Why Should You Care About Bitcoin

by Michael Terpin (excerpt from Chapter Three)

Bitcoin, now and at the very beginning of its existence, has several unique properties that should appeal to every investor and saver who cares enough to understand their alternatives:

– It’s decentralized. There are no leaders and no rules other than those committed to the Bitcoin code.

– It’s a hard asset with digital qualities.

– It has a fixed supply. No more than 21 million bitcoins can ever exist.

– It has a reliable monetary policy, set in code for 132 years.

Let’s review what makes Bitcoin a unique and important development in the history of technology, finance, and, ultimately, civilization.

·?????? Bitcoin was created by a pseudonymous founder, Satoshi Nakamoto, with a nine-page white paper that dropped amid the 2008 global financial crisis. Yet, it has become the best-performing asset class—by orders of magnitude— over gold, silver, stock markets, and real estate.

·?????? Bitcoin is the original blockchain. Satoshi coined the word, referring to an immutable, time-stamped series of blocks containing a digital ledger of transactions. These blocks can be traced back in sequence to the original “Genesis Block” from January 2009.

·?????? Bitcoin is an immutable blockchain that creates a sealed permanent set of records every ten minutes. Each record provides mathematical proof of the completed digital asset transfer between two parties without any third-party permission.

·?????? Bitcoin “mining” uses software that independently verifies these transactions in return for new bitcoin issued every ten minutes as a reward for those miners running the machines and expending electricity. The work of the miners confirms each transaction by hundreds of disinterested parties. It also cryptographically proves there has been no double spending of these assets and then inscribes a permanent transaction record. This is a fundamental economic breakthrough that would inevitably win a Nobel Prize if Satoshi were not anonymous.

“Cryptocurrency” is a term coined by Cypherpunk David Chaum, who remains a vibrant force in the sector, in 1983. Today, this term encompasses all public blockchains, from the pioneering Bitcoin to innovations like Ethereum’s smart contracts and multichain blockchains such as Cosmos. The cryptocurrency market has surged to over $2.2 trillion, with Bitcoin alone accounting for over half of this value. This represents a phenomenal leap from its humble beginnings, with the entire asset class valued at less than $1 million in 2010. Cryptocurrencies’ unprecedented growth and transformative potential signal a new era in finance and technology.

Like many new technologies, early adopters behave very differently than the “early majority,” as profiled in the technology business cycle books Crossing the Chasm and Inside the Tornado by author and iconic Silicon Valley venture capitalist Geoffrey Moore. In the case of Bitcoin, the earliest adopters were a mix of cryptographers and libertarian dreamers, some of them even adapting the moniker of anarcho-capitalists or, in the spirit of Tim May, crypto anarchists. Wei Dai felt that crypto anarchy was indeed a higher calling, very different than all forms of anarchy preceding it:

“Unlike the communities traditionally associated with the word ‘anarchy,’ in a crypto-anarchy, the government is not temporarily destroyed but permanently forbidden and permanently unnecessary. It’s a community where the threat of violence is impotent because violence is impossible?.?.?.?because its participants cannot be linked to their true names or physical locations.”

Many of today’s leaders in the Bitcoin ecosystem got their first introduction through libertarian outlets like Free Talk Radio and the Free State Project in New Hampshire. Satoshi Roundtable founder Bruce Fenton and Bitcoin Center NY founder Nick Spanos were avid supporters of libertarian presidential candidate Ron Paul. Spanos went as far as setting up live peer-to-peer bitcoin trading and a bitcoin ATM next door to the New York Stock Exchange, thumbing his nose at the most iconic symbol of Wall Street.

My first bitcoin public speaking appearance was at a New York City conference in July 2013, discussing whether the First Amendment protected digital currency as a form of free speech. The earliest Bitcoin advocates and acolytes had the advantage of fierce loyalty to the protocol, so many of them became fabulously rich without much investment by simply holding on to the hundreds or even thousands of bitcoins they received for a few pennies or dollars each. I am friends with many of these people, and they are happily retired in their thirties or forties, but they still support libertarian and freedom-centric causes. When the time comes for key decisions to be made about the future of Bitcoin in an environment where lobbyists and political donations matter, they will show up. At the recent Bitcoin 2024 conference in Nashville, leading presidential candidate Donald Trump delivered a keynote address showcasing his support for the bitcoin industry and held a private fundraiser and roundtable dinner that charged $833,600 per person. It sold out.