One thing often held against cryptocurrency is that it doesn’t allow reversibility of payments. Better put big commission on the seller shoulders and then run back to Paypal or your credit card company if something goes awry.
This kind of reasoning misses entirely the point.
The point being that a non reversible payment is a payment instrument for the free, intelligent and grown man, not a toy for kids spraying around fake money.
Take Bitcoin for example. You cannot print it out of thin air. It’s fucking scarce. Then it has some really peculiar properties. And, even if these are not widely understood, these properties make it highly valuable. Let’s forget for one sec all the techno jargon bullshit. Bitcoin is fucking political. Bitcoin allows you to keep your money out of the reach of government. Can you believe this?
A friend of mine says money is time. Time spent working, time spent creating value for other human beings, time stored for future use in the form of things and services you can buy against it. Money earned is freedom.
But that’s unpleasant to the mass herders. To the people living off the modern serfs. Think about it. What would the shepherd think of a sheep that could store its wool in an unaccessible cryptosphere?
Your beloved dollar is out of your control, it’s in the hands of the government who can inflate it, reflate it, who can reward with it one class of people and punish another. It can tax it, track it, seize it, freeze it. Imposing its will over banking institutions it can forbid certain trades, goods and services severely impairing the freedom of the people.
All of these government powers rest on one single thing: third party money processing. When Bitcoin removed that inherent feature of modern money management a whole new era began.
But more and highly valuable properties emerged from the Bitcoin network. The first is the creation of trust networks and communities centered around this trust networks. These are now small villages living in the cyberspace.
Let’s look at them.
When you handle a non refundable payment system the first problem you have to solve is: how do I trust my counterpart? Ho do I make sure that he will deliver the product I bought or pay back the loan he asked for?
Of course you have to start small. Trading with people you know and trust in real life. Building over these actual trades and relationships you build trust. You actually mint trust through a proof of work. Does it sound familiar?
But then, every member of the small community carries relationships and trades outside the original community and, in doing so, he increases the number of trusted members of the community, or the number of nodes of the network. Does it sound familiar?
So, if I (A) know and trust one node (B) I can safely extend trust to the unknown node (C) trusted by the node I know.
I do it all the time, buying things over the Internet from people I do not know but who are known by friends of mine. I’ve never been scammed once on these trades. Do I need a chargeback service to do this, or a trade regulation or a court of law?
No. That’s exactly the point.
Of course this kind of trade is smaller, slower and more burdensome than trade conducted by traditional means. But, despite appearance, I hold this model as superior compared to the traditional, centralized model.
Its advantages are as follows:
- lack of a centralized point of failure;
- lack of expensive support systems (political body to pass the rules of law, police enforcement of those law, courts to hear cases on alleged law infringements and so on).
If you have an eye for things like that you can see the Internet architecture and the Bitcoin network structure being duplicated in social formations.
This new way to organize human relationships I see as a great advancement. And why so?
Because the current system is on the verge of collapse. This model has failed economically, politically and socially. The economic overheating brought about by fiat money systems and credit expansion burned natural resources, created productive overcapacity, perverted air, water and food quality. All these evils can be traced back to money manipulation one way or the other.
Cryptocurrency systems are the infrastructure of the future. And they are gonna prevail in the long run simply because they will be the last thing standing in the wake of the impending global collapse.
But let’s get back to the small communities that spin around the founding members. The longer they persist, the bigger they grow. They are porous and overlap with other communities. These communities can then merge or simply find a trade agreement. But all these relationships are not inscribed in some dead treaty with the impossible pretense to set a rule for the time being, these relationships are live, mutable and adaptive. They better suit reality. Pretending to solve all cases with a body of rules is just the present day madness. Anything is in flux and will ever be. So, this new model fits reality and doesn’t try to mold reality into a fixed form. Therefore the decentralized model doesn’t bring about distortions as the centralized model does.
So, another emerging property of cryptocurrency systems is to build information channels between nodes of the network and to create communities around these network. The web of trust and knowledge aggregates are the final product of this kind of structure.
By throwing away the political system this new model guarantees that only strict adherence to reality can bring success.
I’ll try to explain this in the next posts.
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