Author: Maria Bustillos, Reporter and Editor at Popula.com
Translation: Eric, Foresight News
People often say that Bitcoin is an illusion, a collective illusion. It exists only as a digital entity in cyberspace, a mirage, as ephemeral as a soap bubble. Bitcoin is not backed by anything except the belief of the fools who buy it, and the belief of the even bigger fools who buy Bitcoin from those fools.
These are indeed facts.
But perhaps more difficult to grasp is that the dollar is also an illusion. It is primarily composed of numbers in cyberspace, and while it sometimes exists in the form of paper bills or coins, the dollars represented by those paper bills and coins are not real. The dollar is not backed by anything except the belief of the fools who accept it as a means of payment, and the belief of other fools who agree to accept it again as a means of payment. The main difference is that, at least for now, the illusion of the dollar is more widely and strongly recognized.
In fact, about 90% of our dollars are completely abstract; they do not exist in any tangible form. James Surowiecki reported in 2012 that "only about 10% of the U.S. money supply, roughly $1 trillion, exists in the form of paper cash and coins." (Now this is about $1.5 trillion, with a total supply of $13.7 trillion.) Nothing prevents our banking system from creating more dollars at a whim. As of October 2017, of the $13.7 trillion in the M2 money supply, $13.5 trillion was created after 1959; in other words, M2 has nearly expanded by 50 times.
The dollar is a so-called "fiat" currency. "Fiat" in Latin means "let it be," just as "fiat lux" means let there be light, and "fiat denarii" means let there be lira, bolivars, dollars, and rubles. Historically, the temptation for national leaders to create money has been almost irresistible. One obvious result of this reckless behavior is inflation: the purchasing power of a dollar from 1959 is now slightly less than 12 cents.
The creation of the Bitcoin blockchain was partly a response to this historical weakness. After the 21 millionth Bitcoin is mined around 2140, the system will no longer produce more Bitcoins.
Charlatans and thieves will always try to exploit the various structures set up to control or even account for any currency system (or any form of value storage). (See: Panama Papers, Bernard Madoff's $65 billion Ponzi scheme, the London Whale incident, the bankruptcy of Long-Term Capital Management and International Bank of Commerce, the Isabella Stewart Gardner Museum heist, the 2008 financial crisis, and the thefts of Mt. Gox, The DAO, and USDT). All means of value storage are targets; wealth can and will be created and lost using any exchange system, whether through legitimate or illegitimate means. However, despite sometimes appearing surprising, there are still enough people acting in good faith to prevent the currency system from completely collapsing.
There are some fundamental differences between cryptocurrencies and the dollar. For example, transactions made in the Bitcoin system are recorded in an immutable ledger that relies not on the authority of banks or governments, but on the power of a public computer network that anyone can theoretically join freely. Additionally, the supply of Bitcoin is ultimately fixed. Of course, the anonymity of cryptocurrencies may not be as foolproof as the anonymity of (unmarked) cash.
Money itself is an illusion, a collective illusion. You work hard to earn it, increase it, and save it, but even so, the only real thing about it is its symbolic power. From a certain perspective, this is indeed awe-inspiring.
Our shared understanding of the value of that green paper bill, Krugerrand, Ethereum, or pound coin is what matters most, and this shared understanding does not have a fixed meaning; it is in a state of eternal flux. The value of all currencies, all means of circulation, is unstable and abstract, even in the face of every attempt to ensure its value by setting fixed exchange rates with various assets or by setting interest rates to regulate its flow. Currency is merely a network of constantly changing agreements that represent the interests of the parties in the network, and it has always been a fragile thread in the web of human trust.
Think of the "capital flight" that refugees are forced to trade at great loss to cross borders; that is certainly money, but what does it have in common with your "invisible" salary, a string of numbers colliding in the void with another string of numbers in your bank account? Perhaps between your payday and your market day, the price of avocados or coffee will rise or fall. In natural disasters, people must suddenly be willing to pay exorbitant prices for a few gallons of clean water. So, what exactly is "the value of a dollar"?
All common arguments against cryptocurrencies (like Bitcoin) and the blockchain technology that supports them fail to consider this fact: the temporality and fragility of ordinary currency. If one believes that currency is real, solid, or backed by anything other than human trust in institutions, then one cannot understand cryptocurrency. The dollar is backed by "the full faith and credit of the United States." But what does that really mean?
It means that if you take a dollar to the U.S. Treasury and ask them to exchange it, they will give you a dollar. Or, if you prefer, they will give you four 25-cent coins.
Unfortunately, currency crises in unstable governments like Greece, Venezuela, and Spain have triggered a surge in cryptocurrencies. When the Cypriot government attempted to resolve the banking crisis in 2013 by forcibly writing down citizens' bank deposits by 7%, the price of Bitcoin skyrocketed; the likely reason is that many Southern Europeans holding euros and living under debt-laden governments inferred that Bitcoin might be a more reliable "safe haven" for funds than Cypriot banks. Spanish savers must have also wondered: will we be the next to fall?
In short, our existing financial institutions are riddled with flaws and always carry a tendency toward corruption; this has been the case long before the mysterious inventor of Bitcoin had the idea. Satoshi Nakamoto made it clear in the "genesis block" of Bitcoin: "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks." From the very beginning, Bitcoin was a politically motivated project with the explicit goal of creating a tamper-proof digital medium of exchange, thereby establishing a better alternative to the current banking system.
The theory behind all cryptocurrencies (including Bitcoin) is that records generated by distributed computer networks can be made tamper-proof, thus theoretically ensuring the soundness of currency better than governments can. So far, despite encountering some significant setbacks, the blockchain system established by Bitcoin has at least partially proven this theory. Since 2009, over a million Bitcoins have been stolen, but the underlying system on which Bitcoin is based, the distributed ledger, has remained stable and tamper-proof.
Many of the early thefts and frauds involving Bitcoin evoke the film "Blood Diamond," a story set in the 1920s about greed and corruption. Undoubtedly, the prospect of easy wealth is enough to drive people mad. However, note that the tendency for greed to incite evil and madness has not diminished the value of gold.
The real warning is that the Bitcoin ledger remains untampered not only because the system is decentralized, not only because of its clever encryption protections, but also because, in its wobbly infancy, a group of developers guided it with goodwill and reason. Without the unique "firefighter" Gavin Andresen calmly overseeing multiple early crises, Bitcoin might have already perished. Even today, the endless forks and growing pains continue to put the entire system through "stress tests." At present (representing personal opinion): core developers are increasingly losing credibility, and many believe they are only looking out for their own interests; this distrust could not only inflict long-term damage on the Bitcoin project but also jeopardize the future of blockchain technology as a whole.
Another issue is that early cryptocurrency speculators were easily "sheared," for two reasons:
It was difficult to create secure storage solutions at the time;
The system for safely transferring ordinary currency in and out of cryptocurrencies was not yet mature.
The 2014 theft of about 800,000 Bitcoins from the Mt. Gox exchange cast a shadow of "original sin" over the entire cryptocurrency ecosystem. The public mistakenly believed that "Bitcoin was hacked," but in reality, it was the largest exchange that was hacked, just as the Bangladesh central bank lost $63 million from its account at the New York Federal Reserve last year; the problem was with the channel, not the currency itself.
To say "Bitcoin is a scam" because someone committed fraud is as absurd as saying "the entire financial industry is a scam" because Jamie Dimon's company was involved in wrongdoing. Some say, "Bitcoin is used to buy and sell drugs on the dark web!" But most hundred-dollar bills have traces of cocaine on them; if you disdain hundred-dollar bills for that reason, please send me your excess. Can cash be disqualified for its legitimacy simply because it is used in crime? No. The truth is: money is inherently stained.
It won't be long before the blockchain system that currently secures Bitcoin transactions will morph and integrate into other systems, because its value is immeasurable. From Wall Street to Sand Hill Road, investors have already poured large sums of money, time, and effort into blockchain enterprises. As long as humans need to verify "whether something has happened," blockchain technology can provide an immutable answer through programming. No matter how many flaws the system released by Satoshi Nakamoto in 2009 has, he has proven that humans can create a foolproof transaction ledger without relying on external authorities like banks or governments. Once this step is taken, there is no turning back.
Any currency's efforts to maintain stability are always in a state of "imminent failure"; as long as there is an opportunity for manipulation or forgery of transactions, human nature dictates that there will always be someone wanting to cheat. Even the limited and fragile stability in developed countries requires countless principled individuals to remain vigilant and continuously patch things up, and there is never 100% certainty. The struggle to protect the illusion that "money is real" will never end, nor can it ever end.
免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。
