.
Early humans, or any advanced civilization that evolved enough to be able to create value through making things and trading them or discovering information and trading information (like maps or other types of knowledge about the world and how it works) at some point collectively decided it was a good idea to have a symbolic representation (money) that could be divided into lots of smaller units to make trade more efficient and to safely store the value they created over time.
Ideally, we would want to live in a world without money, where a borderless biosphere resource-based economy would take the place of this corruptible money world, where greed was completely replaced with gratitude.
But transitioning to that world is done with baby steps, we need a better monetary system first.
Money should not be the main life goal of any individual, rather it should be a powerful tool to invest in ourselves and in others, a tool to support and empower what we love, for the benefit of all participants in that system, not at the expense of them.
Money is simply a representation of the Energy you spend over Time, multiplied by a Location factor.
The symbol we call money, once gifted, must be protected and it must be spent wisely, it should not be hoarded or blocked, stolen, or spent selfishly.
Sadly, today money is useful only to those who control and regulate it. If you and I were the only people alive, nobody would need it.
The decentralization of money is not about abolishing the idea of money, it's about value/wealth redistribution.
All that money ever was and that ever will be is just a consensual symbolic representation of how much energy was spent to create or offer something to another human being. Money persisted as the idea to store this energy spent by another in a more efficient way.
Energy is supposed to flow freely, without too many stops or intermediaries.
As an analogy, if blockages would happen in an organic system like your sanguine system, you would have a heart attack or stroke and die. Every time we stop energy or movement, trouble comes, economic bubbles explode, people suffer or even die directly because of this.
When we have an intermediary for energy transfer, the nature of the intermediary determines the biospheric sustainability of the system and the longevity of the species using it.
The development of new internet technology finally allows us to eliminate any intermediaries between individuals and companies.
We can finally store our efforts into decentralized systems that are reliable, trustless and require no Straw Man identity verification (meaning the transactions we make with these systems are anonymous and for some cryptocurrencies completely untraceable).
Enough with the Orwellian Surveillance Capitalism.
In a free world and free market, value is something that we all seek long term. It comes in many forms or symbols.
Price is just the indicator of how many seek at the moment to invest in a certain symbol and by doing so support the system that manages everyone's share of that symbol/system.
Most cryptocurrencies or tokens are decentralized and deflationary monetary systems.
In this type of system, those who exchange their fiat money or other cryptocurrencies into the new Token or Coin early on are called “early adopters” - they have patience and are rewarded long-term by the increase in demand for that certain symbol.
People that invest after the launch must wait at least as much as the early adopters to have benefits, otherwise, they might see the price decrease in some periods and panic-sell their crypto currency or crypto token. Investors must only invest what they can afford to block long term.
These systems are basically digital networks running on the first global layer of the internet, in other words, the Internet Protocol (IP) - which is simply the result of our global consensus on how to exchange or communicate information or content digitally. Upon this First Layer Global Consensus, we can now develop the Second Layer or (Middle Layer) applications using blockchain-type technologies and new protocols.
In the future, all money will be stored in these new systems using the new protocols, not in banks. Banks, as we know them today, will be a thing of the past.
Going to the bank for any financial services will be like looking for a horse and carriage to travel instead of using electric cars like everyone else.
