The significance of Bitcoin's birth
Those who participated in the Bitcoin market after 2017 encountered different operations and ideals than those who came before. Currently, there is minimal interest in what occurred prior to 2017. Instead, the focus is on the momentum of the price rise and the increased valuation of assets in portfolios.
The rhetoric surrounding the separation of money from the state, market-based means of exchange, and a true revolution that extends from money to the whole of world politics has receded. Similarly, the talk of changing the way money works as a way to change the prospects for freedom itself has diminished. Bitcoin enthusiasts have different goals.
During this period, the digital asset could have protected users and businesses from inflation. However, the original asset bearing the BTC symbol has been sidetracked from its original purpose. This is despite the fact that Hayek articulated this ideal well in 1974.
Hayek spent most of his career as an economist advocating for sound monetary policy. At every significant juncture, he encountered the same challenge: governments and the institutions they oversee are reluctant to embrace sound money. Their objective is to manipulate the monetary system to benefit a select few, rather than the public at large. Over time, he refined his argument, concluding that the most effective solution was to fully divest money and power.
In 1976, two years after the Nobel Prize was awarded, he wrote that it would be beneficial to limit the government's control over financial resources. This would help to slow the growth of the government's share of national income. If this trend is not addressed, it will result in a situation in which the government will claim 100% of all resources within a few years. This will result in a totalitarian state, although not in the traditional sense.
Perhaps it will prove as important to cut off the taps on the extra money that government provides for it as it is to stop the inherent tendency of government to grow indefinitely. This is becoming as much of a threat to the future of civilisation as the badness of the money it provides.
The problems of realising this ideal lie in technology and institutions. As long as the nation's currency is in operation, there is no real impetus to change it. It is clear that the impetus will never come from the ruling class that benefits from the current system. This is precisely where every old argument for the gold standard falters. How to solve this problem?
In 2009, an anonymous developer or group published a white paper on a peer-to-peer digital cash system written in the language of computer scientists, not economists. At the time, most economists considered Bitcoin's functionality to be opaque and untrustworthy. As it transpired, the system's operation commenced in 2010. To recap, Bitcoin employs a distributed ledger, dual-key cryptography, and a fixed-quantity protocol to release a new form of currency that operationally merges the currency itself with a settlement system.
Bitcoin represents an idealised vision of a decentralised, globalised financial system, as proposed by Hayek. The distributed ledger technology that underpins Bitcoin is a key enabler of this vision, as it allows for the globalisation of operating nodes and the introduction of a new form of accountability. The ability to bring together payment and settlement mechanisms on a large scale has never been possible before. However, the emergence of distributed ledgers has led to a significant increase in their market value. They have completely abandoned the concept of peer-to-peer cash and transformed it into a high-yield digital security that is not a competitor to national currencies. Rather, it is an asset that is not meant to be used, but rather accessed under the control of third-party intermediaries.
