2. How a Bitcoin Cash economy might handle a crisis

At the end of my last post, "1. How many works", I found myself asking: How would a Bitcoin Cash ("BCH") economy deal with the current coronavirus crisis?

First, let me say that I chose BCH as opposed to Bitcoin ("BTC") because it is the version of Bitcoin that aims to be money for the world, whereas BTC merely aims to be digital gold.

The vision for BCH is to be a new form of digital money that can be used to pay for anything from a coffee, to a house, or just to split the lunch bill with a friend. BCH isn't meant to be held in a vault waiting for its value to go up, it is built to move quickly and cheaply while completely removing the friction from the world's economy. Think of it more like digital oil, not digital gold.

I want to be clear that I'm not a BCH maximalist. I believe the world will use many currencies in the future, but I do think that society will converge on a single currency that becomes the mos used throughout the world, and I believe that Bitcoin Cash has the best chance of reaching that status.

Let's pretend for a moment that it is the year 2046. Bitcoin Cash is accepted just about everywhere. It has scaled to handle terabyte blocks with ease, and the network is fast, cheap, reliable, and unregulated by any government since the network regulates itself with miners all over the planet broadcasting transactions and searching for the next block. Bitcoin Cash has reached this point having proven to be censorship resistant, borderless, and sound. There are other competing networks that may offer something Bitcoin Cash doesn't, but they are more niche with a smaller market share.

In this Bitcoin Cash future, we have managed to finally separate money and state. Money has become decentralized. There is no longer a need for central banks, which also means that the state has much less control than it does today.

James Garfield, the 20th president of the United States, once said, "He who controls the money supply of a nation controls the nation."

So what if no one controls the money supply, does that mean no one will control the nation?

My personal take is that even if there are no more central banks, there will still be governments. I believe this because as a species, humans are social beings that tend to form tribes in order to survive. Maybe we like knowing there is someone at the helm watching out for the rest of us. Perhaps you're an anarchist that doesn't agree with this thinking, but I think the most likely outcome is we have a smaller government that is more efficient and less corrupt.

Since this new government would no longer control the purse strings, the balance of power between the citizenry and the government will be kept in check. I believe this government can help build infrastructure (yes, the roads) and plan for pandemics and other natural disasters. It can also fund some other things like science, or the arts, but it will be different because our money will now be different. Everything will be out in the open with government funds easily traceable on the blockchain.

In this new paradigm, everyone will have a voice because if our money can't censored, I'm hoping our voices can't be either. I envision a world that is no longer authoritarian, but decentralized. Of course there will always be conflicts. Groups of people might not like other groups of people. But perhaps conflicts can be resolved less primitively because it is no longer a regional issue but a global one. Consensus on a global scale.

So going back to the original question, if we suffer a pandemic in this Bitcoin Cash world, how will we handle the entire economy coming to a screeching halt? Remember that in such a future the government no longer has the ability to print money at will. So how will it help the citizens who are impacted most by the crisis? How will we prevent civil unrest and people resorting to looting in order to survive?

One solution I can think of is that the new government would have an emergency fund in place for such an event. The fund would have been made through contributions made using some mechanism whereby a portion of all transaction fees are donated to this fund. You might call this donation a tax, but the difference will be that no one will be forced to use Bitcoin Cash and therefore no one will be forced to donate to the fund. Those who oppose such a government will be free to attempt a fork or use a different network altogether. But by that same token, those who use other networks will not be able to take advantage of any programs that distribute money to those in need from this fund.

But isn't that socialism? I'm not an expert on any of this, but if you're talking about the idea of from each according to his ability, and to each according to his need narrative, that is not what this is.

Considering a Bitcoin Cash economy would be a deflationary fund, I could see the contribution % related to this fund growing smaller and smaller over time unless it gets depleted enough that the contribute rate needs to be increased once again.

I'm not an anarchist. I don't like our government, but it is easier for me to imagine a society with a government, albeit a small one, than no government at all. No more tax brackets, no more pork barrel spending, everyone pays a flat % of all transactions, which I imagine will be much smaller than what we generally pay today.

I can practically see this gleaming city full of futuristic buildings like something out of a sci-fi movie. Not a dystopian version of the future, but a society that is better than the one we have today. I'm not saying things will be perfect, humans are still humans, but I can see a world that doesn't have to rely on us trusting our representatives to be honest, because everything can be verified.

I know this is only a 50,000 foot view of this new paradigm. There are a million other factors to consider. For example, how will the justice system work, how will the banking system work, what will be your interest rate if you need a loan to buy a house? These are all valid questions that will need to be explored further.

Maybe what I've written here is unrealistic, or full of glaring holes in logic, but like I said in part 1, I am only trying to get the ball rolling. I believe the best way to increase adoption of cryptocurrencies, and Bitcoin Cash specifically, is by helping no-coiners imagine what a peer to peer electronic cash system can mean for the world. This series of articles is my attempt to paint a picture.

So the next question is how are we going to get from here to there? The world I've described above is so drastically different from the world we live in today. I'm not saying it's going to happen quickly, or even at all, but in the next installment I hope to try my best to describe how we might transition from one to the other.