It's become really easy to get lost with all the volatility and headlines present in Bitcoin lately. The various altcoins are becoming more and more distracting, albeit ever-useless, and new entrants into the space continue to make us forget the real reason why we are here. Unfortunately, the people behind these schemes simply don't understand what a crucial time we are living through.
Bitcoin is a fix to the current corrupt system.
Traditionally, governments collect some percentage of goods and services produced and manufactured in their respective economies in the form of taxation (the inescapable evil which everybody hates). The state takes the taxes from productivity, then collects and reinvests this into the country. These investments could be anything, from infrastructure to the military. The original purpose and function of all governments (past and present) and taxation is to protect the people, to protect the country, and to build out the infrastructure. Ideally, there is an alignment of incentives where what is good for the people, is also good for the government. By reinvesting these tax receipts back into the economy, the country grows and is able to modernize its infrastructure, thus allowing everyone to become more productive.
Higher productivity coupled with reinvestment of tax revenue grows an economy and thus grows its overall tax base. A government can collect more taxes the more production grows. Organic growth of an economy disincentivizes the government from raising tax rates.
Today however, our economies are being heavily driven by central banks. Enter “money printer go BRRR!” Our economies are driven by excessive quantitative easing. Rather than funding government spending with tax revenue and keeping a balanced budget, central banks put up new money to buy government debt, thus allowing the government to spend beyond its means. The key issue with a central bank driven economy where the government can have its central bank simply print up new money is that at this point, the state no longer has to care about reinvesting tax revenue into the economy, the infrastructure or the education system in order to benefit the people and grow the tax base. The state no longer has to rely solely on taxes. It can simply utilize as much new money from the central bank as needed. Look at the current US federal budget for the fiscal year 2021 and ask yourself “HOW is this sustainable?”
Under this system, taxes don't go away. They go way up. Wealth and savings wither away through “2% annual inflation”. Under this central bank driven economy, the alignment of incentives between the government and the people is broken. With monetization, assets such as stocks and real estate go up in price over time. As a result, we get more wealth inequality, as those who own these assets become even wealthier. The people who don't own assets have no hedge against excessive money printing as their costs of living increase. Senseless killing and wars are financed by governments via their central banks. Wealth inequality drives social unrest. Instead of governments being honest with their citizenry, they rather lie and pit them against one another.
When I talk about Bitcoin, it's not about “number go up” or “have fun staying poor” (although these quips may be humorous) but about buying and holding bitcoin as an imperative. It's a way of fighting the central bank driven economy. Bitcoin is the one unique way by which we can protest against — and possibly overthrow — this system.
There is a lot of deep thought that has gone into and still flows into Bitcoin. How the Bitcoin network operates is immaculate and majestic all on its own. Bitcoin is still a mystery unfolding before our eyes. I’d go as far as to compare it to how chaotic, yet awe-inspiring, our universe is. You simply don't see that in other projects. As Alex Gladstein states in his amazing article, “87% of the planet is born into autocracy or considerably less trustworthy currencies. 4.3 billion people live under authoritarianism, and 1.2 billion people live under double or triple-digit inflation.” People like Paul Krugman, Charlie Munger and western elites anger me whenever they lend their thoughts on Bitcoin to the rest of us. They enjoy a degree of civil liberties and stable currencies most of the world simply hasn't. In the summer of 2018, I visited the Palestinian territories. I have seen what our current central bank driven economic system has done the world over.
Fix the money, fix the world.
This is a guest post by Paul Opoku. Opinions expressed are entirely their own and do not necessarily reflect those of BTC, Inc. or Bitcoin Magazine.