Bitcoin is in the news, it’s a peer validated crypto currency, meaning every bitcoin is a cryptographic key while its ownership history is validated by a peer to peer system of serial encryptions. All users of bitcoin participate in the validation of the pool of existing bitcoins, and as they do so new bitcoins are released into the pool (at an ever deminishing rate).
Bitcoins are unique tokens that can have only one owner at a time
You can wonder : What’s the value of this? This is an invalid question, unless it is asked of everyone alive around the world at the same time. The value of Bitcoin lies in it’s specific qualities. So far you have unique tokens you can own, of which there is a limited amount. They can not be forged, because they are mathematically unique things. You can’t make up a whole number between 5 and 6, it simply doesn’t exist.
Making and validating Bitcoins is a pulluting activity, and therefore undesirable The liberating aspects of it are however interesting and potentially important
As a currency it is superior to all other currencies, because it is hyperliquid. It can change hands in a millisecond, it can travel around the world and be stored indefinitely are verly low cost. It fulfills the role of store of trust, meaning that if two parties agree to respect Bitcoin, doing more for more Bitcoin and less for less, then this creates a communication between these parties, their behaviour will be coordinated, and there is very little chance that coordination fails or is disturbed because of the use of Bitcoin.
Bitcoins can be used to symbolize effort, so that groups of people can exchange efforts towards a common goal
Bitcoins do have a drawback in that the integrity of the bitcoin transactions requires all participants to store a backup of them, encrypted, and do calculations and updates. The history of all Bitcoin transactions is stored peer to peer in the bitcoin system. This requires a lot of energy and infrastructure, and of course a functioning hardware market, internet etc. Software used to move and exchange bitcoins is also a vulnerability. So in that sense you could say the coins are like little birds traded around a catmarket as currency. It’s a vulnerable system because it’s substrate can devour it. Not the coins itself, but the systems set up to use them.
Bitcoin exists necessarily in an environment that can destroy its integrity
Bitcoin’s primary authority is mathematics, a belief system if you will, but one very much in tune with reality, unlike economics. But if the bitcoin trade system becomes compromised the coins lose their restricted ownership and will be abandoned. News of rogue coins, forked ownership chains etc will announce that hackers destroyed the system. We can wonder why this matters at all in the bigger scheme of things though.
Many people focus on the price of Bitcoin. This is the least relevant thing, but it is interesting because price information allows us to navigate towards higher monetary reserves. Price behaviour alone can be the engine behind trades, in that sense Bitcoins are like over the counter zombie stocks. The price they generate through trade can collapse any second, if no one traded that second. It doesn’t work like the US Dollar or Euro, who’s value is determined by their fossil fuel buying power. Everyone knows you can get around with a certain amount of Dollars or Euro’s (the so called carboncredit system). Nobody knows that about Bitcoins. Simply using them in daily life is no use because it becomes a floating derivative of other currencies. This will be resisted because banks have to make the other currencies work and will object to freeloaders. You can’t transfer a million USD around the globe in Bitcoins because the exchages have to actually administer the transfer through the banking system in parallel with the quick email containing the coins.
What Bitcoin is really good for is payment and coordination of effort in a restricted economic system. It makes no sense to think it will run the world, you can do that many other ways. There is no difficulty generating digital or analog unique tokens. The utility of a bitcoin is zero, so it has to derive it’s value from people being conditioned to respond to it, and that conditioning can not be achieved because bitcoin has no linked incentive (unlike Dollars and Euro’s with their fossil fuel incentive). It can not be used to seduce (except through some external conditioning proces), but it can be used to deny.
A reliable value base for Bitcoin
The key to consolidating value for Bitcoin is for IT professionals to demand they wages be payed in Bitcoin. No digital work will be done unless it is payed for in Bitcoin. Why IT professionals? Because that is the only group with the skills to manage their currency. Chicken farmers need a currency that they don’t have to worry about, gold, silver, feedstock, or USD. They would be hacked pennyless and not understand what happened if they used Bitcoin. Hackers do, and as such bitcoins create an incentive to do good IT work, it creates a pecking order in that sector. At the same time spending Bitcoins can be easy because the recipients (traders or otherwise) know it has value to almost every company on the planet.
IT professionals will know and want to know how to protect the coins, they can manage the infrastructure, and they will not tolerate fraud amongst themselves because their currency is as good to them as gold is to chicken farmers. Because of the need for Bitcoins to pay IT workers there will be a real exchange rate in other currencies that will generate reliable prices. Of course other cryptocurrencies exist as well and the real opportunity they offer is for skill groups to band together and choose a token of exchange nobody else can touch. In that sense these currencies are the way to free yourself from interference by financial institutions.
It makes sense to denote effort in certain skillhours in a seperate currency (this is the idea behind our project tubecoin.com and our piece Euro,Auro,Joule). That makes it’s trade much easier. The beauty of using Bitcoin this way is that it spreads the value of IT work (in this case) far and wide because it creates fundamental demand.