This is an opinion editorial by Trent Dudenhoeffer, Certified Financial Planner at Watchdog Capital.
Believe it or not, bitcoin is money.
This can be a hard sell for many of us in the Western world, specifically here in the United States. I understand; the dollar is the reserve currency of the world. Yes, there is inflation, but no this bad, even though current inflation is the highest it has been in over 40 years.
I don’t know about you, but the ever-decreasing value of my dollars is one of the reasons I learned about bitcoin in the first place. Who said we needed have inflation? John Maynard Keynes did it, by the way, and it’s the economic theory taught in schools across the country.
My point is that it may be difficult for western civilization to understand why bitcoin is important. Many are blinded by the “strength” of the dollar and cannot appreciate the usefulness of bitcoin.
To jog your memory, let’s go through five examples of what bitcoin can do that the dollar, other fiat currencies and gold can’t.
1. Bitcoin provides neutral and censorship-resistant money
The issue of censorship has been in the spotlight for the last decade, and particularly relevant in recent years.
Twitter unplatformed a sitting president of the United States.
Theories of the origin of COVID-19, once considered heresy, are now largely accepted as valid. Believing in this theory previously led to the deplatforming of many prominent people, including legitimate and respected doctors.
And that’s what happens on social media. What happens when your money is it censored?
Look no further than the Canadian trucker protest that took place in early 2022. The Canadian government attempted to require vaccinations for all truckers entering their country. Seeing this obvious human rights intrusion, the truckers decided to protest the mandate by essentially shutting down the capital city of Ottawa by blocking the streets.
One thing led to another, and before you knew it, the Canadian banking system began to “shut down” the money of everyone involved in these protests. That is correct. Whether you were a truck driver, donating money to efforts, or distributing food, you were on the hit list and had your money disabled. frozen It was there, but there was nothing I could do about it.
Today is a truck drivers’ protest. What if it’s a women’s rights protest next? A protest against the abuses of a country you are allied with? Who decides?
Bitcoin sure doesn’t. Bitcoin doesn’t care about the color of your skin, your political affiliation, the country you’re in, what videos you watch on YouTube, etc. If you play by the same rules everyone else plays by, you can use bitcoin.
This is one of the reasons why thousands of people donated bitcoins to the cause of Canadian truckers. It was money that no one, not even the government or the banking system, could stop. More than 21 bitcoins were raised in the effort from 5,000 donors, which at the time totaled nearly $1 million in support.
Bitcoin is censorship resistant money.
2. You can take your Bitcoin anywhere without anyone knowing
Jurisdictional arbitration will be more common with the more extreme-leaning political parties here in the United States, as well as around the world. He sees polarization, capital controls and capital flight happening every day:
- Pro-choice and pro-life states
- States with legal use of marijuana and/or other drugs
- Countries with reasonable energy policies (e.g. not germany)
- Countries that are prone to sanctions, such as Iran and Russia
As a citizen, you sometimes have to act fast or risk being too late to escape, but how can you move an entire house of trinkets and stuff with you when you leave? How do you cross borders with bags of cash falling out of your pocket or gold bars weighing you down?
The answer is simple: you don’t. Good luck getting anything of value across borders without it being confiscated. But you can move your bitcoin, and if you do it right, you can move it without anyone else knowing and without any evidence.
All you have to do is keep it to 12 (or in some cases 24) words. These words can represent your entire livelihood and are known as a seed phrase. With these words, you can take your wealth anywhere in the world.
This is what Laleh Farzan did. After receiving threats from the Taliban in 2016, he fled to Germany. Most of the time, when you flee a hostile area like Afghanistan in the midst of chaos, you’re bound to encounter thieves and/or unforgiving governments. Emigrants usually leave with almost zero possessions.
But for Laleh, he was able to store his wealth through his seed phrase. It was contained in a small piece of paper that thieves and others ignored. Once he arrived in Germany, he was able to sell some of his bitcoin for fiat to pay for daily expenses.
3. Bitcoin mining and power grid are made in heaven
Bitcoin mining requires a lot of energy. News talking heads have repeated this line many times. It’s supposed to consume all the world’s energy by 2020 (how did that work?).
One could argue that the more energy bitcoin consumes, the better.
Listen to me.
Bitcoin miners act as energy consumers of first and last resort. Essentially, they will always buy (use) energy if they have it available to them. What most don’t know about our modern energy grids is that this kind of reliability and consistency is extreme useful Instead of having to plan for peaks and troughs in energy demand, power producers can simply provide power without worrying about anyone using it.
In short: Bitcoin miners stabilize entire energy networks. If you want a deeper dive, read more here.
Not only do miners stabilize networks, but bitcoin mining encourages the use of the most efficient energy sources available. As a miner, your profit and loss account is very easy to decipher: your income is the bitcoin you mine, your expenses (for the most part) are the energy required to mine it.
As a business owner, your ideal is to increase revenue and reduce expenses for beef profits. Besides mining more bitcoins, what is the easiest way to increase profits? Reduce your expenses, also the cost of energy. What is the cheapest energy available to us? Energy that comes naturally: solar, wind, hydraulic, etc.
Bitcoin is ushering in new developments and innovations in green energy and, more importantly, wasted energy.
Bitcoin miners try, as best they can, to mine with energy that would otherwise be wasted. It’s a win-win for both parties. The miner gets cheap energy and the energy producer sells energy that would otherwise have produced no income. A good example of this is the exploitation of gas in torsion. When I first saw a video of miners using gas flares, I knew it was a game changer. It makes sense for every producer on earth to connect a bitcoin miner to earn more income and reduce emissions. It’s a no-brainer.
Did you know that it is estimated that 60% of the energy produced is lost before reaching the consumer? Bitcoin miners will happily buy energy that would otherwise be wasted from producers, thus allowing producers to earn more income and provide reliable expectations for supply and demand.
It is only a matter of time before miners become fully integrated with the energy markets.
4. Bitcoin is open 24 hours a day
Have you ever needed banking services after 5pm or on a weekend? Pretty awkward, right? In a world of globally connected markets and everything else on demand, why haven’t our financial services been held to the same standards of availability?
Bitcoin has an uptime of 99.99%. In over 12 years, the Bitcoin network has only experienced a cumulative downtime of 14 hours.
I can be anywhere in the world at any time of the day and interact with the Bitcoin network as long as I have an internet connection. If internet connectivity is a problem, some geniuses much smarter than me are working on ways to explain it.
24/7, 365. No holiday closures. There are no switches in volatile times. Tick tock, next block.
5. Micropayments and the ease of Internet commerce
Commerce occurs on the Internet rather than the meat space more and more as the years go by.
I’m not going to focus on commerce that requires a product to be physically shipped to your home in this post, but what I want to talk about are products and content that you consume right on your computer.
Why do I have to disclose my credit card information and address to the Wall Street Journal if I want to read an article? Why do I have to do the same with Spotify to listen to a podcast?
Bitcoin and its scaling layers, such as the Lightning Network, will disrupt e-commerce with native internet micropayments.
There is a growing trend in the space known as value for value. Let’s look at Fountain as an example. Fountain is a podcast application that is built directly on top of the Bitcoin base layer on the Lightning network. While using Fountain, podcast listeners can load a Lightning wallet and transmit tiny portions of a bitcoin (known as satoshis or sats) directly to the content creator. These flows can be as small as five sats per minute, which is worth $0.0011 today.
Content creators can now rely solely on their audience to fund their business if they choose. Many podcasters appreciate this idea of aligning their own incentives with their listeners: zero product, zero false advertising, etc. This also allows for a more engaging experience between the two parties.
Another great use case for bitcoin in internet commerce is those pesky paywalls. Let’s use the Wall Street Journal as an example again. I rarely read the Wall Street Journal, but let’s say an article catches my eye that I desperately want to read. Then I hit a paywall. 99 times out of 100, I’ll go out the window and forget about the article.
The odds of me getting my wallet, typing in my credit card info, all my other personal info, and having to sign up for a monthly subscription are next to zero.
With the Lightning Network, the Wall Street Journal can create a paywall using the BTCPay server. In this case, I can pull out my Lightning Wallet, scan the QR code, pay the bill, and start reading the article. The whole process can take less than 30 seconds without the post having any idea who I am or where I live. This billing route could greatly expand the reach of the Wall Street Journal, keep one-time reads affordable, and respect the privacy of its viewers.
While these types of transactions aren’t quite as world-changing as some of the other points mentioned above, it’s another arrow in Bitcoin’s quiver. Another real world use case that bitcoin does worlds better than our current system.
No, bitcoin is not dead. This isn’t the first bear market and it certainly won’t be the last.
Too many are fixated on the fiat price of bitcoin. What most don’t realize is that bitcoin continues to work as advertised. It is reliable, open to all and there are no rulers, only rules.
Bitcoin is objectively better money. I hope everyone else comes to this realization.
This is a guest post by Trent Dudenhoeffer. The opinions expressed are entirely my own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.