SILICON VALLEY, CA. – The future of money has arrived. Electrons on a computer screen can be sent instantaneously around the world to transmit funds – or even to raid currencies as transpired in the infamous 1997 “Asian Financial Meltdown.”
Here in Silicon Valley, the future is being invented, literally, day by day. Advances in robotics, artificial intelligence, full-stack engineering, smart materials, “Big Data” and biotechnology are occurring almost exponentially. South African Elon Musk of Tesla fame claims we’re “living in a computer simulation.” Advances in quantum physics point to a “multiverse.” Advances in space colonization – provided by privatization – may loom on the horizon of humanity’s greatest aspirations.
How will these things be financed, bought, sold and paid for?
Enter bitcoin, the digital payment system ready to revolutionize transnational finance. Back in 2008 and 2009, a group known only as “Satoshi Nakamoto” revealed the invention to the public though a white paper and then open-source software. Using peer-to-peer transactions free of any “middleman,” bitcoin verifies exchanges through network “nodes” that are recorded in an electronic ledger known as the “block chain.” There is no “central bank” per se in regard to the Federal Reserve Bank in the U.S. – or regional affiliates like the Federal Reserve branch in St. Louis, Missouri.
Is bitcoin here to stay, and is it a natural progression from ancient barter to fiat money and digital currencies?
In Ancient Rome, salt or opium could make a trader rich. Salt was used to preserve food. Spices came from India and Indonesia. Slaves, cattle, concubines, gems and even seashells were used as stores of wealth that might have dazzled even the fabled Queen of Sheba. Diamond cutters honed their craft over the centuries. Credit cards might have seemed strange at first to postmodern Americans, but no stranger than the fabled “Tulip Bubble” that gripped the Netherlands so long ago.
Consider the storied Knights Templar. They invented modern financial systems – or at least their precursors. Consider that during the Crusades, one could make a deposit at a bank in London, then travel with the receipt to the Holy Land and make a withdrawal in Jerusalem. With their funds from operating Saint Mary’s Hospital, as well as the “discovery” of gauze bandages in the appropriately named “Gaza,” the Knights Templar were able to purchase the island of Cyprus as a swath of Bavaria.
Bitcoin news and a plethora of evolving ancillary digital currency issues are both astonishing and exciting. Truly, we have entered a whole new era in globalization. Where will it lead the U.S., the G-20 nations and the world at large?
Hollywood has produced films like “Looper,” starring Bruce Willis predicting that China will one day boast of issuing the world’s major reserve currency. With the “New Silk Road, “One Belt, One Road” and emerging alternatives to the IMF and World Bank, China beckons the world as an economic juggernaut.
Napoleon once said, “Let China sleep, for when she awakes, let the nations tremble.” To what degree will China’s elites and middle class embrace the coming “cashless society”? Success for digital currencies in China might provide a “tipping point” for their ascension into mainstream transnational commerce.
There’s a saying: “As goes California, so goes the United States.” Soon we might be saying, “As goes China, so goes planet Earth.”
There are a several reservations first-time users of bitcoin might encounter. First, they might wonder how their “funds” will be spent and monitored. Without a central administrative authority, or the ability to hold actual notes in one’s hand, this is a legitimate concern. The answer is that the bitcoin software offers control mechanisms to keep the digital system functioning smoothly. When Mary Stuart Relfe published her scary, “When Your Money Fails” back in the early 1980s, she probably had no idea that within 40 years hence something as crafty and maverick as bitcoin would emerge. BCTs and XBTs could be the wave of the future.
Millions of Americans are already using credit and debit cards to a greater extent. Cold, hard cash is demonized and even seen as “sinister.” Of course, cash means freedom to a large extent. Cash could also embolden Colombian drug cartels to spread their wealth and influence around without regulation and oversight from state actors. In some parts of Colombia, cocaine is used as a currency all its own. Perhaps this is all a matter of perception – meaning the value of the artwork in the Vatican or a coca leaf in Bolivia is exactly what people are willing to pay for it.
As for how bitcoin works, this YouTube.com video offers an insightful look. Basically, the system calls for faith and trust while maintaining a level of anonymity. To begin, bitcoin “miners” will install the needed software on their computers. Personalized signatures from previous decades and generations appearing on checks and legal documents have been replaced with mathematical keys – which exist in cyberspace in the form of complex math problems used within the verification process. Miners or “mining pools” that solve these problems are then granted additional bitcoins.
Bitcoin virtual “wallets” are stored on a computer or similar data storage devices. Peer-to-peer transactions follow the model of solving the complex math problems to acquire new bitcoins. The verification process must (again, as noted) prove that the bitcoins in question are not being “doubly spent.”
As for where all of this will ultimately lead, who can say for sure?
There are more than 7 billion people on Earth. More than half live in mega-cities like Beijing, Seoul, Tokyo, Jakarta, Mumbai, Calcutta, Bangkok and other cities in Asia.
If bitcoin can crack into these mega-cities and become a staple of everyday commerce, then the dollars, pounds, euros and yen in your pocket might well turn into complicated mathematical formulas on your handheld devices.
Truly, the nerds sporting the pocket protectors have inherited the Earth. Need proof? Anyone can launch their way into the world of digital currency simply by clicking right here.