Our one shot to a fairer, more connected society

I want to explain why “cryptocurrency” is one of the best things to happen to humanity as the implications are enormous. Buckle up, it’s a hefty article.

“I think this Bitcoin fad is stupid and wish it would crash back to zero. It has no value!”

I’ve heard this all too many times. You might feel like this right now, and that’s ok. One can not like cryptocurrencies for several reasons; Some waste huge amounts of energy, They’re used in plenty of illegal activities and sure, you can look at many as a giant ponzi scheme.

So what’s the point of ‘digital money’ when we already have our secured bank accounts with credit/debit cards, bills and PayPal accounts… making our lives easy?

A solution for problems I hope you never encounter

Technology serves a purpose. Most people don’t care how their smartphone or the internet works, as long as they can benefit from what it does for them. So I’ll skip the whole ‘what’s a blockchain’ part. To put it simply:

A cryptocurrency’s purpose is to enable someone to become their own bank.

Basically it allows one to no longer depend on any institution to store value and send it from one place to another on the planet. It seems simple yet the implications are mind boggling.

Financial Inclusion

Over 2 billion people remain unbanked. Financial inclusion is key for reducing poverty. If banks don’t want to give someone an account because they’re considered a ‘cost’ or a ‘liability’, it becomes very hard for said person to participate in the economy. Let alone the global economy.

Cryptocurrency enables people to become part in the global economy and nobody, no border, bank or political power can deny them the right to save, send and receive money worldwide whenever they desire to.

Fast and free* (Inter)national payments

I don’t think I have to explain the vast benefits of not having to wait three days or even a week for your international transfer to come through. Not to mention the hefty fees some banks charge for doing just that. This alone is pretty groundbreaking.

Also, forget about getting terrible deals in those shady exchange offices when you land in a foreign country. If people all over the world would accept cryptocurrencies you’d never have to worry about having the right money on you.

Now bear with me and try imagining earning just a few dollars per day. You live in a developing country, are unbanked. You struggle for survival. Your oldest daughter feels obliged to leave everything behind to work abroad to generate some extra income, as is very common in e.g. the Philippines and many African countries…

It’s Payday and your daughter abroad wants to send you some of her hard earned money. She can spare 60 Euros. It will costs her at least 7 Euros to send it to you through Moneygram or Western Union:

At the moment of writing the official rate is 64.4 PHP for 1 EURO. Western Union claims it’s just 62.3 PHP on their site ànd they charge a whopping 4.9€ for the transaction. It comes down to this: The poorest are getting ripped off twice. This is simply outrageous if you consider 7 Euros is worth about 2 days of work for you, the father.

But it gets worse:

Most people working abroad save up to send a large sum at once to avoid multiple 4.9€ transaction costs on small transactions and costly or difficult transportation to the cash deposit/pick-up address.

(The receiver back home could live far away of a bank where they need to receive the sent cash. Travel can be difficult and costly. Also the worker abroad may have to pay expensive bus or train tickets back and forth to a Moneygram or postoffice. Remember, if you don’t have a bank account or a credit card you can’t do online transactions unless a friend helps you.)

So your daughter saves a 1.000 euros over a few months and sends it all at once. She thinks she’s getting a better deal, instead she ends up paying 38 euros because of the dishonest exchange rate!

This happens every day, to hundreds of thousands of people who need every Euro or dollar to advance in life. This is holding back the most vulnerable people worldwide. And the worst part is: they have no alternative! At least they had…

*Depends on the crypto you use. Most require a very small fee, but some are completely free.

Censorship-resitant

Remember Edward Snowden reveiling to the world we were all being spied by the NSA’s PRISM program? Terrible warcrime documentation? Leaked tax haven documents and so much more…?

If it wasn’t for cryptocurrency, WikiLeaks might not even exist as they are denied to have a bank account. Lucky for them, they accepted crypto because of this back in 2010, and now— ironically — money will never be a problem.

Whether you like Wikileaks or not, it’s pretty amazing they can continue doing what they’re doing, and nobody can stop them. Most of us live in relatively free countries, but those less fortunate finally have a way to circumvent their dictatorial regime or family.

In March 2013, the people of Cyprus were no longer able to withdraw over €100 per day. It’s your own damn money, right? A handful of people or an institution shouldn’t be able to drain or block funds of millions.

Obviously this medal has 2 sides. But money will always be used for good and evil. Just like freedom of speech. So how can we regulate this?

Transparency

We all know the saying ‘Follow the money’. It is important we can trace large transactions. Don’t get fooled by the media; Bitcoin is actually 100% traceable. Using Bitcoin is the worst idea if you want to do shady things. Every transaction is registered and verified by thousands, is publicly visible and can never be altered or hidden.

However, there are privacy focused coins too. They enable you — just like cash — to leave no trace at all. So you shouldn’t ‘hate all cryptocurrency’ if you don’t like the anonymous ones. The user has a choice, and that’s nice. Privacy can be extremely valuable, even if you have nothing to hide. But that’s another discussion.

I actually encourage public institutions, like government institutions, political parties, non-profits, NGOs… to use transparant cryptocurrencies to increase their credibility. Nobody likes to see tax money getting wasted, nobody likes donating 100 USD to a disaster fund only to find out less than 3 USD actually found their way to the people in need. I may sound naive, but I think transparancy leads to more fairness.

A new movement where nobody and everybody is in charge.

Cryptocurrencies are decentralized. No institution, no military force, nothing can destroy it. It’s a bit like a (Bit)torrent, as long as 1 person still owns the file (or public ledger), he or she can still rebuild the entire ledger and network. So good luck trying to destroy Bitcoin’s +150.000 nodes spread over the entire planet. On top of that, everything is open source, which means there are no backdoors or malware and hacks are nearly impossible. On top of this

nobody and everybody decides what the price is. It’s a global agreement between regular people. No local war or political conflict or large scale corruption can make the price implode (ref. Venezuela, Zimbabwe…), no-one can manipulate it.

However, today we’re still in a speculative phase where fear or optimism can spread like a wildfire. This causes a volatile market. But on the long run, when cryptocurrency reaches a critical adoption rate with extremely high marketcaps, I expect things to ease down. Also keep in mind, it’s mostly the price of Bitcoin versus traditional currency that is so volatile today. The rate of Bitcoin versus ‘altcoins’ like Ethereum or Litecoin lead different lives.

The fact remains; today a few people with a lot of money or influence can still manipulate the price. And believe me: a lot of financial institutions and governments worldwide are doing everything in their power to destroy cryptocurrencies from achieving their goals.

Perhaps you didn’t know this, but in it’s core Bitcoin started as a kind of new ‘Occupy Wallstreet’ movement to bring the financial powers to their knees and shift it back to the people. In the very first transaction, also known as the ‘Genesis Block‘ of the Bitcoin blockchain there’s an encrypted code which deciphers to this link: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks”.

Bitcoin was in fact created as a countermovement to the global financial crisis of 2008.

Where the internet brought freedom of information to the world, Bitcoin and the blockchain will bring financial freedom to the world.

A safer, cheaper world for merchants

We’re about to enter a more honest world. Scammers don’t stand a chance with cryptocurrency where you can receive, prove and trace back any payment immediately.

I’ll just excerpt/quote the owner of Headphones.com on accepting digital currency ‘Nano’ (article) to clarify.

We’re not paying any fees and neither are our customers!

We don’t have to worry about Visa or MasterCard blaming fraud caused by their own lack of security on us. (FYI if your Visa is compromised and you get reimbursed, that’s coming from the merchant — not Visa. Even though it’s Visa that allowed the money to be spent in the first place)

The point above has given us the freedom to ship products to places we usually would have avoided due to fraud concerns.

Selling goods or services today costs a lot than you’d think. Did you know:

Every online transaction with Visa or PayPal costs you (or the merchant) quite a lot of money. 2.5% On a pair of shoes may not seem much, but on a new $1,300 laptop it adds up. With cryptocurrencies we have a chance to 1) cut out the middle man to save on every transaction and 2) serve the unservable (unbanked and people without a valid credit card, people from ‘shady regions’ etc…)

to save on every transaction and 2) (unbanked and people without a valid credit card, people from ‘shady regions’ etc…) Most PoS (Point of Sale) terminals also cost quite a lot for the merchant. If I’m not mistaken 1 terminal to accept your cards costs about 80 euro’s per month in rent (I could be mistaken, please merchants let me know in the comments how much you pay). Imagine a large franchise with 10 large stores, each having 5 cash registers; that’s 4,000 euro’s per month just to accepting money. Not to mention certain transactions like Visa can still bring extra fees.

If ‘their’ service has a hiccup, your business can kiss its revenue goodbye and you’re stuck in a very difficult and costly situation. It doesn’t happen often, but it happens. In Belgium we’ve had major outages by Atos Worldline, like this one, 2 days before Christmas. You can imagine the chaos.

Another small benefit is that you as consumer can avoid the uncomfortable ‘Sorry sir/madam, your card has been declined’ moment for good. You’ll always know your balance before you spend it and you won’t encounter issues out of your control like mentioned above or like I encountered recently in the Netherlands:

I was less than 100 kilometers (+/- 60 miles) away from home, but across a border. For a still unknown reason none of my cards were accepted, even though I had sufficient funds on them (I can check my balance with an app). Luckily I was there with friends who could borrow me the money.

In a nearly cashless society I don’t want my financials to depend on vague decisions or outage of services of one organisation.

Accept payments the easy way

Have you ever tried to set up a payment system in your (online) shop? It’s quite a (expensive) hassle to say the least.

With solutions like Bitcoin Lightning or Brainblocks, it becomes dead-simple to accept crypto on a website or in a store.

This brings opportunities. Especially entrepreneurs who still hesitate to start a business as they can now set up a shop without any kind of bankaccount or registration. They can immediately accept payments and serve a worldwide audience for free. When their business concept seems to hit the marks, they can take the next steps and accept traditional payments as well.

Less hassle, less investment and less risk required to start a simple business may lead to more businesses everywhere, especially in developing countries.

Again the flip side means scammers can easily generate new stores and ask for your digital money without giving anything in return.

But what about the heavy strain on the environment?

I completely agree. Bitcoin and other ‘mineable’ coins use way too much power and this is completely unsustainable. However, as long as mining these tokens can be profitable, there will be miners. On top of this they keep said blockchains extra secured. So I hope the hardware gets more efficiënt to force the energy bills to lower.

There is good news though: Bitcoin is just 1 type of blockchain. Hyper-efficient blockchains also exist. They don’t waste any energy at all. It’s entirely up to you if you want to try cryptocurrencies without using Bitcoin. So to say ‘cryptocurrency is bad for the environment’ is just not true. It’s just the mineable coins.

If the world should use these ‘green coins’ we’ll actually end up saving a lot of energy. Compare a green coin to printing and distributing paper money, daily value transports in and out of hundreds of thousands of shops, running thousands of exchange offices, giant bank offices, gold mining operations and transportation of tonnes of gold…

In conclusion

You see there is a lot more to it than a “tulip craze” or “a worthless get-rich-quick ponzi scheme”. Digital currencies hold value. You may not realize it yet, but then again: how much value does that bill in your wallet have? It’s “just a piece of paper”. However it’s value is what people agree on what it’s worth. The same goes for cryptocurrencies, or Star Wars collectibles, or unique sneakers…

I have a feeling I could go on forever here. You may have noticed I’m an optimist when it comes to cryptocurrencies as I truly believe we’ve only scratched the surface of the possibilities. Not to mention the thousands of solutions blockchain will bring to our world.

So go out there and give cryptocurrencies a chance!

Addendum: here’s the activist in me talking

Now that I have your attention I’m just going to speak my mind.

The big difference with traditional currency is that nobody can just print a few billions in cryptocurrency extra when it’s convenient for them. Our debt-based economy is reaching dangerous levels… Again. Just like in 2008. Check this US National Debt Clock. If these numbers are even remotely accurate, I find the idea of saying ‘Bitcoin is a giant bubble’ laughable.

You know that cartoon of the donkey with the carrot in front? That’s how I feel. It’s as if we’re all being held back, systematically.

I had an icecream today: 2 scoops cost me 4 Euros. When I was 10 it was about 0.8 Euros. And I’m only 32. Good luck having a beer in Silicon Valley as an old-timer.

Sure, Inflation keeps the economy going by forcing people to spend in stead of save, but — by slowly making sure our savings are worth less — it also feels like it’s keeping us running without actually getting anywhere, like hamsters in a treadmill. If you had 10.000 USD in 1960 and just saved it for your kids, like the responsible parent you are, you’d have 8.3 times less buying power with it today, or about $1,192. That’s a pretty lousy deal if you ask me. People chase wealth, but it never seems enough because you have no clue how much your wealth will be worth in 20 years.

I’m a hard working millenial myself and I say it’s time we step away from this system where a few people in charge keep hanging the carrot a bit farther away as soon as we nearly reach it.

Compared to this inflation, Most cryptocurrencies are deflationary, as there is a hard-capped total supply and on top of that, lost coins are locked and gone forever, actually reducing the supply. And many Bitcoin have been lost due to

Someone dying, without telling anybody how to get to their coins

Hard drives dying containing private keys, without back-up.

Computers stolen, containing private key without (cloud) back-up.

Faulty transactions to inactive/erronous wallets

Fires destroying paper wallets

People forgetting they actually have Bitcoin, let alone remembering their private key (yes it happens)

funds forever stuck on exchanges due to lost username/passwords or los secret keys to two factor authentication codes (this happens way too often!)

…

Nobody knows how much funds are untouchable, how many of todays ~17 million Bitcoins are gone forever.