When it comes to Bitcoin, there is undoubtedly a lot of confusion regarding its role in the economy and society. At this point, people are still arguing about the specifications of BTC and everyone has his own theories and questions about Bitcoin and its future.
Is it a currency? Is it a store of value? Is it the beginning of a new, decentralized world? Does it herald a new era for our society, transferring the power of the banks back to the ordinary people? Or is it just part of an agenda and the revolutionaries are being fooled by the elites of the financial world? And most importantly…
Who is Satoshi Nakamoto?
Satoshi Nakamoto, the founder of Bitcoin, suddenly disappeared on December 12, 2010. In his second to last post he said
“WikiLeaks has kicked the hornet’s nest, and the swarm is headed towards us.”
This is a strong sign that he was part of a community, since he wrote towards “us” instead of towards “me.”
Interestingly enough, the guy who posted the first ever tweet about Bitcoin, Hal Finney, received 10 BTC from Nakamoto to test the network on Jan 12. Shortly after, he died from ALS.
There are very few people in the public eye today who were officially associated with BTC from its very beginning. In fact, nobody knows the true identity/identities of the person or group behind the pseudonym Satoshi Nakamoto, as self-proclaimed Satoshi Craig Wright failed to deliver any evidence. But what we do know is that Satoshi’s numerous wallets hold more than 980.000 BTC and it seems like he never cashed out any of them, even though a very early miner transferred 30k+ BTC between Dec. 2016 and Jan. 2018.
So maybe Satoshi Nakamoto was already filthy rich before the creation of BTC. Furthermore, who can say for sure that Satoshi isn’t a whole organization, a group of people or maybe the elites of the financial system?
Moreover, I find it quite preposterous to assume that the financial elite, which controls every central bank of the world, except for the ones in three countries, namely Cuba, North Korea and Iran, would tolerate the risk of losing its power because of one single guy, who came up with, and coded a digital currency in front of his computer.
In fact, the Economist, a magazine owned partially by the same people who own the central banks, not only published an article in 1988 which covered the idea of digital money, the author also went on to state that
“Thirty years from now, Americans, Japanese, Europeans, and people in many other countries […] will probably be paying for their shopping with the same currency.”
In addition to that, there was a coin on the cover of that issue and there was a certain number on it: 2018, the year in which cryptocurrencies reached their highest market capitalization to date.
https://bitcoin.com.au/1988-economist-magazine-prediction-come-true/
I am not sharing this information to spread conspiracy theories.On the contrary, I am against those who claim to know the truth. I want to spread awareness and turn you into a skeptic, simply because you shouldn’t take anything at face value in this era of fake news. Behind every word on the internet there is an intention, and sometimes this intention is purposely hidden in the darkness.
With all of this in mind, we should take a differentiated look at the underlying technology behind Bitcoin.
The technology of Bitcoin
Bitcoin’s technology, which is called Blockchain, is a 100 percent transparent, decentralized database of all transactions within the system. Bitcoin’s supply is limited, and as a consequence, lost Bitcoins equal a reduction of the circulating supply, which in turn means everyone who hasn’t lost his Bitcoins basically gets a small fraction of the lost ones. Smaller supply with at least equal demand means that the remaining BTC are worth more than before. Furthermore, Bitcoins are created through mining, a process that rewards everyone who brings the computing power to find a block with a fraction of said block. The mining reward halves as the circulating supply gets bigger. Thus, the creation of Bitcoins is decentralized, because, in contrast to the creation of FIAT currencies, there is no institution that prints the money and brings it in circulation.
Bitcoins are created by many independent individuals, and the mining will stop when the circulating Bitcoins reach the absolute amount of 21 million coins. Here you can read an interesting discussion about why the supply is capped at exactly 21 million. Seems pretty smart, right? Yes, but there is problem with it:
Because BTC mining needs electricity, and the mining rewards get less, small individuals don’t have the capacity to compete with the big mining pools. As a result, a few of the mining pools make up a big portion of the mining power. In concrete terms, ten mining pools hold almost 50 percent of the total mining power, and over 80 percent of all mining pools are located in China. Doesn’t seem as decentralized as originally thought, right?
Decentralization
Decentralization is the favorite topic of the revolutionizers, who joined the Bitcoin movement because of their idealism. I personally love the idea of decentralization and I strongly believe that it has the potential to create a better world, but I also see the dangers in an abused decentralization.
First of all, we have to understand what decentralization means.
http://www.truthcoin.info/blog/measuring-decentralization/
As seen above, a centralized system has a center, if you cut off its head, the system collapses. The picture in the middle is considered to be decentralized, but, if you take a closer look, it still has a center. The only difference is that it also has sub centers. So what’s left is the distributed network, which isn’t what Satoshi Nakamoto was talking about in his whitepaper, right?
Wrong. In fact, Satoshi Nakamoto never spoke of decentralization in the Bitcoin whitepaper. What he spoke of was “pure P2P.” Satoshi said that
“Governments are good at cutting off the heads of a centrally controlled networks like Napster, but pure P2P networks like Gnutella and Tor seem to be holding their own.”
http://www.truthcoin.info/blog/measuring-decentralization/
Paul Sztorc, a Bitcoin researcher working for Tierion, commented:“Clearly, the ‘Decentralized’ image still has a ‘head’ that can be ‘cut of.’ In fact (worse than that), if I reorder/relabel the images, the ‘decentralized’ option is the most-headed of all!”
So, how can Bitcoin achieve 100 percent decentralization, making it “pure P2P”?
To answer this question, I want to jump to Paul Sztorc’s conclusion:
“To increase decentralization, focus on making a full node cheaper. ‘Decentralizers’ include the Lightning Network, Tor, and metered bandwidth services.”
If you want to read about this in detail, please check out his article.
Now, let’s move on to my concerns. I want to point out the potential risks of a completely transparent and decentralized financial system. Remember when the European Commission proposed a restriction of cash payments in the European Union in February 2017? In fact, there is a war on cash within the EU, and it won’t take long until cash is abolished. The reason for this is the anonymity that goes along with cash transactions. Blockchain might be the first step towards a new era of surveillance, where everything is fully documented and saved in the database forever. Illegal activities will be tracked and traced. This is not necessarily a bad thing for society, but how does it affect a society when every step is documented? Will the individual not act significantly different in his or her everyday behavior? Moreover, isn’t privacy a part of human dignity and essential to have a feeling of freedom?
Also, tracking illegal activities is only a positive consequence for society if the law is not out of control. In fact, if there is no scope at all, the power of the legislative is enormous and probably too strong.
A.I. and Blockchain
Cryptocurrencies are anonymous, they said. The addresses can’t be identified, they said. Although it is widely believed that transactions within the Blockchain are anonymous, this assumption is flawed. While it is true that neither the sender nor the receiver of a single transaction can be identified by looking at one specific transaction, it is also a fact that every transaction is interconnected with all the others, and you only need to identify one transaction to follow the path of the spider web. To give you an example, let me introduce you to Bob.
Bob has a PR agency and wants to be paid in Ethereum for his services. He requests the payment from Thomas, who agrees to send twenty Ether to his address. Thomas uses his private MyEtherWallet address, and thus, Bob can see every transaction that Thomas has done so far, since he can follow each address to its origin and destination.
Not to mention that most wallets are connected to your personal data at this point. It is just a matter of time until artificial intelligence can collect all this data, making it easy to identify every person within the Blockchain network, who is not using a BTC mixer.
A.I. and Decentralization
Imagine a world where the majority of today’s jobs are expendable, because the tasks are fully automated and done by robots. Artificial intelligence can and will be connected to the Blockchain, where all data is stored. If an artificial intelligence can analyze all the facts, who needs a lawyer anymore? Even high diploma jobs are unnecessary in a world where robots manage everything. Further, what will happen if all trust is eliminated, because all the evidence is in the Blockchain? If all your money will be stored in the digital world, how can you escape the system? Following the previous assumption, that transparency leads to complete identification, you will have no other choice than to obey the system, because otherwise your rights or wealth will simply be waived by the glorious and infallible justice, managed by artificial intelligence. Fortunately, there is always an escape if the system isn’t right anymore. Protests were always a way to regain freedom and human rights, as the French proved to us at the end of the 18th century. But wait, there is a missing piece. Exactly! You can’t start a revolution if there isn’t a regime to overthrow. In a fully decentralized world, where justice is executed by robots, evaluation is done by artificial intelligence and every piece of evidence is stored in the Blockchain, there is no way to evade the rules of this system.
So you better be a good sheep.