Hard Money Diploma · Module 10: What Future Can Bitcoin Build?

10.0 Introduction

In this concluding module, we'll summarize the lessons learned throughout our journey, ask and discuss a number of important questions, and explore the future of Bitcoin.

Bitcoin is not just a technology; it's a network that powers a new form of money whose supply cannot be changed by any single party. Humanity has never had a form of money with a fixed supply and no centralized control. If widely adopted, Bitcoin is a tool that will unlock a movement for positive change that can transform the lives of people all over the world. It represents a peaceful revolution toward collective freedom and equity, opening up new opportunities for humanity by creating a shared, global monetary system.

As a decentralized global system, Bitcoin enables greater financial freedom, shifting power from the few to the many. It provides a secure, censorship-resistant platform for storing and transferring value, empowering individuals to take control of their wealth and protect their purchasing power. This is especially important in today's uncertain economic climate, where the traditional financial system is facing unprecedented challenges.

Next, we'll look at another form of digital currency called a Central Bank Digital Currency (CBDC) and evaluate how it is similar to and different from Bitcoin.

10.1 What are Central Bank Digital Currencies (CBDCs)?

Central Bank Digital Currencies, or CBDCs, are digital versions of regular fiat money. CBDCs follow the same rules as fiat money, where a central authority (like a government) can unilaterally expand the supply, reducing people's purchasing power in the process. However, CBDCs also grant governments new and potent tools to control how that money is used by people around the world.

According to the Human Rights Foundation (HRF) research, 134 countries and currency unions, representing 98% of global GDP, are exploring a CBDC. In May 2020 that number was only 35. Currently, 66 countries are in the advanced phase of exploration (development, pilot, or launch). Every G20 country is exploring a CBDC, with 19 of them in the advanced stages of CBDC exploration.

So, besides being digital, what makes CBDCs different from regular fiat money? It's crucial to understand that, unlike regular fiat money in the form of paper or coins, CBDCs let the government digitally watch and control every transaction globally. This means the government can stop certain transactions or even freeze your whole account if they don't like you or how you're using your money.

For example, imagine you want to send money to a family member in a country that needs help, but your local government rejects your transaction because they disagree with that country's leaders. Or picture going to the store to buy something you like, but you can't because you expressed your opinion freely on social media.

Now, most of the fiat money in circulation is already digital, the difference being that it is a number of different banks that can monitor and censor transactions, and only those that pass through their accounts. Still, examples of censorship such as the above have happened and continue to happen in many countries, executed by banks but often at the behest of a central government.

CBDCs, however, give governments significant control over how money is used in their jurisdiction, limiting individuals' ability to spend freely. Some argue that CBDCs could allow governments to enforce policies instantly, without human enforcement. Instead of coordinating with multiple banks, they could quickly track and block money flows within their country.

Both CBDCs and Bitcoin are digital but, beyond this similarity, they represent very different forms of money with distinct philosophies, leading to different outcomes.

10.2 The Philosophy of Bitcoin

In Modules 5 and 8, we discovered that individuals who run a node help keep Bitcoin's rules safe. This is a big deal because, for the first time ever, people like us can be part of a network that ensures the rules of our monetary system are protected. These rules include the finite supply of money, and no one single party can change these rules. It's a unique opportunity for regular people to participate in keeping our money secure and reliable.

Bitcoin's philosophy is one of empowerment, freedom, financial independence, critical thinking, and self-determination, the idea that we should all have a say in the rules of the system we choose for ourselves. Unlike the fiat system controlled by powerful central parties, Bitcoin rests on a network where no single party has all the control. This means no one can take your property from you or stop you from spending your money the way you want. The exact opposite is true for CBDCs.

In the fiat world, having more wealth directly translates to having more influence and control. In contrast, Bitcoin distributes power to the people equally. It's a team effort where everyone, no matter how much money they have, plays a crucial role in the system. Picture it as a collective force, where your financial power doesn't automatically determine your influence. Bitcoin is built on unchangeable rules and, in this harmony, it's as if humanity itself is in control of the system. It's not a few big shots calling the shots, rather, it's all of us working together as a resilient community, guiding the course of Bitcoin without any single authority altering its path.

Whereas in the fiat system the powerful dictate the rules, in the Bitcoin ecosystem it is the added contribution of individuals that sustains the network. No single entity, regardless of wealth or power, can dictate the path of the Bitcoin ecosystem. It's an inversion of the traditional power dynamic, where the system's resilience lies not in the hands of the few but in the collective power of all participants.

10.2 The Philosophy of Bitcoin (continued)

Reflection: Do You Have the Right to Control Your Own Money?

The book closes the philosophy section with a set of reflection questions that pull the whole course back together. These are for students to answer and discuss, not for you to lecture on.

10.3 The Benefits of Bitcoin

Hyperbitcoinization refers to a hypothetical future where Bitcoin has become the dominant global monetary system. This would mean that Bitcoin is being used by everyone, everywhere, and for everything, from buying coffee to paying bills, and even buying property. The growing interest in Bitcoin among individuals, businesses, and even governments highlights the potential impact of its widespread adoption on the global economy and society.

Here are some of the benefits of a hyperbitcoinized world:

A Self-Sovereign Future

A self-sovereign future is one in which individuals worldwide have full control over their own digital identity and assets. This could lead to greater financial inclusion, freedom, privacy, and security, thereby contributing to heightened human flourishing, abundance, and overall happiness.

A Reliable Store of Value

Bitcoin's digital scarcity makes it the most reliable store of value in the long term, which encourages more and more people to use it as a means of saving for the future.

Changes in Monetary Policy

If Bitcoin were to become widely adopted, it could take away the ability of governments to expand the money supply through traditional monetary policy tools. Mass adoption of Bitcoin would potentially increase people's purchasing power and encourage society to shift toward a lower time preference mindset.

Enhanced Transparency and Traceability

The tamper-proof and immutable record of all transactions on the blockchain would increase transparency and accountability in various industries and sectors. Currently, powerful entities have the ability to move trillions of dollars around the world without clear visibility into where these funds go or how they are utilized. By providing an open and verifiable record of financial transactions, Bitcoin could ensure that the movement of capital becomes more transparent to the public.

A Revolution in the Remittance Market

The remittance market involves the transfer of funds from one party to another, often across international borders. Despite declining costs, remittances remain relatively expensive compared to domestic bank transfers, especially for smaller amounts. The Lightning Network offers near-instant and inexpensive worldwide transactions, making it well-suited for the remittance market and addressing the high costs and other challenges associated with remittances, such as slow settlement times and restrictions on business hours.

Abundant Energy

When there's a lot of affordable energy, societies do well, and many industries and communities can meet the increasing need for power in homes, businesses, and new technologies. Bitcoin mining incentivizes miners to use surplus energy that would usually go to waste from sustainable energy sources like solar, wind, and hydroelectric power. Bitcoin miners can tap into this cheap surplus energy to create new bitcoin through mining activities, secure the network, and offer excess energy they create back to the energy grid society uses when it is needed.

10.4 An Empowered Future

Money helps people communicate which activities, goods, and services are most important within society. When money is controlled by centralized authorities, it is inevitably manipulated.

One of the mistakes humanity keeps repeating throughout history is intervening in the free market, such as through the manipulation of money, which negatively affects individuals, families, businesses, and ultimately global human prosperity.

By taking the control of money out of the hands of centralized parties and instead using money with a fixed supply that no single party can change, we can create an entirely different world, one in which we don't have to trust politicians to do the right thing, because doing the wrong thing has become very expensive and costly.

This is a fundamentally new world. And you can be a part of creating this reality. By using Bitcoin, running your own node, and helping your fellow humans learn more about the future of money, you are voting for a different world.

10.4 An Empowered Future (continued)

Activity: Final Discussion, How Did Your Perspective Change?

Please answer the following questions:

Then: