Updated: Sep 1, 2018
So first a little history.
On August 18th, 2008 the domain name Bitcoin.org was registered.
Then on October 31st, a link to a paper authored by Satoshi Nakamoto appeared on a cryptography mailing list, the paper was titled, Bitcoin: A Peer to Peer Electronic Cash System.
Approximately two months later on January 3rd, 2009 the bitcoin network came into existence with Satoshi Nakamoto mining the very first block, (the genesis block) and as a result, the first 50 bitcoins were issued as a reward.
To this day no one knows for sure who Satoshi Nakamoto is, it could be a man, a woman, or a group of people, but I don't think it really matters. In my opinion, whoever is responsible for the creation of bitcoin, they have given the world a great gift. I believe it will take many years before we realize just how big of a gift it is and in my opinion, in the end, it will be deemed just as if not more important than the creation of the internet. Today we cannot even comprehend the ways that blockchain technology will change our world and we cannot even imagine all of the applications that will be built on top of it.
But even with all of the possibilities the blockchain has to offer if we just look at one of its applications, digital money, this one application alone, in my opinion, will be revolutionary. For many of us, it is hard to imagine that there are still 2 billion people on this planet that do not have access to banking, either because of geographical, financial, or other issues. A World Bank study from 2016 found that approximately 1.5 billion people do not have a way to prove their identity which means the inability to access financial services. For the unbanked population, they are relegated to live and work in an informal economy, isolated from the world economy.
This is where bitcoin and other cryptocurrencies can really be life-changing, anyone with a $20 cell phone can download an application onto their phone and basically become a bank. This access to a global, decentralized, borderless peer to peer payment network will open up unimaginable opportunities for them. especially for business owners and entrepreneurs where this access will allow them to operate on a worldwide scale. My belief is that this opportunity will change many lives for the better, it will, in my opinion, ignite innovation in parts of the world that up until now have basically been left behind. They will then be able to join in with the rest of us in the global economy that they have been excluded from for far too long.
For the rest of us who have been privileged enough to live in a part of the world where we have easy access to banks and other financial systems, we now for the first time ever have another choice. We can choose to continue to operate in fiat currency dealing with banks who loan out our deposits at exorbitant rates while paying us next to nothing, then charging us fees just for access to our money.
Dealing in fiat money we also expose our selves to the loss of value through dilution (expansion of the money supply) and we also give up true control of our money. When your money is placed into a banks care, you give up some control, banks are not open 24/7 and even through an ATM you most likely have limits on how much you can withdraw each day. It is also possible, for some governmental entity (the IRS) to seize your bank account. This practice is called civil asset forfeiture, it allows the IRS to seize property they suspect of being tied to a crime even if charges are never filed. Banks are federally required to report activity (deposits) in excess of $10,000 to the IRS under the Bank Secrecy Act, but banks are also required to report any suspicious transactions to authorities, including patterns of deposits below the $10,000 threshold. So with just suspicion that illegal activity may have occurred, the IRS can seize your assets.
The new choice that we now have is cryptocurrencies, although in their infancy and still cumbersome to use, (hopefully this is being worked on as I write this) cryptocurrencies offer many advantages over fiat money. Cryptocurrencies are Global and borderless, they are decentralized, so there is no one person, agency, or government that controls it. It is permissionless, anyone can join the network whenever they choose and make transactions as they see fit without needed to get approval first. Many cryptocurrencies are inflation resistant because the total supply of that currency is known and fixed. In the case of bitcoin, it was designed to mimic certain properties of gold such as it's scarcity.
Cryptocurrencies transactions are peer to peer so there is no intermediary needed to facilitate the transaction and to charge you a fee to do so. With cryptocurrencies, you have true and absolute control over your money when held in a secure wallet and it can never be frozen or seized. But, along with absolute control comes responsibility, it is up to you and you alone to take the steps necessary to keep your cryptocurrency safe. If you are careless you could lose a lot of money.
As I said, for now, cryptocurrencies are still in their infancy and in what I would call the early adopter's phase but as cryptocurrencies become more widely accepted and used I believe they will offer everyone a second choice. It does not have to be one or the other either, for many people cryptocurrencies could be used as another way to diversify their wealth. But for some people on this planet, I believe cryptocurrencies will be life-changing, and that truly is a gift!
I wish everyone a happy holiday season!
Until my next blog, take care!