I can barely remember the first time I used the internet.

It was either playing a Neopets knock-off of space invaders or watching my first porno. For the latter I only remember a very big, dark butthole. I couldn’t have been more than 8 years old. The year was 1999 and the internet had already been around for a few decades.

The internet was developed by the US military during the late 60’s and into the 70’s. In 1985 the first .com domain was registered. It would be 6 more years until I was born. By that time (1991), the world wide web had started (it’s a little different than the internet), but the basic web address that you use today: www. blah blah blah .com was officially born.

Can you remember the first time you used the internet? Maybe you have a similar story to mine, or maybe it’s completely different. Maybe you’re a bit older, and it was the crazy guy at work that couldn’t stop talking about this new tech called internet, where everyone can communicate with everyone. Maybe it was on your radar for a while, and you just didn’t understand it or even want to use it. Whatever the case, internet has changed the world more than any of us could have imagined.

I am writing this post to be the crazy guy in the office. The one that went a little insane from the runaway train of his own imagination. Cryptocurrency is my internet. It’s a disruptive technology that could have internet level impact. I'll be weaving together my experience with Bitcoin, a thorough explanation of the technology, and why we desperately need a global revolution in money.

What’s different from me and the crazy office guy, is that I have already lived through the adoption of a globally disruptive technology. I’ve witnessed the internet’s birth firsthand, and I can look back (thanks to the internet) and find the patterns and correlations between the internet’s early days and the current turbulent times of Crypto. I see a lot of similarities.

The first time I heard about Bitcoin was in 2014 on Reddit. I thought it was a cool idea, but at the time I was in school and I didn't have much money or knowledge, or wisdom. However, because I seem to naturally seek out risk, I did actually buy $100 worth. I forgot about it after I bought it, and when Bitcoin hit nearly $20,000 per coin in 2017 I started to think, man, maybe that $100 is worth something. It was (nearly $1,000 a 10x return) Luckily, I found an email with my username and password. It was a nice find, but the treasure wasn't the monetary value it was the curiosity that it sparked in me. After finding the forgotten Bitcoin I decided to commit to learning the core technology well enough that I could decide on my own, is this thing going to take off? Is it a revolution or not? This post is a snapshot of my recent explorations in Cryptocurrency and Bitcoin, but it is by no means the end of my learning process on the matter.

First, let's make sure we've got our terminology sorted out. Bitcoin is not the only cryptocurrency. It’s the most popular and there are good reasons for this, but there are many more like Ethereum, litecoin, etc. There’s a whole blog post worth of discussion to be had on the different cryptocurrencies and what makes Bitcoin one of the best. For now, since Bitcoin is the most popular (by market value) and has pretty much defined what features make a Cryptocurrency, I’m going to use Bitcoin and Cryptocurrency synonymously. (I might also abbreviate Cryptocurrency to Crypto)

So, Bitcoin. What is it?

Bitcoin is a decentralized digital currency that enables instant payments to anyone, anywhere in the world.

(https://en.bitcoin.it/wiki/Main_Page)

To have a basic understanding of Bitcoin it helps to break down how these three concepts work and why together they create something revolutionary:

1. Digitization

2. Currency

3. Decentralization

If something is digital it can be stored on a computer. Computers use binary code to operate. The most fundamental code that a computer runs on is made up of a bunch of 1’s and 0’s. Why? Because 1’s and 0’s can be physically recorded quite easily. On/off = 1 / 0. Like a light switch. Computer chips are really a bunch of on/off switches. These are called transistors.

These 1’s and 0’s make up a sort of language called binary. The computer reads this language at the most basic level, and level by level the language is translated to higher orders of complexity. Until you have an image on your screen. It’s kind of mind blowing to consider that all those videos on YouTube, all the video games, everything on the internet, is fundamentally made up of 1’s and 0’s.

So when we say a digital currency we’re talking about money being recorded with 1’s and 0’s. The literal definition of digital is something comprised of numbers. Here’s where many people get concerned about Bitcoin, because how can you have money made of numbers? It’s not real right? Well, is the internet real? Do you trust it to access your bank account? Your school portal? Your friends on Facebook? Your documents in the cloud? These utilities are all using digital technology and are made of 1’s and 0’s. To say that Bitcoin isn’t real, is to discount the entire impact of the internet. It’s wrong.

There’s advantages to having something digital rather than physical. A digital version of a book can be shared and used by infinite number of users with almost 0 cost per copy. The cost of information exchange has become nearly 0. We have most of the knowledge of the entire human race at our finger tips. All we need is connection to the internet.

Now that we understand what it means for something to be digital and that it makes the cost of transactions low, we need to talk about money. The currency side of Digital Currency. It’s like that conversation most of us dread to have with our partner. But rewards come from doing the hard things, so here we go.

What is money in the first place? It might feel weird to ask. Most of us take the concept for granted. It’s just part of life. But money didn’t always exist. It was invented by people to facilitate trade. Money is a vehicle for exchange. It’s an I owe you. It’s a placeholder of value. Rather than a limiting barter and trade system, money allows for economic transactions between people with incongruent wants. It allows people to exchange goods with more flexibility. Whether the money itself has value is the next question.

US Dollars, greenbacks, the green piece of paper you might have in your wallet, do they have intrinsic value? Does the piece of paper itself have value? Or is there something else going on? Does that piece of paper have a practical use? No…well I guess you can make origami and snort coke with it, but besides a few quirky tricks the dollars physical form is useless. Instead the value comes from an agreement of a society with it’s government to use it as a symbol of value. It is a Fiat Currency. These currencies also don’t have a built-in limit of supply. The supply of the currency is controlled by the institution or government that creates it. This isn’t necessarily a bad thing, but it can be if the institution or government wants to manipulate the economy for their own gains.

Commodity currencies on the other hand do have intrinsic value. Gold is a good example. It has use as raw material, in jewelry and computer hardware for example. On its own it has some uses that make it valuable. Other types of metals, or maybe even oil, could be used as commodity currencies for their intrinsic value. Since these natural resources are limited in their supply and they can’t be artificially manufactured they have a stable supply that is good for planning and stability in the economy. People can trust that the value will not be manipulated or swing wildly up and down. The problem with these currencies is their expensive transaction costs. Gold is heavy. It takes time to verify quality and weight. It has gone out of fashion because we are busy people with many economic transactions every day and it would be impractical to tote around several pounds of gold everywhere we go.

For a long time the US dollar was a hybrid currency, a commodity backed fiat currency. The government had laws that prevented the printing of money unless there was an equal amount of gold obtained to match the value of the money. There was a promise that the dollars you held could be exchanged for the equal value in gold the government was holding. This is called the gold standard. The laws we had for the gold standard started eroding as early as 1933. By 1971 Richard Nixon finished them off and the US dollar became a completely fiat currency with no limitation on the amount of dollars that could be in existence.

This is a problem because whoever has control of the money supply can create dollars out of thin air, devaluing all the dollars already in the market. This is how inflation works. And it can be used to steal from the masses so that the powerful few can have more wealth. If we trusted that our government was using this money for helping the entire society (Infrastructure, education, healthcare etc.) that would be one thing, but the reality is that things like the Bank Bailout of 2008 happen. Trillions of dollars were given to the largest banks that were “too big to fail”. Instead of being arrested for nearly destroying the global economy Wall St. Execs received bonuses, the banks walked away scott-free and the root cause of the problem was left to grow into a new form. And we all paid for it. The dollars that we were holding lost value. The value was siphoned away by the government into the new currency they printed. It really was a steal from the poor and give to the rich scheme.

And it’s not the first time this has happened, just look at how the value of our dollar has eroded over the last 100 years:

In 1906 $1 could buy a pair of men’s patent leather shoes.

In 1960 $1 could buy you 2 movie tickets.

In 2010 $1 could buy you a song on Itunes. Now,

Today $1 can buy you a cup of coffee at McDonalds.

It’s clear the value of the dollar has gone down drastically over the past 100 years. Where did all that wealth go?

Mostly, to the top.

Wealth inequality is at an all-time high, here’s a chart from 2013, depicting wealth disribution in the US. It’s only been getting worse since this was published.