What Bitcoin Is and Why It Matters In Under 5 Minutes (Repost)
Trying to distill the fundamental innovation of Bitcoin
An Incomplete Digital Revolution
The fundamental innovation of the Digital Revolution that began in the 1970’s was the elimination of scarcity.
Anything that could be digitized became reproducible, transmissible, and scalable in the thousands, then millions, now billions for basically no cost.
This is the digital world’s greatest strength. But also its greatest weakness.
Many aspects of the analogue world can’t be digitized because they fundamentally require scarcity. Many more were able to be ported, but imperfectly and with many unintended negative consequences.
Some examples:
Money — Money does not work if it is not scarce. It will lose value at best and when maintained by a government (which it has always needed to be) allows a whole swath of short-term-gain-long-term-pain behaviors like printing money to boost the economy (which kicks the can of a correction down the road to bigger booms and busts), incentivizing consumerism (which disincentivizes saving and harms the environment), and spreading corruption (vote buying of the populace with “free” services, giving money to all the institutions already in power further increasing income inequality, etc), among a dozen other things.
The digital revolution made this problem even worse because although it wasn’t solely responsible for the switch to fiat money (it contributed much more than most think), it certainly allowed us to more effectively obfuscate and distribute the externalities of this change to every corner of society slowly over generations, ultimately causing far more harm than had it been obvious and upfront.
Property — The music, movies, software, etc industries all spend billions of dollars a year trying to prevent the unauthorized copying and dissemination of their digital IP. Most art cannot be digitized at all because abundance destroys its value. Ownership of personal property (houses, cars, identity, medical records, etc) require massive infrastructures of trust between third parties to track, manage, share, and transfer records. These have huge overhead costs to maintain and secure and are honey pots for hackers and rent seekers (making everything way more expensive than it could be while also subjecting your personal information and identity to theft and abuse).
Attention — Most everything “free” on the internet is not really free. It is making money by selling your data or your eyeballs to advertisers (this is the optimal and arguably only way to make money in a hyper-abundant digital world). Journalism makes more money the more eyeballs they deliver to advertisers, incentivizing clickbait and sensationalism. Social media makes more money the more time you spend on the platform (they can scrape more data to sell to advertisers and get you to click more ads), which is best garnered by confirming your existing beliefs (“fake news” and echo chamber problem) and making you outraged and scared at the stupidity and evil of your enemies (“fear porn” and tribalism problem).
As the digitization of our lives becomes ever more encompassing, so too will the negative side effects (only a few of which I have mentioned here) of the hyper-abundant digital world.
Closing The Loop
Bitcoin, arguably the greatest feat of technical innovation since packet switching, solves the problem of digital scarcity.
And it does far more than that.
Because it is permissionless (anyone can use it regardless of race, sex, country, legal status, wealth, or power), programmable (you can build smart contracts on top of it), open source (its code can be copied and modified to attempt alternative ideas, models, and use cases), censorship resistant (it is distributed and decentralized making it nearly impossible for a power structure or bad actor to hack or destroy), and global (transmissible to anywhere in the world instantly and basically for free) it unlocks a pandora’s box of possibilities for solving these problems and dozens more (many of which we, like GPS or the smartphone, won’t even know how bad we need them until after they’re invented).
Most either ignore, underestimate, or deride Bitcoin (and it’s children). Just as most ignored, underestimated, or derided the World Wide Web in the 1990’s and its ARAPNET precursors in the 1970’s.
In 1984 only a fraction of a percent had the technical knowledge, time, and interest to go through the effort of performing the steps necessary to send an email. In 2021 we all do it every day with just a swipe.
A second digital revolution—equally as important, impactful, and world-changing as the first—that brings the digital world full circle is under way.
Money is its first application. But it will not be the last.
Today is it complicated. In a decade or two, it will be so easy a monkey can do it.
Do not ignore it. Do not underestimate it. But most importantly, do not deride it. Lest you be the laughing stock of an entire generation.
Good dae.