It's Time For Bitcoin Cash

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3 years ago

Needless to say that 2020 has been a year unlike all others, between the pandemic, lock-downs, the stock-market crash and civil unrest. One of the things that worries me the most is the irresponsible printing of money that has reached unprecedented heights. Throughout the world, media and governments are busy pulling wool (or trying to) over the eyes of the people who are set to lose the most while reassuring them that everything is fine. In this article I want to highlight the importance of money, show exactly how troubling the situation is, and what we can collectively do about it.

Money is Everything

Without context, this might seem like a controversial idea, but please bear with me. Money is everything, not because it matters more than everything else or that it should be prioritized in spite of everything else, but because it is the facilitator for everything that we need. In its broadest description, money is a representation of value, which can then be exchanged for goods and services as agreements are reached. Many will say that they do not care about accumulating wealth, and that they prefer to focus on happiness, travel, experiences, family or any other flavor of fulfillment; and it is my argument that money facilitates all of the above.

Two very simple truths of life are that time is not infinite, and that all things take time. With that in mind, in order to travel (or accomplish any other fulfilling endeavor), we must use the products, services and innovations that others have developed. We can certainly try to swim across the ocean, but it might be too difficult or take too long. We can try to create our own tools out of raw materials in order to create our own boat (or plane if we feel very ambitious), but it doesn't seem far fetched to conclude that exchanging money for a plane ticket is a far more efficient use of our time.

My argument here is not that we should spend more time trying to acquire money, but that it is critical in a healthy society that all people have access to a way to preserve the value of the money they have worked so hard for. Money is an expression of our freedom. If we can predict that we can sustain ourselves for a given set of time, we are free during that time. However, if our money loses value at an unpredictable rate, our freedom is equally eroded because it prevents us from making those predictions.

Why You Should Care

Inflation is a fancy word to distract us from the fact that governments have granted themselves a monopoly on the counterfeiting of money – and as such have legalized it. Historically speaking, fiat money (government issued currency that is not backed by a commodity such as gold) is relatively new. However, the effects of a sudden increase in what is used for commerce has been studied for a long time and is called the Cantillon Effect, which will help us understand the insidious effects of inflation. Below is Richard Cantillon's (1755) description of what happened when a new gold mine was found (emphasis mine):

the owner of these mines, the entrepreneurs, the smelters, refiners, and all the other workers will increase their expenses in proportion to their profits. Their households will consume more meat, wine, or beer than before. They will become accustomed to wearing better clothes, having finer linens, and to having more ornate houses and other desirable goods. Consequently, they will give employment to several artisans who did not have that much work before and who, for the same reason, will increase their expenditures. All this increased expenditures on meat, wine, wool, etc., necessarily reduces the share of the other inhabitants in the state who do not participate at first in the wealth of the mines in question.

When comparing the gold miners in Cantillon’s example to the governments of today, the similarities lie in the simple fact that they are both contributing to the influx of new wealth entering an economy. On the other hand, the gold miners are entrepreneurs that took on significant risk in order to discover and exploit a new gold mine – and deserve to be rewarded by the fruits of their labor – while governments and banks issuing newly minted money take on no such risk. Cantillon’s conclusion is that new wealth entering an economy disproportionately benefits those who benefit first, and thus creating an imbalance of wealth. The fact that governments choose the recipients of the newly minted money, means that they are acting as de facto wealth redistributors – in the perverse sense that the working class’ money ends up with businesses that are wealthy enough to afford lobbying or that have grown to the point where they are “too big to fail” (2008 economic bailout).

Inflation not only erodes our freedom by devaluing the currency we have no choice in using, but it also furthers the wealth inequality between the rich and the poor. As a matter of fact, inflation is the driving force behind the somber reality that 50% of Americans collectively own less than 1% of the wealth in America. There are many other indirect consequences of inflation, such as making it increasingly difficult for the average person to have access to real-estate. By devaluing the currency, inflation disproportionately drives wealthy people to seek other ways to preserve their wealth.

Ten months into COVID-19 and hyperinflation is already here. The basic money supply (M1) in the United States has increased from 4T to 6T (a 50% increase) since the beginning of 2020. Coincidentally, since the bottom of the March economic crash, the Dow Jones Industrial Average went from just under 20k to 30k (another 50% increase). While not all countries are printing as much money as the United States, it paints a grim picture with regards to the future of the financial independence and prosperity of the 99%.

What is Bitcoin Cash

To try and explain it in the simplest ways, Bitcoin Cash is a digital currency. To explain what a digital currency is, it is important to realize unless you are dealing with physical coins and bills, you are most likely already using a digital currency in your daily life. Your credit card, bank account, PayPal balance are all examples of popular cases of digital currencies.

Decentralized

The big difference with regards to Bitcoin Cash is that it is decentralized and requires no trusted third party. What decentralized means, is that instead of the digital currency living in one server or a combination of servers belonging to a single legal entity (e.g. Servers that your bank or credit card company runs or pays for), they are run on thousands of servers ran by different unaffiliated individuals or companies who participate in the Bitcoin Cash ecosystem. This has two very significant consequences: 1) that the Bitcoin Cash network cannot be shut down and 2) that we become our own banks.

For all digital currencies, since they are (as the name might hint) digital and not physical (and therefore cannot be physically counted), they must be represented by a balance sheet or ledger of sorts in order to track your final balance, this is typically what you would see on your online banking website, or credit card statements you get in the mail. Typically you would trust your bank to keep accurate records, with Bitcoin Cash, you do not need to place your trust in a third party, because your ledger and balance is kept accurate with cryptography and mathematics. This also means that nobody can tamper with your funds as they would be able to if they hacked into your bank.

Peer to peer

As there is no trusted third party necessary to facilitate a transaction, transactions are completely peer to peer, as it would be giving physical currency to another person, but from anywhere in the world.

Permission-less

Bitcoin Cash is a completely free and voluntary network, you do not need anyone's permission, or need to sign up anywhere to start receiving and sending Bitcoin Cash. This also means that nobody can stop you from using the network or freeze your funds if they don't agree with the type of business you are conducting. Conversely, at a bank, the registration process is quite complicated, as they require a lot of personal information and reserve themselves the right to freeze your funds or close your account at their discretion.

Low fees and Near Instant Transactions

Transactions on the Bitcoin Cash network are received by peers nearly instantly, and for a fee of less than a fifth of a penny, meaning that it is viable for every day transactions as well as larger transfers. Conversely credit card (or other digital payment processors) transactions cost merchants a flat fee in combination with a percentage of the purchase amount. In this way, Bitcoin Cash is closer to physical cash than common digital payment methods.

Deflationary

Without getting into technical details, newly created Bitcoin Cash are rewarded to those who spend resources running and securing the network. The rate at which new Bitcoin Cash are created is determined in advance (since its inception) and set to decrease by half every four years. This means that Bitcoin Cash is a viable long-term hedge against inflationary currencies, and will allow us to plan our futures.

How We Can Opt-Out with Bitcoin Cash

To quote Murray N. Rothbard (America’s Great Depression, 1963):

[...] the clearest way of preventing inflation is to outlaw fractional-reserve banking, and to impose a 100 percent gold reserve to all notes and deposits.… Fraud is equivalent to theft, for fraud is committed when one part of an exchange contract is deliberately not fulfilled after the other’s property has been taken. Banks that issue receipts to non-existent gold are really committing fraud, because it is then impossible for all property owners (of claims to gold) to claim their rightful property.

As this is clearly not happening in the United States, or any other country for that matter, the only logical step is to turn towards Bitcoin Cash. Due its unique properties, we now have an alternative to the corrupt legacy financial systems that have been siphoning away the wealth and oppressing the freedom of honest people. More importantly, Bitcoin Cash is freedom. You can see it and feel it when people talk about Bitcoin Cash, you can see the gleam in their eyes when they understand the far reaching implications that this financial revolution will have and how it will improve the lives of every single person on earth.

Bitcoin Cash is where self-interest intersects with the greater good.

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3 years ago

Comments

Bitcoin cash is best

$ 0.00
3 years ago

💚

$ 0.00
3 years ago

It covers a sound money and Bitcoin Cash and it is not too much not too little, well structured, easy to read ,easy to understand , it is optimistic and so i want to say that it is a

🔴Good article🔴

$ 0.00
3 years ago

Agree

$ 0.00
3 years ago

Thanks for writing. This was a good read. I have been passively keeping up with what’s going on with crypto for the past few years, but I haven’t ever been 100% sure about the difference between Bitcoin and Bitcoin Cash. A lot of the literature I’ve read on this is conflicting.

Since you have an obvious faith in BCH, it would be nice to hear your perspective on the difference between the two in a section in the article.

Is BCH truly worlds different than BTC? Does your philosophy you start with reflect views in crypto in general? Or just BCH?

$ 0.50
3 years ago

The short answer is that it's all about fees. BCH has low fees and has "keeping fees low" as a mission statement. BTC has high fees and no intention of lowering them. You can't really "bank the unbanked" if they can't afford the fee of a single transaction, which forces them to trust intermediaries, which brings us back to status quo.

The longer answer (and the answer that makes me certain I am not misguided) has to do with the history of Bitcoin and the scaling debate (c. 2013-2016), and at the beginning, before satoshi left, he asserted that the 1MB blocksize limit was a temporary anti-spam measure that would then be increased. Not long after he left, most people (including some people who are now in the "never increase blocksize" camp like Adam Back) agreed that the blocksize would need to be increased.

Also around that time, a lot of the Bitcoin developers got together a founded a company called Blockstream, which got something like 70+ million in funding from big bank/insurance companies (like AXA) and suddenly the narrative changed. And to keep it simple, their argument was now that blocks had to be kept small, so that anyone could run a Bitcoin node on a very small budget (think raspberry pi), so that everyone can validate their own transactions. On paper this kinda makes sense, but when you start thinking/asking questions about "why would someone who can't afford transaction fees run a Bitcoin node" that stance starts to make less sense.

Then there was fearmongering about hardforks, the whole segwit / segwit2x debacle, the censorship on /r/Bitcoin and all other Bitcoin related forums. Yep, around 2015 the top /r/Bitcoin mod would ban anyone discussing blocksize increase, which is why this sub is called /r/btc and not /r/bch, because it came before Bitcoin Cash.

If you're interested in a more detailed history, a lot of other people have written up more comprehensive stuff. But to stop rambling, it boils down to transaction fees, and the fact that those who control BTC want to profit off a congested network (and insert themselves as trusted third party) rather than bring peer to peer cash for the entire world.

$ 0.00
3 years ago

It covers sound money and Bitcoin Cash, not too much, not too little, well structured, easy to read, it is optimistic and so am I

Good article

$ 0.10
3 years ago

I agree with ErdoganTalk, you wrote well 😊 Thank you for this, it added my knowledge about BCH.

$ 0.00
3 years ago

Thank you for reading :)

$ 0.00
3 years ago

"Bitcoin Cash is where self-interest intersects with the greater good." Conclusion rocks👍👌💪

$ 0.00
3 years ago