Believe it or not, Bitcoin isn’t the first attempt at a digital currency. According to Newsbtc, “the idea of running society with digital cash has been around for three decades.” Back in 1990, a cryptographer by the name of David Chaum created DigiCash in an attempt to bring digital cash to the masses. However, his company went under just a decade later. Then, E-gold and Liberty Reserve died just as quickly. The former attempted to represent gold on a computer, while the latter converted currencies into a digital form.
Bitcoin was influenced by all three of these projects. It has already seen more success than them as well, though that is probably helped by the fact that it isn’t a company per se. Bitcoin has a market cap of $66 billion, and people are very aware of it despite how they may feel about the technology.
Learning From Past Mistakes
In a recent blog post by BitMEX CEO Arthur Hayes, he revealed that while he thinks Bitcoin has a bright future, the “first type of new money” will actually be centralized.
Entitled “Two Sides of the Coin,” Hayes claims that while technology spreads throughout the world into different cultures and peoples of different privilege, a government-backed “e-money” will become the new normal. He goes on to say that this new system will be a direct result of the current state of finance on top of the “increasingly corporatized economy.”
Additionally, the BitMEX CEO provides that people are becoming more comfortable handing out their private information through Facebook, Google, and other corporations. Because of this increased acceptance, users may be more willing to accept a government-tracked e-currency. Because of convenience, people are way more likely to give up their data.
That said, Hayes notes that the U.S. government has been taking its time with digital currencies. However, other places in the world, like China, are much further along. WeChat Pay, an app used by millions over there, is essentially government-backed digital cash. Of course, this system is centralized which has its downfalls. However, Beijing can watch over transactions and censor payments, but it only works with the Chinese renminbi.
Hayes claims that these systems will move West soon and that users will suffer from similar issues:
“The only place left in the system for inefficient or corruptible humans to participate will be at the apex of the network, where the authorities can issue credit directly to people, tax every transaction immediately, and determine who can and can’t be part of the network. In theory, your entire financial existence can be governed this way.”
Control vs. Freedom
There are already other entities here that like to be in control as well. Patreon, a platform that enables users to pay influencers for their creations, has recently banned professor Jordan Peterson for his controversial statements – a big source of his income simply taken away. This is where Bitcoin can help, says Hayes.
Satoshi’s digital currency will fit solve the privacy issue. It will provide a proper alternative to the government-backed e-money that is sure to come about soon. Despite consumers’ willingness to give up their information, privacy is still valued and is even essential for a functioning society, says Hayes:
“Sooner than you think, cash will not be an option for privacy, or for anything else. And private citizens will come to appreciate the inherent value of Bitcoin, as their ability to discreetly hold and transfer value evaporates once cash goes the way of the dodo.”
While he’s right, he goes on to say that Bitcoin is still “very much an experiment.” The payment solution is still unlike anything else we’ve seen. It has the potential to do very well, but it also has the potential to fail. Only time will tell its fate.
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