Give People Less Levers to Pull
One of the things worth mentioning about bitcoin, is how simple it is. There are very few ways that people can interact with the system to alter its course. Bitcoin was designed in such a way that the only real human interaction is done at the transaction level. This means that humans can use the system to send and receive transactions, and the computers handle the verification.
Like with any financial system, the question of supply needs to be addressed. In the case of bitcoin, that too is also handed over to the code to figure out. Bitcoin adheres to a strict set of rules for producing more bitcoin. Emphasizing on simplicity, bitcoin really only has two rules when it comes to the supply.
- Produce an amount of bitcoin every block
- Reduce the amount of bitcoin produced per block by half every 210,000 blocks
It’s that simple. These two rules actually have one huge side effect. The side effect is that there will never be more than 21 million bitcoin in existence. There is no lever within the bitcoin codebase that people can pull to alter the course of these rules. Because there are no levers to pull, bitcoin is extremely resistant to corruption. This is simultaneously how bitcoin combats inflation. Bitcoin’s supply is predictable, and predetermined. We will not wake up one day to find that the “federal bitcoin fund” has just printed 6 trillion more bitcoin.
I Trust Computers More Than People
People are subject to emotions that alter our logical faculties. Emotions like greed, envy, anger, and a host of others often cause us to make decisions against our best interests. Or, for our best interests, but against the best interests of the group. Other times, people just simply have a difficult time predicting what effect a present decision will have on the future. The latter is no fault of the individual as predicting future events is simply just difficult. This is all just to say that people don’t always do what they’re told. People don’t always adhere to the rules that they’re supposed to.
Math, and computers always do what they are told to do. They never fail at this. I have a much easier time trusting that bitcoin is going to adhere to its code, than say, the President of the United States. This was difficult for me to accept, because I want to believe that humans are good. I want to believe that one human has the best interests of the next.
Make Everyone Equal
Within the bitcoin network, everyone is equal. There are no elevated roles of superiority. In terms of hierarchy, there is none. This is by design. One way to limit corruption, is to remove any elevated position from the system in general. Bitcoin does this so that there is no central point of failure. Centralization is vulnerability.
Bitcoin is egalitarian, whereas our current financial system was built as a hierarchy. There are elevated privileges all over the place. We have bank executives and the Chairman of the Federal Reserve at the top. There are bank managers and tellers at the bottom. Each with their own vulnerabilities and potential to be corrupted. Our current system works like this. If Jeff Bezos and myself walk into a bank right now, we’re going to get different levels of service. Bitcoin does not have the ability to look at the race, social status, or financial wellbeing of its users. It doesn’t even really know about humans. Bitcoin does one thing and one thing only. It tracks where the bitcoin is.
Investing in Programmable Systems of Money
Bitcoin grants unbiased service to everyone that adheres to the rules. This is precisely how a financial system should work. Our system of money is supposed to be a mutually shared belief system that works for everyone. If components of the system are built in such a way that hinders my ability to use it, then I have little reason to believe in it. We see this scenario playing out on the world stage right now. People’s trust and belief in money is being reduced as financial inequality increases.
I think it is unlikely that bitcoin will be used, or accepted by governments anytime in the near future. However, I think that governments could learn a thing or two from cryptocurrencies. It would be useful for governments to observe the egalitarian nature of cryptocurrencies such as bitcoin. The amount of influence any human has over the entire system should be a nexus point of attention. As it pertains to finance, we should move to a system governed by code. People are going to have their emotions of greed and envy, and we should let them have those emotions. What we shouldn’t do is let anyone, no matter how pure their intentions, take the reins of money. When it comes to governance and control, I trust computers more than people.