Crypto Uncategorized

How bitcoin is changing the definition of money, and the balance of power in the bargain

Money has long been a method of exercising control. While you may think of money as something which enables you to buy groceries and pay the rent on your house, in reality it is so much more, and so much less. To put it in the simplest words, the concept of money as it exists today, provides governments and authorities with the power to exercise control and maintain order over the masses.

And that folks, is the true purpose of all money. After all, haven’t you wondered why governments all over the world are so keen to ensure that money only flows from them, and that they are the only agency capable of publishing legal tender? What harm could it do, if a private company started pushing out banknotes that were also backed by a tangible asset – similar to how the government issues banknotes are backed by commodities like gold, or oil?

The answer to that question, and to the wider mystery of the authority’s massive disapproval of anyone apart from themselves publishing money, lies again in the actual purpose of money. What started out as a way for people to store their efforts, ingenuity, and time and so on has today become a way for the people in power to exercise their power. To put it in simple words, Money has become the primary modicum of exercising authority. The more money you have, the more power you are capable of leveraging. Which of course leaves the central government (as the source from which all money stems) at the top of the food chain for their respective countries.

But we seem to have strayed from the purpose of the article – which was bitcoin. The main reason why bitcoin is of so much interest to people, is the fact that it was the first currency or means of exchange, which was not answerable to any central authority, or government. Instead, in a totally novel move, the creators leveraged the concept of mining – setting up a way for introducing new bitcoins into the system, while also regulating the once which already existed, in a single masterstroke.

Again, the fact that there is no central authority regulating and minting new bitcoins, is what really separates it from normal currency – as opposed to the popularly held notion that Bitcoin is different and revolutionary because it is held online. Not true. The vast majority of the US dollar is also held online, however, that still leaves it regulated and controlled by the US government. Bitcoin on the other hand once it was created, has become a self-sustaining phenomenon to a very large extent.

So as things stand today, validating the authenticity of transactions taking place over the Bitcoin network and protecting it against external attacks in constituted as a valuable activity for the network as a whole. And folks who are contributing to this particular activity by lending the computing power of their desktops, or laptops, or mining farms, are the people who receive rewards in form of newly minted bitcoins.

So where does government come into the picture here? That’s right, nowhere! (Except when it tries to suppress and otherwise discourage the use of bitcoin and other cryptocurrencies) And that could well be the major reason behind the government’s denial of the currencies. After all, a world where people mine and spend their own money, is one where the government’s authority will be significantly reduced.

Of course, there is also the factor that these currencies are nigh untraceable and thus hold a special appeal to those with less than scrupulous intentions. What’s more, there is also the question of whether or not cryptocurrencies can arrive at the point where they are not quite so volatile. With that said though, the technology has the potential to make the world a much more open and free place to live in. Now whether that is something that the governments find themselves willing to trade in their monopoly over money for, remains to be seen.

A bibliophile and a business enthusiast.

mudit.m@thetechportal.in