Bitcoin is 11 years old.
It’s been tested for over a decade across every dimension conceivable.
From security threats, government scrutiny, hard forks, miner collusion, to nefarious nation states, and it’s been resilient to all those threats and challenges.
Resilience is valuable in a world of information network security.
Especially when the network is worth hundreds of billions of dollars.
With exchange hacks, 51% attacks and a whole host of other fiendish ways of attack growing by the day, is Bitcoin really safe out there?
Perhaps this quote captures the phenomenon perfectly.
“Financial institutions make people feel safe by hiding behind layers of complexity. Bitcoin brings risk front and center and brags about it on the internet.” Elaine Ou, Global Financial Access.
U.S. Congressman Patrick McHenry sums this up, “The world that Satoshi Nakamoto envisioned is an unstoppable force. We should not attempt to deter this innovation … those who have tried have already failed.”
If that’s not enough to calm your fears. China, the all-powerful authoritarian state has banned Bitcoin for like the 37th time *sarcasm*. Each time they grew even more desperate.
Eventually, they only succeeded in pushing Bitcoin activity underground.
- LocalBitcoins’ volume in China spiked by at least 7x after 3 of China’s largest bitcoin exchanges were banned.
- Paxful’s volume in China also noticeably spiked. Over a few months, it increased at least 6x after the ban.
When the need is great, it becomes the mother of innovation.
People will adapt and find ways to circumvent the bans. Take the never-ending war on drugs as a prime example.
Xi Jinping, President of the People’s Republic of China finally announced on the 26th October 2019; that they should seize the opportunity to take the lead in the tokenization of money using the technology made famous by Bitcoin.
What if you could tell the future of money simply by understanding this moment right here?
And what if this sparks off a global reserve currency race? (Here’s why the U.S. Dollar is ill-suited)
Remember what happened during the space race.
Competition pushed nations to the frontier of human evolution.
This idea of free monetary competition is infectious. It’s beneficial for the people.
What’s more, the need is dire. Especially for the disadvantaged.
Every day millions in Chile, Hong Kong, Paris, Venezuela, Lebanon, Argentina, India, Russia, Syria, Catalan, Egypt, Iraq, Chile, Ecuador are protesting for better lives.
People can go on protesting, but it would never hit them where it hurts.
What people haven’t caught on yet is that they can now opt-out of their financial system without being held hostage by the state they’re protesting against.
I live in Finland and Im ok with the current banking system here.
My parents in Lebanon havent had access to their bank for 10 days. e.g. They cant send money abroad.
Not until today Ive realized the power of bitcoin. Let bitcoin spread like virus and unemploy the legal crooks.
— Elie Kopaly (@ElieKopaly) October 27, 2019
It really makes you wonder who the government really protects.
Its people or the banks.
Remember the last time you got your money stolen?
But it’s happened to all of us.
Every citizen has had their wealth stolen already.
Stolen from right under our very noses. And I’m not just talking about the Kleptocrats.
Governments have grown used to enjoying a monopoly over currency that they could depreciate at will.
Central Banks can inject hundreds of billions of dollars into the market with a pull of the lever.
Stealing the purchasing power away from the people is like stealing candy from a baby.
Since there’s no real resistance, they do it over and over again until there’s nothing left for them to milk.
Why are everyday goods getting more expensive?
Why is the $50,000 saved for your college education now $100,000 in only a few years?
Why can’t millennial’s afford a home anymore?
Is the “dollar” still a useful gauge to preserve and protect ones hard-earned wealth?
In Hong Kong, you can hear screams in the streets yelling, “7K for a house like a cell and you really think we’re afraid of jail?”
HK$7,000 is the monthly rent an individual can expect to pay for a flat the size of a prison cell. That’s more than half the monthly salary for most university graduates.
What is a blockchain without bitcoins?
Blockchain without bitcoins is Barcelona without Messi. Leonardo da Vinci without the Mona Lisa; Einstein without the equation E=MC2 – only worse. For blockchains ain’t worth shit without an open permission-less network that’s secured by a deflationary incentive mechanism.
Turns out that a blockchain network is only important when the participants hold a certain key attached to value.
That value are the bitcoins themselves. Determined by the laws of supply and demand.
Bitcoin has been running 24/7, not just the trading aspect, but the maintenance of a global decentralized financial system that cannot be shut down by anyone.
This invention had to go unnoticed for the first few years to allow its decentralized roots to take hold before gaining public attention.
Satoshi knew that the creation of money is a monopoly of the State. It challenges the government and the central bank head-on.
Creating a centralized system is to shoulder all of the risk in one place. A corporation is not fast enough.
It will get shut down. Like Libra.
Attacked. Co-opted. Coerced. Distorted. Censored.
Sharing the risk with participants of the system — spreads the risk among individuals who are incentivised (with bitcoins) to accept the personal responsibility of securing their own money.
Bitcoin’s Public-key cryptography allows effective military grade encryption technology for the masses.
You and I can now secure our own money without needing to trust ANYONE.
It’s hard to believe that someone invented this and gave it to the world for free.
When you start to think about it, It’s incredible – could a company even develop something like this?
Ask any entrepreneur or visionary, what would it take to build this? and the answer you get is…
How much did it cost to put a man on the moon?
How much did it cost to put a supercomputer in every pocket?
My dad (who lives in China) told me that there is a company called “Blockchain Group” listed on the Hong Kong stock exchange and asked me if I knew about it.
Surprised, I looked it up—didn’t think it’d happen already!
…it’s a goddamn tea company that changed it’s name 😑😑😑
— Katherine Wu (@katherineykwu) October 28, 2019
Gold is $8.5 trillion purely as a store of value. You cannot transact gold on the internet.
Amazon, a centralized corporation that runs basically half the internet is worth a trillion dollars, they can censor and cut people off from using their services. They’re permission-based. Biased. Non-neutral.
How much would it cost then for an open, global, decentralized, neutral, frictionless payment system to touch the lives of every single human being on the planet unconditionally, to allow them basic access to financial services? A Universal Access to Basic Finance.
Then it begins to dawn on you that this invention could be worth hundreds of trillions of dollars.
Blockchain is really just a misrepresented view on Bitcoin. You have to dive down into the rabbit hole to understand how the game theory works. (Related: Is the blockchain overhyped?)
Bitcoin is Code
2/ Bitcoin is code. The US government cannot ban code 👊
(source: https://t.co/3LeQend7BG) pic.twitter.com/NHkkdcNff2
— Alex Krüger (@krugermacro) July 15, 2019
Code is law. And that has intrinsic value. People’s trust in a mathematical algorithm stems from the fact that machines do a far better job at enforcing the rules of the network more than humans ever can.
A fixed supply means nothing without the credibility to enforce it.
Anyone can simply copy bitcoin’s architecture and code base. Bitcoin is open source.
But what cannot be replicated is the way Bitcoin was conceived and introduced to the world.
Bitcoin was born through unique circumstances.
Back in 2009 when it was launched, nobody believed that an internet of money could work which is why it did.
The creation of it was pure. Focused on a public good rather than any agenda.
Think about it, if everyone actually believed from the start that challenging the monetary seigniorage was viable, and that the value of the tokens would skyrocket 1000 times, everybody would just bet on it.
What happens when too many people think its a sure bet? They become fools. To such an extent that buying stocks and real estate today is a sure thing.
You will never get ahead if you’re not already rich.
Owning bitcoins is one of the few asymmetric bets of a lifetime that everyone and anyone can participate in.
% of world using the Internet in 1995 = 0.4%
% of world using the Internet in 2019 = 58.8%
Bitcoin is to money what the Internet is to information.
% of world using Bitcoin in 2019 = 0.4%
If you thought you are late to Bitcoin, think again.
— Misir Mahmudov (@misir_mahmudov) September 23, 2019
Don’t wait until Bitcoin becomes a sure thing.
When you see someone investing in a technology that every single person around them think is insane and then make 100 times return on their investments (ROI), the reason why they got that kind of ROI is because it hasn’t caught anyone’s attention yet.
Even if it did, they would be quick to judge the book by its cover. It would require multiple waves of adoption to attract and retain the smarter money.
Not only that, with each new wave of adoption; multitudes of charlatans would have their hand at distorting and misleading the public about this new technology.
Just like every other ICO and altcoin that tries to copy Bitcoin’s blueprint and re-brand it in a little way with slick marketing gimmicks.
Fortunately, you cannot fake the same network effect. You can only do that by being the first-mover in your field.
Every Altcoin & cryptocurrency exchanges you see today has a central figure-head and a high degree of centralization. They don’t benefit from the same network effect.
They’re run by people with agendas, and agendas change over time.
Bitcoin is the only demilitarized zone where one party cannot deprive the other from their contributions.
Everyone can profit from it, none can corrupt it.
How to Kill Bitcoin
In 2013, China took steps to clamp down on Bitcoin trading.
In 2014, we saw the hack of the biggest Bitcoin exchange platform, Mt. Gox that was handling over 70% of all bitcoin transactions worldwide.
Prices when media declared bitcoin dead:
NY Mag: $105
Biz Insider: $182
USA Today: $208
NY Times: $208
Keep this in mind when reading all headlines.
— Rhythm (@Rhythmtrader) November 4, 2019
These were shock-waves that sent the value of bitcoin plummeting.
Yet, the believers in Bitcoin stayed on.
For people who see this as game-changing – the short to medium term price didn’t matter much.
And that’s why these pioneering investors in bitcoin were able to reap the rewards of today.
Bitcoin’s price is always headlines for speculators and the media, but it isn’t for the HODLERS and the true believers because they’ve developed a quasi-religious belief about the kind of technology they’re on to. The kind that is able to survive come what may.
Only the unfamiliar will frequently believe that Bitcoin is doomed. (Bitcoin had been pronounced dead 377 times)
However, let’s examine some potential issues that could hinder the adoption of Bitcoin.
1. Surveillance Tools
One of the ways governments often use is mass surveillance.
The U.S. government can’t stop people from holding ones and zeros on a device in their pocket — In 1995, a legal battle was won in the U.S. Supreme court that dictates that code or computer language is just another language and so it’s free speech.
But, they can start by implementing checkpoints on the on-ramps and off-ramps (exchanges) which on-board users into Bitcoin.
Know your customer (KYC) and Anti-money Laundering (AML) are tools for mass surveillance on entire populations.
Using these two laws, they can exert control over just about anyone. They can freeze assets across many jurisdictions without any due process IF they have any reason to believe tax evasion or money laundering is involved.
This becomes a non-issue if you’re not a criminal and you’re a HODLER.
2. Accredited Investors ONLY
Regulators could use volatility as a reason to restrict on-boarding users into Bitcoin, citing that it shouldn’t be sold to retail mom and pop investors for they do not know how to invest their money.
Investing well is a skill that everyone can and should learn.
Accreditation rules prevent learning and push people into a small set of “safe” assets, high-priced managers, and into lotteries / gambling.
Rules based on sophistication instead of net worth would lower inequality.
— Naval (@naval) August 5, 2019
Doing so would jeopardize many of these cryptocurrency exchanges that rely on retail for revenue and growth.
The rule of law suffers when you have too many laws.
Investing well is a skill that everyone should be able to learn. Regardless of net worth. It develops critical decision making skills around money management.
“Decision is a risk rooted in the courage of being free.” – Paul Tillich
By creating archaic accreditation rules, ordinary people are only subjected to a small set of “safe” assets and lotteries/gambling.
Don’t Let Volatility Get to You
I was there. People were losing their minds after the price dropped from $19,500 to $3,200. A few months later, we were at $14,000.
Remember, volatility cuts both ways. It’s a nascent market. That’s why we want to be in it for the long haul. It gives us the chance to take small stakes and magnify them dramatically.
To take advantage of market inefficiencies and the lack of understanding.
The key to profiting is staying disciplined with rational position sizing and dollar-cost averaging.
If you’re freaking out, it means you either do not understand Bitcoin well enough or you might’ve put a bit too much into it to hold it for 5 to 10 years.
Take a long breath and relax. Don’t get too caught up in day-to-day moves. Let time do the heavy lifting. And when you see these crazy headlines, just laugh at them.
3. Executive Order to Ban Bitcoin
Countries like the U.S. could issue executive orders to ban their citizens/companies from transacting in Bitcoin.
President Donald Trump has done it with the Petro currency issued by the Government of Venezuela to circumvent sanctions by the U.S.
But this is a long shot as the executive order could easily be over-turned by congress and courts.
Governments such as the United States, rely on the dollar hegemony to project their power across the world. This power includes imposing sanctions on countries that don’t comply with their foreign policy.
Would they concede this key competitive advantage?
In 1933, President Roosevelt banned the “hoarding of gold” with an executive order, under the authority of the Trading with the Enemy Act. Executive Order 6102.
If and that’s a big IF, the economy deteriorates and plunges into a dark oblivion. Unemployment rate reaches 25% like in the 1930s, that certainly could be a possibility.
If Bitcoin skyrockets and becomes the world’s safe haven after a financial collapse, it could be made a scapegoat citing it as the real reason for the implosion.
Nothing could be further from the truth!
HINT: The Truth Shall Set You Free.
4. Banks Avoiding Bitcoin Companies
This has somewhat been happening for years in many parts of the world as banks see Bitcoin as a direct threat to their monopoly of the financial system. They could pressure the government to impose the same regulations and laws to these companies making it practically impossible to function and compete.
Thanks for reaching out to us. Unfortunately, Wells Fargo does not allow transactions involving cryptocurrency. -Josh
— Ask Wells Fargo (@Ask_WellsFargo) July 12, 2019
Banks rely on their deep pockets for control and strong lobbying powers within the government.
It is therefore obvious that the bankers will not help facilitate the transition into a decentralize financial world that doesn’t require any middle man like themselves.
In fact, if you’re a bank customer in Wells Fargo, you’re not even allowed to use your own money to buy any bitcoins.
When your bank can dictate what you can or cannot spend on, there goes your freedom out of the window.
Are you sure that the money you saved in a bank is really your money?
5. Criticism of Bitcoin’s Energy Consumption
- “Bitcoin uses more electricity than all of Denmark!”
- “Bitcoin’s energy consumption is more than the entire Swiss nation!”
- “Bitcoin sucks up as much energy as 5 million U.S. households.”
kinda like how Motel 6’s slogan is “We’ll leave the light on for you” — No one ever says “That’s so wasteful!” We think, oh good, how convenient.
— Elaine 🐤🇮🇨 (@eiaine) October 10, 2018
While private energy consumption is a private matter and should be off-limits to public scrutiny, skeptics of Bitcoin like to point out this fact as a rallying point with armchair activists who don’t believe in private property.
They also don’t have much regard for economic liberty at all.
In April 2019, China’s central state planner included Bitcoin mining in a list of 450 wasteful and hazardous activities slated for elimination.
Being the epicenter of Bitcoin mining operations, China is making a huge mistake if indeed the proposed ban takes effect.
Money flows to wherever it’s treated best. And ever since they made that resolution, these miners are already planning to move out of the country and into jurisdictions that protect their economic liberty.
Mining makes “Hacking” Bitcoin not quite as straightforward as you may think.
Once you understand the game theoretic properties that Satoshi Nakamoto employed within the network, you will quickly realize that Bitcoin works because of its bare bones simplicity in using vast amounts of processing power that does nothing but ensure the safety of the design.
Once Bitcoin becomes the global standard of value, China will quickly realize their mistake.
This is playing out exactly to the game theory playbook. In the long run, governments that embrace this new standard will ultimately attract the best talents that bitcoin can buy.
Don’t make the mistake of discounting or dismissing a technology that liberates individuals at the expense of nation states.
Could Bitcoin be Banned?
It’s extremely unlikely that Bitcoin gets banned in developed countries.
WOW 😲 BITCOIN IS LEGALLY PROTECTED IN CHINA
Today the first property dispute case on Bitcoin finalized trial in a local Chinese court. The court confirmed the “virtual property” attribute of Bitcoin, recognized it as a virtual property with valuehttps://t.co/W8ZeqLCYge
— Dovey 以德服人 Wan 🗝 🦖 (@DoveyWan) July 18, 2019
The U.S. government cannot ban code. The First Amendment protects citizens to the right of Freedom of Speech.
Code is speech.
And while China has clamped down on trading bitcoins, and is looking at closing down Bitcoin mining operations in its region citing energy wastage; they understand the importance of recognizing ones virtual property.
Earlier this year, a Chinese court in Hangzhou ruled in favor of a user who lost his funds in a now-defunct exchange.
This was a significant watershed moment for Bitcoin in China.
It says that “Bitcoin is Legal” in the region.
Court decisions normally sets precedence over future disputes.
Now when superpowers do that, they become the go-to metric for other nations to follow suit.
Besides these nations have bigger fish to fry. They are not going to worry about Bitcoin until its too late.
You will however see bans in certain countries. These are normally countries where the rule of law is weak and that their ability to actually enforce those laws are weak too.
People in Venezuela for example have no choice but to break the law.
It’s a choice between feeding their family or dying.
Why are you afraid of the government. You’re only afraid if you have something to lose. A house? Stable Job? that’s because your country hasn’t descended into chaos yet!
Ask a Venezuelan, Chilean or Hongkongers if they’re afraid of the government banning bitcoin. No they’re afraid of the government for all of the other reasons and therefore they don’t give a damn whether their government says no, “you cannot own bitcoins“.
They were getting shot at in the streets anyway. So in countries like that, it’s better to have some bitcoins at the expense of breaking the law rather than to be obliged by the law.
We’ve only just begun…
In the world of Bitcoin, there’s so much more to delve into. That’s why I created The Zodiac Collection, that tells the story of Bitcoin and the cryptocurrency revolution from every angle you can dream up.
There’s a lot of exciting stuff to read — I’ve selected a few of the stories, to start with, below.
To read a curated list of the most important news stories, subscribe for FREE. It will be everything you need to know, in your inbox. No brainer 🙂
I certainly don’t want to overload your brain with the library of Bitcoin resources we have here.
Here are some special picks:
- How to Get Rich Without Trading Bitcoin (or renting out your time)
- 3 Bitcoin Wallets That Are Iron-Clad, Ultra-secure and Affordable
- How Satoshi Nakamoto Used the 1950’s Game Theory to Design a $100 Trillion System
- How to Buy Bitcoin At Discount
- How do I Buy Bitcoin (BTC) on Binance w/ My Credit Card?
- 7 of the Fastest Ways to Buy Bitcoin (BTC) Today!
- Buy Bitcoin With Paypal Instantly on these sites (Explained Step-by-step)
- Bitcoin vs. PayPal & Banking – Why One is Dying a Slow Death