A friend set a challenge – a brief written motivation for bitcoin.
Bitcoin is the first fully decentralised value transfer mechanism. The current financial system is centralised with reliance on trusted intermediaries to complete all value transfers, which is problematic. We rely on central banks to protect the value of our currency, government to make efficient use of tax, and banks to look after savings and implement payments. While I do not suggest that these aforementioned institutions are evil, they don’t necessarily have people’s best interests at heart, particularly not poor, uneducated and less fortunate. Persistent monetary and fiscal expansion are the biggest and most misunderstood problems in the world today. Bitcoin won’t necessarily completely circumvent the intermediaries but I expect the competition will place pressure on their actions. Over time, society may appreciate the benefits of sounder forms of money and reject the current status quo, resulting in better outcomes for individuals.
The current system is also exclusionary when you consider the time, cost and process for a individuals without assets and financial histories to get a bank account or loan. This is not a technology issue – more people in Africa have phones than bank accounts. Bitcoin is open-source, accessible and traceable. Whether funds are allocated for the purchase of goods / services, taxes to government or a charitable donation, on the bitcoin network those funds can transmit directly to the recipient, reducing middle-man costs, corruption potential and increasing individual’s transaction independence. Individuals can set up a bank account in minutes and receive value/money without any application process, which is a real liberation of money!
The peer-2-peer (person to person) nature of blockchain cryptocurrency networks also offers great potential in the lending space. Since transactions are digitally recorded, a credit history can develop (no matter the size of transaction) allowing individuals and organisations who were previously perceived as less important to traditional financial institutions to seek funding in the global economy. Their digital credit history allows an appropriate interest rate to emerge, which is in stark contrast to the difficulty with traditional lending frameworks in time, cost and exclusivity.
Bitcoin and the cryptocurrency universe could result in a liberation of money. This is revolutionary and it is exciting.