Bitcoin: The Immutable, Uncensorable, Unbribable Judge Algorithm
Regardless of what you call a political system when only a power elite has access to information, it grabs its benefits, at the expense of the rest. As living standards drop for the majority, economic growth becomes unsustainable.
In economies where fiat money is the medium of exchange, monetary intervention leads to information asymmetries that reward malinvestment, distort pricing, incentivize corruption and expand poverty. Information Asymmetry also means letting centralized players encroach on the private information of citizens whose personal data, belief-system, time-expenditure, private assets or political choices should be solely under their own control. Fortunately, information symmetry and thus, self-sovereignty across centralized-interest barriers is within reach through Bitcoin’s immutable, uncensorable and unbribable judge.
Equal access to information among all economic agents worldwide would bring sustained exponential growth in living standards to the 90% of the global population, whose future is already compromised by Information Asymmetry. In fact, the more pervasive the symmetry, the better informed our long-term assessment of contemporary decisions and the higher our chance of producing real value for everyone.
Just like the wheel, metallurgy, telecommunications, computers and so many other inventions that have enriched humankind, digital money brings with it a new form of life, self-sovereignty, and yet…
Without Sound Money, Self-Sovereignty Will Not Last
“Sound money is money chosen freely by the people who use it, and whose value is determined through market interaction, and not through government imposition” ―Joe Salerno, “Money: Sound and Unsound” 2010.
Sound money provides a stable unit of account for pricing the cost of goods, services or complex value calculations. From the time of Greek King Croesus until 100 years ago, gold had been best able to fill the role of sound money.
Yet, since the dawn of the 20th century, when governments nationalized gold reserves, gold is unfit to guarantee individual sovereignty, a virtue that along with the properties of sound money listed below, only Bitcoin provides today.
Salability
The quintessential characteristic of sound money is that it is money chosen freely on the market by the people who use it, and whose value is determined through market interaction, and not through government imposition (Salerno, 2010). Thus, the relative Salability* of goods (used as money) can be assessed in terms of their “salability” across scales (small to large denominations), across space (geographic acceptance), and across time (inter-generational stability).
*The ease with which a good (used as money) can be sold on the market whenever its holder desires, with the least loss in its price.” ―Carl Menger, founder of the Austrian School of economics.
Unit Of Account
The operation of a market economy is dependent on prices and to be accurate, prices are dependent on a common medium of exchange: A Unit of Account. In an economy with a medium of exchange, all prices of all goods are expressed in terms of the same unit of account. In this society money serves as a metric with which to measure interpersonal value, it rewards producers to the extent that they contribute value to others and signifies to consumers how much they need to pay to obtain their desired goods. In economies with no recognized medium of exchange, pricing economic value or trade-offs between production choices becomes unfeasible.
Store Of Value
For a good to be “salable” across time it must have physical integrity. Being immune to rot, corrosion, and other types of deterioration help maintain its value, yet it is also necessary that the supply of the good not increase too drastically during the period during which the holder owns it. In essence, the ratio between the new production of a good and its existing stockpile is a fair indicator of how well that good is suited to playing a monetary role. Thus, if the production of new units of the good is restrained due to natural or logistical causes, it will maintain the value of the existing units. In fact, the only monetary media that have survived history’s test of time, are those whose supply growth is severely restricted.
Individual Sovereignty
Gold solved the problem of “salability” across scales, space and time by becoming centralized and thus, falling prey to nationalization at the start of WWI. Conversely, Bitcoin’s first and most important value is its aptness for Individual Sovereignty. Being the first form of digital money, anyone who owns Bitcoin achieves a degree of economic freedom which was not possible before its invention. Bitcoin gives access to sovereign base money by (i) allowing anyone to send value across the planet without anyone else’s intervention, (ii) maintaining value that doesn’t rely on anything physical anywhere in the world and thus (iii), can’t be impeded, destroyed, or confiscated by the physical forces of the political or criminal worlds.
CREDITS:
The Bitcoin Standard: The Decentralized Alternative to Central Banking by Saifedean Ammous
