I wrote previously that I believe Bitcoin is the most misunderstood technology on the planet. I’ll explain what it really is and why I believe it’s so revolutionary here.
If you read newspapers and tabloids, you’ve probably formed the opinion that Bitcoin is a shadowy, untraceable currency that can be used by criminals, hackers, and corrupt officials to move and hide funds. This is 100% false and wrong and is based on the popularization of these myths by a combination of clowns who do not understand Bitcoin and people who wish it to be that because they have anarchist political views and want to create an untraceable cash system to avoid paying taxes.
Bitcoin is, in fact, the exact opposite of this system. Once you dig deep into it and understand how it really works, it’s an anarchists’ worst nightmare. It is a universal truth machine that has the potential to shine a light on every financial transaction on the planet. Let me explain.
Every time a Bitcoin transaction is done, for example I send Jane $5 worth of Bitcoin, the transaction is legally valid because of the digital signature I use to send it (like signing a cheque), and more importantly, a time-stamped record of the transaction is left on the blockchain. Think of the blockchain as an open ledger that anyone can browse, check, audit, or verify.
Click here to see what transactions look like on the public blockchain. Each wallet address has a verifiable history that can’t be altered. Now imagine this was a wallet belonging to a government department and how that would change things.
As you can see, the sending and receiving wallet addresses, the time and date, and other details such as the amount sent are visible. Now ask yourself, if Satoshi Nakamoto was really an anarchist who wanted to bring down global governments and create a digital cash system to facilitate crime, why would he design a system that left a publicly visible record of every transaction on a digital ledger that anyone, including government authorities, could browse?
The people who run the BTC project and call it Bitcoin (that’s the one you read about in the newspapers) have done everything in their power to change the original Bitcoin system. They introduced Segwit to separate the digital signatures from the transactions, built the Lightning network to take the transactions off-chain so they wouldn’t leave a time-stamped record on the blockchain, and lied to the public that BTC can’t be stopped because the tens of thousands of nodes that control the system are unidentifiable when section five of the whitepaper clearly states that miners are nodes. Satoshi built Bitcoin this way because he wanted nodes to be identifiable so they could be held accountable by the law. He always said nodes would end up in data centres, but that doesn’t suit the anarchist/criminal narrative, so that doesn’t get discussed much in BTC-land.
What Bitcoin Really Is
Bitcoin is not what most people have been led to believe. It’s is a universal truth machine that leaves a time-stamped record of every interaction on a public blockchain that can’t be altered. Even if you could gain the majority of the hashpower that would allow you to control the network, you couldn’t delete previous ledger entries, you could only amend them, and this would leave a new time-stamped entry, so it would be publicly verifiable that the ledger had been altered, and neutral adjudicators such as courts could decide on which entry is valid when there’s a dispute.
Think about the implications of such a system for the world:
- Corrupt politicians could no longer steal funds without leaving a trace. If all wallets eventually become KYC/AML compliant, as I suspect they will, it becomes impossible to move money offshore or between wallets you or your allies control without leaving a publicly visible evidence trail.
- Hackers who break into servers get away with it by deleting logs on the way out the door, so to speak. If there are no central servers because everything is on a globally distributed blockchain, hacking becomes near impossible. It also becomes impossible to delete logs if you do penetrate a network because the Bitcoin system will detect an entry and an exit and will time-stamp them. It revolutionizes computer security.
- If money is stolen from one wallet, say by hackers, the wallets that receive it can be frozen or blacklisted by miners/nodes. This is why it is crucially important for nodes to be known and identifiable. As Satoshi said, imagine if gold turns into lead when stolen and turns back into gold when returned. We’re talking about the end of financial theft, robberies, and hacks here. Of course, they’ll still occur, but it will be impossible not to leave an evidence trail.
- It will become possible for auditors and financial authorities to instantly verify claims and determine the financial position of entities immediately by looking at wallet balances on the blockchain. If Bernie Madoff claimed he had x amount of funds in a Bitcoin-powered world, it would be as easy as simply checking his wallet balances to verify that he is lying. Scammers running ponzi schemes and other cons would never be able to get away with it.
- Eventually, if Bitcoin succeeds, the entire nature of the internet will change. Instead of landing on news sites that ask you to subscribe for $8.99 a month, you’ll be asked to pay $0.01 or less to read an article. Bitcoin makes micropayments of as little as 1/1000th of a cent viable. Imagine you can upload a photo to a distributed version of Instagram and earn 1/100th of a cent for every like you get, or a video to Youtube and earn the same for every upvote. Those apps already exist today (Relica and Streamanity), but Bitcoin is still too misunderstood for them to take off. This model would help fight clickbait/fake news and etc because those stem from the ad-revenue model the web is based on. In the long-term, platforms like Facebook that profit from this will cease to exist or will have to adapt to survive in a Bitcoin world.
- Middlemen of all kinds, from rent-seekers in the financial system and remittance companies who take 10% from some of the poorest people in the world, to data harvesters like Facebook and Twitter, will be obliterated as peer-to-peer transactions become the norm. They’ll have to come up with new business models to survive. Those who charge fees for middleman services will have to rely on mass volume at extremely small margins.
Bitcoin Is Revolutionary Technology
Bitcoin changes everything. It is a universal truth machine. Once a record is entered into the ledger, it is etched in stone and can’t be erased by any individual, no matter how powerful they are or what their agenda may be. Yes, that holds you accountable to your government in a way you likely never have been held before, but the flip side is it holds them accountable to you in the same way.
Some people will like this vision of what Bitcoin is, and others will hate it. It doesn’t really matter what you feel about it. It is what it is, and if it succeeds, it will change the world in profound ways in the coming decades. What is the value of an immutable truth machine? Time will tell, but I believe it’s bigger than almost anyone can imagine.