True North: Bitcoin's Peer-to-Peer Promise - #306
TL;DR 2 Billion people are counting on Bitcoin's medium of exchange capabilities beating the CBDCs and focus on peer-to-peer digital cash principles.
Reader,
There are 2.2 billion unbanked and underbanked people, globally.
Unbanked means they have no access to financial systems. Underbanked means they have access but lack the means to do so. These 2.2 billion people have to transact by alternative means. These 2.2 billion people make up 50% of the global adult population. Half of the adult working world has no means to transacts.
Granted, half of the unbanked and underbanked world resides in the Global South. But does that mean its of no less important to the Global North?
Bitcoin fixes this...
Or does it?
Satoshi set out to create a peer-to-peer electronic cash system. A way for anyone who used the Bitcoin network to be able to transact with each other. No middleman needed. The white paper is a technical document outlining how Bitcoin, and bitcoins, operate.
There's no humanitarian language in the white paper. There's no political ideology written in the protocol. There's no religious belief system mentioned in the abstract. It's not Libertarian or Socialist or anything of that nature.
Bitcoin is a hammer, not a hammer and sickle. It's just a tool, kids. Sorry.
The main idea behind Bitcoin
Bitcoin stands on the shoulders of giants. eGold, BitGold, B-Money, Digital Gold Currency, and Cypher Cash tried to solve an global problem. That problem was a private medium of exchange for the internet. Fashioned after the gold standard by way of limited supply and commodity backed. Decentralized digital gold backed by physical gold.
They wanted to make a new gold standard payment system. Private, secure, convenient and stable and in the hands of the market not the government.
Gold is accessible to everyone everywhere. Even the unbanked and under bank can access gold. Gold made for a great medium of exchange amongst people. Because it made a great medium of exchange, it became a unit of account and a way to store value.
Gold is simple
You don't need to be an MIT graduate to access and use gold. You hold it, you own it. You can trade it for other goods and services. You can measure things in ounces. You can save up for that thing you want with it. It's your property, pure and simple. Do with it what you want.
There might be a premium or spread pending on the trade, but there are no fees.
People didn't need to understand the mechanics or politics of mining or assaying. They didn't need to understand the intricacies of banking, they could custody it on their own at home. You didn't need a middleman to transact. It's not to say you didn't need security, violence was and is everywhere, but the system was simple.
That's what Bitcoin and the cryptocurrencies before it tried to create. A simple to use, easy to understand, payment system for the world.
“Let the users be users” - Satoshi
A global peer-to-peer electronic cash system. Sounds amazing! And it sounds like something the unbanked and underbanked could use.
Serving the unbanked and underbanked
Productive people make for a good and growing economy.
The economy is the voluntary interaction of individuals and businesses subjective preferences. It's driven by subjective preferences and shaped by individual action, innovation, and entrepreneurship. Human action shapes the economy.
The more participation from individuals, the more vibrant and healthier society flourishes.
If accepted as true, then it would be prudent to get the unbanked and underbanked involved. All they needed was access to a financial system.
My attempt
Back when I ran a business with a physical location, I understood this concept. There was a decent percentage of unbanked and underbanked individuals in our community. They needed a way to engage but didn't meet the requirements for traditional banking.
At first I thought going back to paying in gold and silver would work. The experiment failed immediately. The simple act of having to find someone to exchange it with to pay for goods, in this age, is cumbersome. I approached the concept of Bitcoin, much smoother and more promising.
I would meet with other business owners and the Chamber of Commerce to promote Bitcoin. I had a couple of meetings with our local officials and shared how Bitcoin could improve our city.
When I went to conferences, I would share how my business was adopting a Bitcoin standard. I would explain how it helped our business to grow, gain more access to talent, and faster payments to people. But, without fail, the subject of price always came into the picture.
No matter who it was, a business owner, the Chamber members, the Mayor's office... Price was all that mattered.
Our Chamber President got it though. He understood how transformative helping someone become a more productive individual was. But he, like myself and others, were in it alone.
Price is all that matters
It's frustrating to see how the current Bitcoin culture and climate has turned. We went from "freedom money" to "pump my bags, please." The idea of "Fuck the Banks" to "For the Banks" has been disappointing.
"Saylorism," is the notion that the world needs a store of value more than medium of exchange. Bitcoin is not meant for payments echoes loud in the twitter and nostr chambers. It's an abandonment of core Bitcoin tenants and discards the unbanked and underbanked.
Rather than making Bitcoin more accessible to the world, its become more complicated. Second layers has already shown and proven a path back to banking. The departure of certain services has cut individuals out from the market.
But instead of coming back to principles, many rally for more institutional adoption. Little do they know that as more institutions enter, it requires more regulation. But as long as the price goes up and to the right... The unbanked and underbanked can have fun staying poor.
From social media to meetups, all that seems to matter is price. If that's what the market is choosing, then that's what the market will be.
The coming solution
The 2.2 billion unbanked and underbanked working adults of the world need a simple solutions. They need a medium with which to exchange in a simple and straightforward manner. If the idea of Bitcoin is now about servicing those in the upper echelons of society; who will service the those in the trenches?
They could use "shitcoins." But fiat is a "shitcoin." What about other cryptocurrencies? Why would you want to promote "shitcoins?" They can always use custodial solutions. But then we're right back where we started from.
These are the mental gymnastics the ouroboros culture of Bitcoin finds itself in. And while the current culture flops about on the mat, CBDCs are on track to a solution. For everyone.
Whether you like it or not.
The current position
CBDCs are laser focused on payment solutions. The network effect of fiat gives CBDCs an incumbent position for effective onboarding. CBDCs are working on fast, cheap and stable payments. In some reports, CBDCs are looking at consumer level privacy at the protocol level. At the banking level, individuals transaction histories would be viewable, much like today. Know that all CBDCs are in experimental phases, with some closer to launch than others.
Imagine CBDCs to be successful. At launch, 75-80% of the global population would be on boarded over night.
As of 2023, it's estimated that around 455 million people worldwide use cryptocurrency. That's 6% of the global population. Of that, it's estimated that there are around 14 million to 15 million Bitcoin users worldwide. That's 0.2% of the world using Bitcoin.
Those are 13 to 1, CBDC to Bitcoin, odds.
What to do
If you don't like CBDC ethos, the short answer is to onboard as many people to Bitcoin and cryptocurrency now.
The long answer:
1 - Beat the competition
If CBDCs geared towards fast, cheap and stable payments, then Bitcoin must exceed it. Whatever the CBDC does, Bitcoin needs to do it better. Faster, cheaper, more reliable and more private. Not on the second layer, at the base. Regrettably, this is at the developer level, not the pleb. The most a pleb can do here is express their opinion either vocally or financially.
There are many individuals and groups working to make Bitcoin more user friendly. Support them.
2 - Push for massive adoption
When everyday people can use Bitcoin for their day to day, that is escape velocity. It would be political suicide for a politician to go against their constituents. If the vast majority of their constituents are regular users, they'd rethink on policy.
Not only that, but presume the success of a CBDC run. The infrastructure would already be in place and would take days to execute.
Again, you are facing 13 to 1 odds. On boarding as many people is critical for success. How you onboard is very important.
3 - NgU and Store of Value no longer work as onboarding narratives.
On a longer time frame, yes "Number Go Up" makes sense but when the cost to transaction is also up, the narrative breaks. Even when "priced in Bitcoin," if the fee to spend 0.001 BTC is also 0.0001 BTC, that's a 10% fee. Not even credit card companies are stupid enough to charge that much.
Store of Value also breaks when fiat prices slump. Like it or not, the majority of individuals still price goods in fiat. People see the value in housing and other useful goods. When prices fall, many people still stay in their homes and drive their cars. People shop more when items are on sale, but sell when a stock price falls. Gold and Bitcoin also fall victim because of how people see it.
Focus on peer-to-peer digital cash and other underlining principles. It's what made (and makes) Bitcoin great.
4 - Unplug
Too many people listen or watch podcasts instead of reading. It's good to get exposure to different ideas and takes, the issue with watching media is how it's produced. Talking heads need to show a confident and authoritative facade. Showing a bit of caution or wavering in their ideas doesn't make for good content. The problem with the facade is they could speak with authority while also being 100% wrong.
If audio and video platforms are bad, social media is worse. The more bombastic an individual, the more attention they garner. The more outlandish the better. Furthermore, the nature of social media is short attention spans. Many forgot topics of conversations from weeks or months ago, let alone years.
Ideas don't need to be long formatted. But they should be expressed in full.
If one is to take part in the online world, contribute to writing full ideas or generating quality memes.
5 - Criticize the coin
Belief that "the market has spoken" is absolute complacency.
The market never stops speaking. If you believe in the Austrian Economics school of economics, then this fact is true. The market is a dynamic play between individuals subjective values. The market is always looking for fair value and improvements.
Understanding this, it is important to provide constructive criticism. Think of it as user-feedback.
In conclusion
2.2 billion people need a medium of exchange. They need a medium of exchange they can self custody in a simple way. When that medium of exchange proves useful, its value becomes inevitable. Then it becomes what people store their value in.
Bitcoin can be that vehicle.
If it doesn't work for the least of us, it won't work for the best of us.
"Know what you own and know why you own it." - Peter Lynch
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