“Bitcoin doesn’t matter” is quite a statement when the price jumped from $37k to $44k in one week. But hear me out.
I see three things that are governing our society. It’s been the same for the whole recorded history.
This things are power, debt and value.
Power is what a nation state uses to coerce its citizens into following (fair or unfair) rules. It keeps the world in a relatively ordered state. It comes in the shape of laws and regulations, police or military action, institutions.
Debt is arguably the single biggest driver of how the economy shapes the society. It’s not the money, it’s debt. Debt owed to your bank, your government, your peers. It comes in many shapes or forms. You might find it in concepts as credit, duty, return on investment, even money.
Value is what us humans provide to other humans. It’s the product of our creativity and labour. It comes in the shape of the products, services and culture we’ve built for one another.
Power, debt and value are quantified in many ways. Usually, one is quantified in the form of another. Power earned can be exchanged for units of debt (money). Debt can be covered in units of value.
Rather recently, with the downfall of monarchy and rise of the bourgeois, value provided could be transformed into power, to a certain degree.
Power, debt and value are the concepts we all share and trade. It doesn’t matter if we quantify them in dollars, yens, favours, goats or bitcoin. What matters between all of us is how much of these things we are worth.
Power is a vague and hard to define term. However, this scene in Game of Thrones might help:
What you can see above is an example of what has ruled our world for a long time. It still does. Power in the form of expressed or implied violence. Either through direct speech, as Cersei states above, institutions (“of power”) or geopolitical relations.
For a long time I believed in the idea that money emerged as a means to trade goods. When we think of the inception of money we often picture some middle ages worker, maybe a blacksmith or a shoemaker, trading goods with a farmer. One awkward negotiation might appear – how many goat skins is a pair of boots worth?
The shoemaker and the farmer go back and forth about the parity between goat skins and boots. They might settle it but what happens when a third variable enters? Like a sword made by the blacksmith. What’s the parity between swords, shoes and goat skins? What happens when you add hundreds or thousands of other wares?
Well – here’s a bright idea if you’re a 19th century economist in the British empire: people found a common denominator and traded in that. Like … gold. Or coins.
But it seems that’s not the case. In his brilliant book Debt – the first 5000 years, the late anthropologist David Graeber argues debt came long before money. Debt and credit units were the first forms of “money”. Debt made and destroyed empires, brought us slavery in its many miserable shapes.
Graeber argued we live in a world that is still ridden with indebted serfs in developing and developed countries, who’s main reason of getting up in the morning and doing a job they may hate is a form of implied or express debt and society’s pressure to fulfil this debt.
However you feel about power and debt, they have indeed shaped our society. For most of our recorded history, they were the only tools you could control the world around you. They were also restricted to a select few. The nobles, the bankers, the priests.
Then came the Magna Carta outlining a world where everyone played by almost the same rules. It started as a way of making peace between an unpopular king and his barons. Still a pretty elitist thing. But it spread to include the masses and lead to the wonderful place in history we are living in now: the democracy.
The industrial revolution and protection of intellectual property handed even more rights to everyday folks that were unlucky enough to not be nobles.
You could have an idea that improved the lives of others, put it into reality and build yourself a better life than all your ancestors.
This lead to inventions, and industrial age and the rise of those that could bring better goods and services to their fellow citizens. It helped build capitalistic enterprises where the one creating value could be in no connection with networks of power or debt. It still relied on them but they were not prerequisites.
We then ended up with computers, the internet and AI and spaceships built by people that couldn’t chop off your head. These people called entrepreneurs rely on debt to finance their ideas rather than using it as an instrument of control. Because now, the value you provide to the world really matters.
There’s many ways you could define Bitcoin – a social perspective, an economic one, a political one. My favourite is that it is a decentralised quantifier of value.
My early childhood was spent in a communist regime, in the Eastern block of Europe. At that moment owning one dollar meant you were prone to investigation by the institutions of power of the state. Why do you have a foreign currency? Are you trying to topple our glorious economy by undermining our glorious currency? Do you not think our glorious nation is the best ever?
But the regime failed. It was not toppled. It just failed. It couldn’t provide enough value for its citizens. Its “value” was fake. It was worth whatever the central authority said it was worth. And this was bad. No central authority should tell you how much your work is worth, right?
Enter the mystical figure of Satoshi Nakamoto. Legend has it he (or she) came down from the bits and data heaven and handed us the secret to decentralised transactions. Bitcoin. The more people used it, the more valuable it was. No one controlled it, except if they owned 50% of the computing power that managed the system. Which was technically impossible.
Why bitcoin doesn’t matter?
Today, blockchain(s) hold hundreds of billions in value. They’re the next big thing. They will change the world. Those that don’t own bitcoin will starve and die a slow and painful death.
Except they wont.
Because they don’t hold formalised power. They don’t handle debt. However, they do store value.
This is what matters. If Bitcoin, or any other blockchain based currency will rule the world one day, that’s a good thing. But it probably won’t change how much power you hold, how your debt is handled and how much value you put in the world.
If you provide value, this can easily be translated into any currency.
If you own or owe debt, this will still be expressed in some form of currency. Centralised or decentralised.
And if you hold power you will most likely try to get a foothold in anything that might jeopardise your position.
So Bitcoin doesn’t matter. It’s a tool that can express value, debt or power. Tools seem to change but the pillars that shape our world stay the same. Invest in those.
Photo by André François McKenzie