Bitcoiners are once more galvanized and excited about a bright new future of internet money, something which has been derailed for three years, but with the ending of the scalability debate, will not be derailed any more.
Bitcoin, the idea, is to create a people’s currency. Something which can’t be printed away as bankers please, inflating our wealth in an endless loop of booms and busts that bankrupt our countries.
This idea is radical in many ways, but it isn’t something thought out at the fringes of society in a hand wavy way. It is instead the product of painstaking academic work with an insight reached by Frederich Hayek, who had the ear of Thatcher herself. He says:
“The past instability of the market economy is the consequence of the exclusion of the most important regulator of the market mechanism, money, from itself being regulated by the market process… only competition in a free market can take account of all the circumstances which ought to be taken account of.” Hayek, in the Denationalization of Money.
He argues that due to numerous lobbying constituencies governments or central banks would be unable to refrain from manipulating money to the benefit of one group or another, something that has unintended consequences, with it sometime printed too much, sometime too little, leading to a constant cycle of booms and destructive busts.
The idea is to take this manipulative ability away from any central body, and give it to the free market, which thus decides what money to value by choosing it in acceptance of payments for goods.
It is an idea many agree with, including senior politicians, because once it is expressed it is self-evident. Old bankers may not like it because it changes the way things work, things they were used to. And because they can’t quite comprehend it either after a lifetime of doing things one way.
But young bankers, so untainted by those assumptions of experience, should be able to create a far better and more equitable world of money, according to Hayek, which benefits them and benefits all.
The dominant currency in most nations currently is a centrally issued paper money of different forms with no backing of anything whatever but the economy that accepts it for payments.
There is no real competition between currencies within a nation. Therefore, money can be inflated away at will, with growth compensating for it, enriching the rich, while the poor get poorer.
That might even be acceptable in a crude level if our generation had not come to learn a now indisputable fact. Centrally planned economies fail. Thus, centrally planned money must fail. That’s what Hayek says in any event.
It must fail because two people in a room at the Bank of England can not possibly know how much money to print, or when to raise interest rates. They are walking blind despite pretending to analyse all sorts of estimated data.
Eventually, they will print too much, something they may have already done, or they will raise interest rates too high, or will be too slow to raise them, thus creating bubbles and potentially causing crashes.
Bubbles and busts are fundamentally destructive. Value that could have gone to productive use is instead misplaced in a bubble, denying the gains of production while fueling fictitious gains that are then wiped out in the bust.
There is some heard mentality to this process, but the mismanagement of money is probably a higher contributing factor which itself might fuel the herds direction, making this matter systemic and of human cause.
The only solution that has been proposed is the insight of Hayek. Instead of money being issued by one entity, it should be issued by many, with each competing in a free market, allowing the users of money to choose which one they would like to use as a means of exchange or store of value, which in most instances would likely be the same as the currency that can best keep value would probably be most accepted.
The only field trying to implement this solution is this space. Within it, bitcoin dominated for long because its supporters widely promoted its use as a currency. What is now called bitcoin, however, has changed. It is no longer useful as a means of exchange. Thus it has no underlying intellectual foundation.
But, there are two bitcoins. Bitcoin Cash began on January 3rd 2009 when Satoshi Nakamoto mined the genesis block which stated the British Chancellor was on the brink of a second bailout for banks.
Many are now arguing that since Bitcoin Cash adheres to the whitepaper and aims to be peer-to-peer electronic cash, it is the rightful heir to the name bitcoin.
That is mainly because its supporters promote its use as a currency, and because it is an excellent means of exchange, with instant and almost free transactions, across the globe, while retaining gold like qualities due to its scarcity.
The plan thus is back on the table to implement Hayek’s insight and give the world free market money, getting rid of these booms and busts while bringing back equity to finance.
It is an ambitious goal of creating a Bitcoin Cash economy in a virtuous cycle where customers, merchants, employees and suppliers all deal solely in Bitcoin Cash.
This would be the first time in centuries that people would finally have freedom to choose something that fundamentally affects every aspect of their life, the money they use.
What we are witnessing therefore in the recent market action where Bitcoin Cash is roaring while what is now called bitcoin is diving is this very free market process where the people, so being closest to events and multitudes in numbers thus having the most facts, decide out of their own free will and in their own best interest just what money they would like to use.
It is this market reaction to mismanagement or good management that ensures our money is the best it can possibly be. It is moreover this freedom that returns equity.
As we advance and grow in numbers with the aim of expanding beyond our planet and perhaps universe, our tools have to improve so that they can handle the complexity and multitude.
As such, Bitcoin Cash is an idea whose time has come, and its implementation will not be delayed, not by one second, as the millennial generation rises to improve the world.
Doing so consensually, incrementally, persuasively, by giving all a free choice. The choice to go to the moon, and beyond, in an economy run by the people, for the people, ruled by the free market alone.