“A purely peer-to-peer version of electronic cash would allow online
Satoshi Nakamoto
payments to be sent directly from one party to another without going through a
financial institution.”
Today I would like to start an open conversation about Bitcoin and hopefully answer some questions that my loved ones may have. First lets examine the opening statement from Satoshi’s white paper published October 31, 2008. For the uninformed Satoshi is the anonymous creator of the Bitcoin network and a white paper is a paper that explains a cryptocurrency’s purpose and the technology behind it. Most people will never find time or reason to read a white paper it is mostly filled with technical terms most people don’t care to understand. Satoshi starts the Bitcoin white paper by stating that “A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.” I admit the first time reading it one may question why something like peer-to-peer cash even matters. It is a very powerful statement packed with truth and it also highlights a dilemma that we have in our modern day society. We as a people and a society are no longer free to transact with whoever we want to however we want to. Satoshi exposed this problem in 2008 but is a problem that has existed since we entered the digital age as a society. When was the last time you made an electronic transaction without going through a 3rd party or a financial institute ? We once lived in a world where cash was king and when using cash we maintained a certain amount of anonymity. When people think of Bitcoin and all of it’s value proposition most will fetishize about the price when priced in U.S. Dollars, but we can clearly see it was invented for a much greater purpose. I could go down the rabbit hole of Bitcoin and all of it’s use cases, but to each it’s own about what they find cool or love about Bitcoin. I would like to stay focused on Satoshi’s opening statement and unpack it further.
Satoshi proposes that electronic cash can be used to make a peer-to- peer transaction without a bank or a third party. This was never possible in the past until Bitcoin was created. Let’s examine some of the problems that we encounter by not being able to transact electronically in a peer-to-peer fashion without a institution or a 3rd party. First and foremost privacy concerns and manipulation will always be at large in a system where we are no longer able to transact in private. This issue runs deep and it starts with who records and maintains the ledgers associated with all transactions. The ledgers of society are written by institutions who are not transparent about what they record but they strive to remove all privacy at the personal level. If institutions control all the ledgers how do we know that they won’t manipulate ledgers in their favor. If they record the ledgers they also record the history. Some may think this no big deal but it is actually a really big deal. Most transactions involve money, money most times is a direct compensation for our labor which is usually expressed in units of time and energy. This means if someone could alter your bank accounts they can effectively rob you of time and energy already spent. This still may not seem like a big deal, but imagine working for years straight and you trusted that the bank was keeping good record of your money and one day you go to the bank and half of it is missing. In the short term it will seem as if only the money is missing but when you zoom out you can quickly see your time and energy is being robbed from you. Or how about having a fully funded bank account that the bank can lock you out of at will. This may not seem like an accounting function or a ledger function but it really is the ledger states who is owed what and the balance of all accounts. This opens up a can worms that we call fractional reserve banking. Banks maintain the right to loan out 90% of the money that customers deposit. We as a people don’t get the right to audit the banks nor do we get to vote on their policies and procedures. He who has the power to write the ledgers of society has the power to write history. Take a look at government issued currencies. Whenever the government hits a debt ceiling they simply re-write the ledgers to increase the countries money supply. This is once again a theft against the people being that we have to work to earn our money and we can’t simply re-write our bank ledgers to reflect more money. Until Bitcoin came about we had no distributed ledgers that anyone in the world could see at anytime. Bitcoin has so many liberating use cases this only a micro example of reasons to use the Bitcoin network. The goal is to learn more about bitcoin and to help my family and friends gain a better understanding. Stay tuned we will continue to explore the Bitcoin network. Check out some of the links below.