Bitcoin and Blockchain – Blueprint for a new “Monetary Paradigm”
By Wes Heald
When I entered into this space a few years ago, no one had heard of the term ‘Bitcoin’ or ‘Blockchain’.
It was a fringe and ambiguous idea so far-fetched that it created a puzzled reaction followed by ambivalence in almost everyone exposed to the narrative.
“Bitcoin, what’s that?” “Is that supposed to be a real thing?”
I found it simultaneously fascinating and cumbersome talk about it with others. Delving into some minor technical aspects on what it was and how it worked, it produced moderate interest in the audience and was ultimately misunderstood. “Sounds silly” was the reply as if everyone was sharing the same mind. Understandably They don’t ‘see’ it yet and it doesn’t seem so important. An amusing irony. I ask them if they use a debit card or credit card. They reply “Yes”. Do you know how it technically works? “No”. But you’re still using it right? “Well yes”. So it seems to provide value even though you don’t understand how it provides that value? “Yes”?
This same point can be said for Bitcoin. It will provide the same value to someone that works intimately with the tech as well as someone that hasn’t the faintest idea. I guess in all fairness anything is met with confusion and resistance when it’s so radically different from the status quo. Google was also a silly concept with a silly name.
Change is difficult, especially radical change and most especially, in my opinion, radical change concerning finance. Many of us would rather trust the proven corruption of a central bank than something unfamiliar.
Now, more and more people are shifting their perspective away from traditional financial tools because they realize it’s providing little benefit. It’s so much harder today for financial prosperity and even if one has any savings at all, it isn’t growing in value like say an R.R.S.P.
Of course an R.R.S.P. locks in your savings so that you can’t access your funds without incurring a penalty… But what if there was a way to grow your savings and have access all at the same time?
Since the beginning 2014, the market capitalization of all cryptocurrency(yes there’s more than just Bitcoin)has gone from a few million dollars to almost 550 billion at the time of this article. Think on this for a moment.. No financial asset has ever appeared and commanded such a market share so quickly.
Why did Bitcoin and currencies like it start out as a fringe idea and develop into a multi-billion dollar tour de force? It’s quite simple. The time has come for the decentralization.
Decentralization of not just money but ‘everything’ in our society. Decentralization is the sound bite synonymous with monetary freedom, power and total sovereignty for and by the people. A new system for a new paradigm to take over from the failing centralized model that has ruled for so very long. Now anyone can become their own bank, create an incredible savings that will grow exponentially and ride the technological wave that has become bigger than the first years when the internet was first introduced. It’s a phenomenon that comes once in a lifetime.
Leaders in the fields of technology such as Microsoft, Intel and many others understand Blockchain and understand why other tech and financial industries plan to use existing Blockchain technology or create Blockchain systems for themselves. They understand why it’s revolutionary! But why is it?
Many of us share a belief that the reason banks were so necessary up until now is that they possessed a complex ledger system for financial transactions. They developed a system that could record and store those transactions between two parties. This was essential in the world of commerce as some kind of system was needed to keep track of everyone’s details.
Now for the first time ever that system has been automated without the need of banks or any third party interference whatsoever. That automated ledger is called Blockchain.
The first Blockchain was released in 2009 and it was used as a method for transferring any amount of money from point A to point B. That Blockchain was called Bitcoin. What is Bitcoin? The short answer is money, a new kind of money. It is the first successful peer to peer electronic cash system. It resides solely within cyberspace and acts as an immutable intermediary between 2 parties so that they can act as their own bank. Yes, you and I and your uncle buck can act as their own bank now with a safe, secure method of transferring wealth by downloading a free digital wallet and sending funds to one another almost instantly for virtually nothing.
But how is this different from fiat currency? That’s the quintessence of this technology. It can’t be manipulated like a traditional centralized money system. Centralized means that there is a central point of authority or control that is used, which in the case of fiat currency is a bank. Bankers can print as much money as they see fit because they the power to print it. Conversely with Bitcoin, there can only ever be 21 million Bitcoins created in the world because of how its Blockchain data system has been created. Once this software was created and executed, it could not be changed. There is virtually no way to tamper(hack)Bitcoin’s system even though many hackers and security experts have tried to do so in the last 8 years. This is very important to know but why is it so secure?
This is where the power of a decentralized monetary model shows itself.
The Blockchain isn’t centrally controlled but rather shared by the participation of a wide group of members around the world. The members that work together to update the Blockchain ledger system are called ‘miners’. Miners are computer programmers and they maintain Bitcoin’s vast decentralized network worldwide . They reside all around the world and their job is to mine Bitcoins with powerful computer hardware and they work in tandem to constantly update Bitcoin’s Blockchain ledger system.
We know miners historically as people who dug up rock and dirt to find precious metal like gold or silver. With Bitcoin these miners are performing a type of digital mining to get Bitcoin out of the Blockchain. It currently takes approximately $1000 to mine a set of 12.5 Bitcoins and involves using computer hardware to solve complex mathematical algorithms. Once a problem is solved a set of Bitcoins is released to reward the miners. It is a reward for what is called proof of work.
Every time a set of Bitcoins are mined, it updates the entire Blockchain network around the world simultaneously.
This process of mining confirms transactions between everyone sharing Bitcoin with each other on the network. Because of this new type of distributed consensus, the advent of manipulation is virtually eliminated. The integrity and order of everyone’s transactions are maintained by advanced mathematics known as cryptography and not by popular opinion in a centralized model.
Now there are ones that will argue that Bitcoin can be manipulated and that is true when it comes to trading in the cryptocurrency marketplace. However, if one simply decides to treat their cryptocurrency as a store of value and leave it in their own private wallet they are safe from these risks. In almost ten years there has never been a real threat to safety in regards to Bitcoin technology itself. Here’s an example of a centralized service provider and how it ultimately failed.
This is the example of Napster.
Napster started out as a file sharing service much like Bitcoin except they were sharing media and not money. They had a centralized database which meant that when they went to share files from one computer to the next, the authorities could easily find the central server for them and shut it down. Bitcoin doesn’t have a single server or point of failure. Computers that run special software work around the world to maintain Bitcoin’s network. Bitcoin works so that everyone has their own wallet and delivers their payments over a distributed Network.
Now the only way to shut Bitcoin down is to shut everyone’s computer down which would be an impressive task. The only other measure would be to shut down the internet which is a possibility but that also shuts down the entire economy including the banks, because they also use this same internet. However, it is of value to know that government do have alternative possibilities for internet control whereby they create closed shell systems, firewalls or restricted access to their centralized internet. This would allow only certain areas of access to common people for use like in countries such as China or North Korea. Ahh but what about a decentralized internet? This is starting to look like a scene from Cloak and Dagger. Yes, it’s already been created and therein lies the beauty of a decentralized system. They are systems that can be applied to almost anything.
Anything centralized can be innovated into becoming decentralized. Money, contracts, insurance, cloud storage, rental equipment and in fact all these things mentioned are already here now and publicly traded.
Let that sink in for a minute.
From 2013 Bitcoin’s market capitalization was under 1 billion dollars. It rose to 7 billion in 2016. At the beginning of January 2017 it was almost 20 billion dollars and currently sits at almost
300 billion dollars today. There has never been a transfer of wealth like this to take place ever in the history of the world and it is happening because the people tired of control, usury and manipulation of their money which are things that centralization brings. They seek the leverage and freedom that decentralization brings. If you live in a world that is less industrialized perhaps you don’t have access to a bank or you’re subject to heavy governmental and banking restrictions in areas like Puerto Rico, Indonesia and Brazil.
Imagine now that all these people need is a computer or a phone and they can be their own bank and have access to their own money without oversight. Bitcoin doesn’t have any borders it doesn’t have restrictions or rules that Banks impose it doesn’t care who you are or where you are. Say you want to send $10,000 dollars halfway Around the World. With a bank you’re going to pay a lot
of banking fees for that transfer of money and it could take anywhere from a few days to two weeks or more to reach its destination. With the Bitcoin network everyone pays a small fee to send
Bitcoin and this fee goes toward maintenance of the network. These fees are much less than a traditional banking environment and with the advent of new upgrades taking effect soon like Segwit and the Lightning Network, it will easily establish Bitcoin as an optimum medium of exchange.
This changing of the guard has not been met with a warmest of welcome as the power of central banks has been the mainstay for centuries and is not used to competition. There have been many attempts to thwart Bitcoin along the way and because the technology can’t be directly attacked, attacks are made upon the ecosystem surrounding it. Public scrutiny, DDOS(denial of service)attacks that target online currency exchanges, relating Bitcoin to the underground black market known as ‘Silk Road’ in order to paint the picture that Bitcoin is used for nefarious purposes. Albeit true, certainly far removed from the bigger picture.
The obvious irony here is that fiat currency has been responsible for fueling these underground markets for decades. These are simply fear tactics used by a very nervous and established order.
In this authors opinion, this is not a technology these central banks want or are willing to accept. Sure there were times in history when commerce took place outside the banking environment such as barter and trade but these practices lacked utility for a more worldwide initiative. Now not only do the people have a choice to be in control of their finances without third party oversight but also have a means to connect around the world with others that share the same interests.
Banks are starting to develop their own cryptocurrencies simply due to its technological efficiency and thus cost effectiveness. Why not use Bitcoin? Again because of the inability to control it.
They need the technology it represents but they also need to steer its direction. This is the very reason they would like it to go away. But they can’t force it away, can’t stop it and can’t stop its rapid adoption. So now like it or not, there’s competition for them that’s here to stay. Not only to stay but in this authors opinion, to eventually take over from the banks as the new establishment of commerce. If true, a power shift like this hasn’t happened in centuries.
I believe the age old model of centralized systems are failing. The time has come to embrace a new way. Monopolies, the manipulation of currency and the printing of money out of thin
air causing hyperinflation doesn’t benefit anyone anymore. Countries are going bankrupt and with the looming debt crisis in North America the writing is most certainly on the wall.
Secure digital cryptography was birthed as a solution to a failing model and this is the very reason why we are seeing this incredible transfer of wealth from traditional money systems into a new cryptocurrency space. Like gold and silver, it is the ultimate hedge fund against economic uncertainty and unlike gold and silver, has transactional utility.
It is a time of great change in how we do business. Blockchain is the greatest innovation in technology and the greatest transfer of wealth the world has ever seen. I see the old system as a failing model making way for a new emerging one. Those that cling to the familiar will most certainly face many challenges. However, those willing to embrace a different way, the way of financial sovereignty, freedom and empowerment could very well set themselves up to be abundant beyond their wildest would be projections.
I have seen the power and potential of this new world and I welcome any and all to experience the same for themselves. I hope to see you there 🙂
G.W. Heald is a Blockchain asset educator and investment consultant residing in Kelowna, BC. He provides the most up to date information on the emerging financial and technological initiatives taking place worldwide.
Involved in Blockchain asset management and education since 2013, he started his cryptocurrency acquisition of Litecoin and Bitcoin and has created mining proposals and investment portfolios with currently 50+ cryptocurrencies personally managed as well as client side self directed.
Currently an advisor on a developing erc223 cryptocurrency asset being built for the Ethereum Virtual Machine, Mr. Heald’s motivation stems from a future vision where the sovereignty and financial freedom are prerequisits for all members of society.
Freedom is decentralized.
Contact firstname.lastname@example.org Telegram@gcentral
The thoughts presented in this article are the opinions of the author and do not constitute investment advice.