By Lee Raj on The Capital
I have spent quite some time in the crypto industry in the last few years. If not from the genesis of Bitcoin, certainly from the early Ethereum days in 2015. I lived in the madness of 2017 and saw the horrors of the bear market that followed thereafter. In my early days in the industry, I kept my opinions and perspectives very unbalanced. Not necessarily because I knew too little but because I didn’t know what to know. Fast forward a few years and with countless hours of searching and reading of books, documentaries, GitHub projects, reading reports on industry trends, talking to industry leaders, and the crypto community as a whole, I’m more inclined to believe that I have a much more balanced view. I’m tending towards the truth more — slowly but surely.
However, a simple problem always remained with me when I tried to explain this ‘genie in a bottle’ to a friend who used his Visa credit card to buy his Starbucks coffee or to my coworkers who wanted to settle the bill with WeChat after lunch. On the other side of the world, my crypto brothers and sisters weren’t doing a very good job of spreading the propaganda as well. Few common arguments included the same ideologies and were on repeat like a broken record — banks control your money, Bitcoin is decentralized, super low fees for cross border transactions, you control your money and you are your own bank, no KYC and difficult to trace and so on. When these arguments failed, we looked to blame the incomplete technology such as obvious UI/UX issues, the onboarding difficulty for customers, the Government regulation, the legality of cryptocurrency, the lack of education about cryptocurrency and so on. Once these problems were out of the way, everyone and their mothers and fathers would be using Bitcoin. That’s how the argument usually ended. Sadly, my friend already made his credit card transaction as I was giving this speech. Another 20 years to go and I would know if he would have made the transaction with Bitcoin.
If my friend managed to jump through all these above arguments, his or her curiosity would begin here. Then it’s a journey of his or her own making. Many of us get sucked into the technical literature of nodes, hashing, Bitcoin mining, proof of work consensus mechanism, 51% attack, and constantly learn till we grasp our ‘aha moment!’. Whereas some of us get sucked into the crypto trading world and the price speculation cult where every day is a bull market, and we are ready to place our Lambo orders. I have been part of both myself. Meanwhile, on some fine sunny day, my friend will be with ‘his friend with a credit card’ at a Starbucks and the tale repeats itself. 20 more years of waiting again.
I have come to realize that some of these questions we ask at the start of our journey are not the right ones and hence we don’t really get the right answers. Below are some examples:
What is Bitcoin? — it’s a decentralized currency, it’s a virtual currency, it’s a store of value, it is digital gold, it’s money, it’s fake money, it’s a Ponzi scheme, it’s computer code, it’s a network.
How does Bitcoin work? — nodes, mining, consensus mechanisms, wallets, addresses, supply and demand, computer code, proof of work, Merkle trees, backed by electricity, transaction fees, 21 million cap.
Who built it? — Nakamoto himself or herself or themselves, some group of anonymous people, Governments, doesn’t matter who built it.
When did it start? — 10 years ago with the genesis block, on bitcoin pizza day when the first trade was made, when it was listed at Mt. Gox exchange.
Where is Bitcoin? — in a peer to peer network, in the blockchain, in your wallet, in software code, in the public network and you access it with your private key.
Why does Bitcoin exist? Or What problem does Bitcoin solve? — I think once we ask this question, we begin to find some interesting answers. The obvious ones include — remember the 2008 financial crisis? it is built to prevent that, it solves the issue of our current fractional banking system, it’s a new form of monetary policy, it’s a deflationary currency, unlike fiats which are inflationary in nature. These are very valid answers and we will take a deeper look at them in the upcoming blogs.
However, I think there is an important and simple question that we haven’t asked yet. It might sound silly, but this question does solve my problem that I have been carrying around for years. And, perhaps this is how we should have been introducing Bitcoin. The question is — Who is Bitcoin? I do understand that it sounds silly and before we answer that, let’s ask ourselves these simple questions:
Who is USD? — it is the legal tender in the USA, it is the world’s largest reserve currency, it is issued by the Federal Reserve, it is the total amount of goods and services produced, traded, distributed by people a.k.a markets in the USA and across the world, it’s the main liquid form of asset that people use in the USA to purchase homes, cars, take out loans, get credit, purchase investment vehicles (stocks, bonds, mutual funds, ETFs), save in bank accounts for a rainy day, pay off their student loans or mortgage, receive their annual or weekly or bi-weekly salary with, receive their retirement pension in, pay their taxes and buy potatoes with.
Who is Euro? — it is the legal tender in EU, it is the second-largest reserve currency of the world, it is issued by the European Central Bank, it is the total amount of goods and services produced, traded, distributed by people a.k.a. markets in the Eurozone and across the world…rest remain the same as above.
Who is CAD, Canadian Dollar? — it is the legal tender in Canada, it is one of the reserve currency of the world, it is issued by the Bank of Canada, it is the total amount of goods and services produced, traded, distributed by people a.k.a. markets in Canada and across the world…rest remain the same as above.
Who is CNY, Chinese Renminbi? — it is the legal tender in China, it is one of the reserve currency of the world, it is issued by the People’s Bank of China, it is the total amount of goods and services produced, traded, distributed by people a.k.a. markets in China and across the world…rest remain the same as above.
Now to our question, Who is Bitcoin or who can it become? — it could be the legal tender of the world, it could be the world’s reserve currency, it is issued by people residing in any geographic location, it is the total amount of goods and services produced, traded, distributed by people a.k.a. markets across the world who use bitcoin, it could be a liquid form of asset that people could use across the world unanimously to purchase homes, cars, take out loans and get credit with, purchase investment vehicles (stocks, mutual funds, ETFs that would be represented in Satoshis), save as a store of value in their fully controlled private wallets for a rainy day, pay off their loans, receive their annual or weekly or bi-weekly salary with, receive their retirement pension in, pay their taxes and buy potatoes with.
Thus this leads to a humbling thought that — We are Bitcoin. Bitcoin represents you and you represent it, you give it value, you give it meaning, you give it a place in our economic systems — not one country or currency or a group of people serving their own interest but each one of us serving our own interest along with others.
We are Bitcoin. We are its Central Bank.
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