Satoshi Nakamoto published the Bitcoin whitepaper 11 years ago. Coinbase, a well-known cryptocurrency exchange, celebrated this milestone recently with a retrospective.
I’m going to remix Coinbase’s narrative to tell a different account of bitcoin’s last 11-years.
For a time, we were all fooled by the idea that bitcoin solved a payment or monetary problem. Since bitcoin was called a coin, it falls under the umbrella of financial economics. Satoshi used phrases such as “electronic money system” and “nonreversible transactions” in his story to complicate matters. We may be forgiven for failing to see bitcoin’s true nature. It was an exciting and fresh story to tear down the current monetary system and build a new one.
Coinbase believes that this tale is still accurate. Its marketing team wrote that money, like other technologies, has undergone many improvements over the years. “Bitcoin, a millennia-old technology, is the most recent breakthrough. “
It is now clear that bitcoin is not a monetary phenomenon. Instead, Bitcoin is a new type of financial betting game. It’s a digital, global, and highly secure version of the traditional chain letter.
Bitcoin-the-Game is based on the idea that current buyers have to guess when or if a new wave of buyers will appear. Thus, this second wave’s participation is dependent on whether or not they believe there will be the third wave.
Bitcoin is a mind game. It’s a Keynesian beauty competition in which we “devote our bits to intelligence to anticipating the average opinion.” The old-fashioned chain letters your parents (or you) used to receive in the mail were an early form of a beauty contest. Alice’s willingness to pay the price for a chain letter depended on whether Bill would follow the rules and mail it on. Likewise, bill’s expectation was dependent on Jack’s likelihood of joining the game.
Chain letters were prone to a severe flaw. A fraudster could easily compromise the chaining order by copying the list incorrectly and putting their name at the top. Bitcoin addresses this problem by adding robustness to chain-letter-type games. The blockchain of Bitcoin is an indestructible public record of the position of players inline games.
This may have been a valid criticism ten years ago. Multinationals can now make cross-border payments in near real-time using traditional correspondent banks, thanks to SWIFT GPI. TransferWise, a fintech startup that offers instant remittances to individuals and small businesses over fiat rails, is available for both individuals and small businesses. These payments can be settled on weekends in countries like the UK that have real-time retail payment systems. This has been discussed before.
Coinbase continues to exaggerate, claiming that bitcoin remittance charges are lower than fiat. However, this does not consider the hefty foreign exchange fees one must pay to convert orders into bitcoin or back into the decree. This calculus is something I have done before.
This may have been a valid criticism ten years ago. But with SWIFT GPI having rolled out a few years back, multinationals can make near real-time cross-border payments using the traditional correspondent banking system. In addition, Transferwise, a fintech startup that offers instant remittances to individuals and small businesses over fiat railways, is available for both individuals and companies. These payments can be settled on weekends in countries like the UK that have real-time retail payment systems. I’ve touched on this before.
But bitcoin’s popularity in Venezuela is also consistent with the bitcoin-as-game narrative. People may only have one option when they are desperate to improve their lives. Lola must quickly raise 100,000 Deutschmarks in Run Lola Run to save her boyfriend’s life. She raced to the casino and played roulette. In the face of social collapse, Venezuelans could gamble on any potentially life-saving bet they can find. One such bet is bitcoin. It is difficult to determine how much of Venezuelan use is due to bitcoin as a game or bitcoin as money.
Coinbase continues to spew the usual nonsense of the cryptocurrency industry about legacy payments. According to Coinbase, sending an international wire transfer from central US banks can cost around $45, take days to complete, and can only be done during banking hours.
Coinbase asks, “What’s next for Bitcoin?” Let me try it. Bitcoin as a game may remain popular for a long time. It could even become a positive thing if it does. As I have said before, there is a demand for bets and financial games, especially early-bird bets. Bitcoin is a more reliable option than many other fly-by-night options.
Now Days Elon Musk is Controlling the digital currency market, his tweets are enough for the markets to be up or to be down he is game changer right now.
But what about bitcoin-as as money? That was the original vision that got everyone so excited. Bitcoin payments, which are currently limited by the game-based engine that bitcoin uses, will probably never move beyond their current niche. This is better than nothing. Even if they are temporarily disconnected from the traditional payments system, those at the margins will still have the option to make transactions. Although it might not be the most user-friendly, it is there.