In this concise overview of the cryptocurrency industry’s strengths, weaknesses, opportunities, and threats, renowned crypto expert Andreas Antonopoulos explains what’s going on the world that makes Bitcoin such a relevant and powerful force.
The State of the Crypto Industry in 2019
The most important feature of Bitcoin is its neutrality, and the rest of the great things are derived from that. That neutrality is not a lack of principles. Neutrality is a principle itself.
That neutrality is resistance to over-centralization of arbitrary power in institutional hierarchies by creating a preferable substitute for whatever utility those provide.
But a preferable substitute that is decentralized by design, public domain, open source, completely transparent, permissionless, peer to peer, and that always follows the same rules for any computer that uses it.
Antonopoulos explains that adoption of Bitcoin as the world’s global currency will not happen steadily but at moments of crisis when it represents a better alternative to unstable fiat currencies that are being abused by corrupt governments.
(Greece, Venezuela, Brazil, Argentina, Columbia, and other examples abound.)
He argues that there are specific steps the crypto industry can take to make cryptocurrency a more useful and attractive alternative to speed adoption when these crises happen.
Let’s Drop the ‘Crypto’ and Just Call them ‘Coins’
Cryptocoins are one of the many marvels of 21st-century industrial computation.
At some point soon it will be fine I think to drop the crypto – and just call them coins.
The way we don’t really say e-commerce or internet marketing as much as we used to.
Because everyone is using the internet now, it’s just called commerce and marketing.
And these cryptocurrencies absolutely mint literal coins.
The medium is different: magnetic fields or electric charges instead of metal.
But cryptocurrency shares in common with coins all of their salient characteristics, the qualities that give them their “coinness.”
This is not a metaphor like a web page. Is it a page? Or is it a place? Like a website?
Or is it a store? Or is it a web log? Or is it a book?
Or is it an engine? Or is it a wiki? Or is it a tube?
In all these cases the name denotes the function, not any of the underlying technologies.
And all those websites use cryptography to secure their functions.
So why don’t we call them all cryptowebsites, and cryptostores, and cryptosearchengines?
What Makes Metal Good for Minting Coins
1. Metal is fungible
It can be processed to purify it into a homogeneous substance that is qualitatively the same as any other piece of the same metal that has been through the same process.
2. Metal is durable and malleable
Because of its durability metal doesn’t wear out easily from constantly circulating through a market. Its malleability allows it to be coined into easily recognizable, standardized units.
3. Metal is precious
Well, some metals are – because of their scarcity, their suitability for coinage and other uses, and the risk and expense of finding natural deposits, mining them for their ore, and refining the ore into pure ingots. Some, like gold, happen to be both relatively scarce and more useful for financial, industrial, commercial, and consumer applications, making them very precious.
What Makes Bitcoin Good for Minting Coins
1. Bitcoin is fungible
Any amount of bitcoin has the same properties as any other amount of bitcoin, and the only thing that may differ between them is the amount, and one thing that will differ between them is that each is made out of different, unique bits that all have a unique origin and history of transactions logged on the blockchain and minted into these coins.
They’re coins that can be continually reminted with finer details like which account currently holds this or that bit of coin.
2. Bitcoin is durable and malleable
Bitcoin may be far more durable than a minted coin. When an ancient king stamped his name and a year on a metal coin, people could trust the coin would be accepted as money in the future, so they were willing to accept it in payment today.
Bitcoin doesn’t stamp a king’s likeness into a hard metal. It stamps an indelible record of accounts, amounts, and transactions into a massive spreadsheet that tens of thousands of powerful computers are all updating and archiving in real time.
When a coin die strikes a metal blank, the coin press pushes a fine detail into the coin like a mint year, a motto, or a tiny sculpture of a president’s head.
It would be difficult to erase those details.
When the Bitcoin network confirms transactions and makes updates to its accounts and coins, it uses computer memory to store those details in a digital spreadsheet.
That spreadsheet is hosted and updated by 10,000 different computers around the world or maybe more in exchange for regular chances to earn bitcoin.
And the software that allows them to do this is in the public domain, it’s open source, and anyone with a computer capable of running it can download the software, without having to ask anyone’s permission. Anyone can run the Bitcoin Core software to host, verify, and update Bitcoin’s records and “mine” for bitcoin payments.
It would be impossible to erase those details.
The Bitcoin blockchain is something approaching immutable.
3. Bitcoin is Precious
Bitcoin is scarce by design. There will only ever be 21 million BTC mined in total.
This scarcity combined with its divisibility, portability, and fungibility makes it suitable as a unit of account, medium of exchange, and store of value.
A bitcoin is remarkable because it’s something digital that one person (or computer) can have and keep, but it is impossible for them to make a copy of it.
Which is very remarkable and took quite a sophisticated and very clever design architecture spanning multiple domains to achieve. So much of what makes the digital space valuable is that digital things can be copied so quickly and easily it’s practically free to make a copy of anything digital. That’s how easy it is. The U.S. government couldn’t stop people from making copies of digital music files, movies, books, or image files.
But here is something digital that no one can make a copy of, one digital thing that you can prove belongs to you, and that you have to prove belongs to you before anyone will accept it from you as a payment, and even though it’s something digital, it’s impossible for anyone – not even a reckless central bank – to create copies to counterfeit.
That’s something marvelous that Bitcoin’s creators and adopters have made.
Andreas Antonopoulos Image from Internetstiftelsen/Flickr