Bitcoin Is A Many Splendored Thing

I have been studying bitcoin, other cryptocurrencies, and blockchain technology since December 2020. Over these months, I have come to realize that bitcoin is a many splendored thing, way beyond the full comprehension and understanding of any one individual.

So let me count the ways of its splendor to borrow a phrase from Elizabeth Barrett Browing’s famous poem, “How Do I Love Thee, Let Me Count the Ways.” But, first, the back story and a bit of context.

The Back Story

For those of you who have not kept up with the world of crypto, I will recap the story of bitcoin for you as briefly and as simply as I can.

The concepts of bitcoin and blockchain technology were presented in a beautifully written white paper in 2008 by an individual (or individuals) who called himself (or themselves) Satoshi Nakamoto. In the white paper, Mr. Nakamoto described a peer-to-peer payment system that would be a decentralized and secure distributed database (ledger) supported by computer nodes (bitcoin miners) located around the world. His payment system would not require a trusted third party to approve, authorize, or process transactions. He solved the double-spend problem inherent in payment systems and developed a cryptographic proof-of-work mechanism that would timestamp and validate transactions that would be included in each new block added to the blockchain.

The technology is more complicated than that description, but this will suffice as a bare-bones summary.

The Many Splendors Of Bitcoin

I have read six books about bitcoin and the world of money, and watched tens of YouTube videos as well. I came away from all that research and fact-finding with an overwhelming respect and regard for Mr. Nakamoto’s idea. The simplicity and beauty of its design rival anything I have read about over the years in physics, chemistry, mathematics, or applied science.

I believe bitcoin and blockchain technology are transformational in nature. These two ideas will have an impact on the economic and financial life of all of us that will supersede any technology that has gone before. I write that last sentence because bitcoin represents the soundest of money because of its scarcity.

The Genius Of Satoshi Nakamoto

Mr. Nakamoto, in his genius, limited the amount of bitcoin that would ever be created (mined): he set that limit at 21 million coins. That limit is “hardwired” in the bitcoin code and cannot be changed unless a significant plurality (say, 70%) of the miners could be persuaded of the value of such a change. From my vantage point that would be almost impossible to accomplish because such an action would contravene the very essence and purpose of bitcoin.

A Short Litany of Splendors

Let me close with a short litany of splendors that I have collected from my readings and other sources: Bitcoin is sound money and it is the only sound money that exists besides gold and silver coins. Bitcoin can be described as digital gold because of its scarcity. Bitcoin is also a deflationary store of value because of its scarcity. Bitcoin will facilitate a world of personal privacy. Bitcoin represents personal sovereignty for all of us. Bitcoin will level the playing field for all and bring to the unbanked world, access to decentralized financial services. Bitcoin is immutable and incorruptible, unlike all the fiat currencies that exist today, including the U.S. dollar. Bitcoin will eventually decentralize economic, financial, and political power in the world; this will be the greatest achievement of all.

Reference: This post is the Number #3 post for The Bitcoin Chronicles (Volume I, Number 3)