-Bitcoin can reduce administrative bloat by making the ledger public, eliminating the need for much of the work needed to verify and audit wealth transfers.
-Bitcoin can cheaply transfer large sums of wealth across the globe and can potentially work like a treasury bond, delivering higher yield returns.
-Bitcoin can increasingly function as a secure store of wealth or even as a savings account, as its market capitalization grows and its volatility decreases, potentially making gold and treasury bonds obsolete.
The rise of Bitcoin has been met with both disapproval and adoration. On one hand, the currency has been used by criminals to facilitate their illegal activities, and thus is seen as a tool of the unscrupulous. On the other, it has the potential to revolutionize the way we think of wealth, and its potential implications for the future of civilization are impossible to ignore.
To understand the significance of Bitcoin, it is important to understand its core components. Bitcoin is a form of digital currency, meaning it exists only in the digital space, and does not have physical form. It is powered by a public ledger, which is an online database that keeps track of all transactions. This ledger is maintained by a network of computers, known as miners, which are responsible for verifying the legitimacy of each transaction.
The use of this ledger makes Bitcoin incredibly secure. It is virtually impossible to alter or manipulate the ledger, as the data contained within it is replicated across the network of miners. What this means is that Bitcoin is virtually indestructible, as it is impossible to tamper with the records contained within it.
The other big advantage of Bitcoin is its ability to reduce administrative bloat. By making the ledger public, a great deal of work that is needed to verify and audit wealth transfers is eliminated. This is because all of the transactions are recorded in the ledger, making it easy to track the flow of funds. This can have a huge impact on the efficiency of the global financial system, leading to lower costs and increased efficiency.
The other major benefit of Bitcoin is its ability to cheaply transfer large sums of wealth across the globe. This is because there are no financial institutions involved, and the transaction fees associated with wire transfers and other forms of international money transfer are virtually eliminated. This can help to reduce financial disparities between countries and make it easier for individuals to access the capital they need in order to invest and grow their businesses.
Finally, Bitcoin can increasingly function as a secure store of wealth or even as a savings account. As its market capitalization grows and its volatility decreases, it can potentially become a viable alternative to gold and treasury bonds. This is because the real return on bonds is always lower than the nominal expectation, due to inflation, whereas Bitcoin is not prone to inflation.
In conclusion, while it is understandable why some may be wary of Bitcoin given its past, it is important to look at the potential contributions it can make to civilization. By reducing administrative bloat, cheaply transferring large sums of wealth across the globe, and increasingly functioning as a secure store of wealth or even as a savings account, Bitcoin has the potential to revolutionize the way we think about wealth. It is therefore important to consider the benefits it may bring to the global financial system, and its potential implications for the future of civilization.