10 years ago, Satoshi Nakamoto mined the first block on the Bitcoin blockchain, the Genesis Block. Bitcoin launched in January 2009, at the height of the last major financial crisis. Nakamoto created a radical new form of money: The Bitcoin.
Stocks tanked, banks got bailed out and the Fed was injecting trillions of dollars of cash into the financial system. U.S. banks wound up getting USD 1.2 trillion in secret emergency loans, which weren’t reported until around 2011. Today, the big banks are bigger and more dangerous than ever. JPMorgan Chase, for example, is twice the size it was before the 2008 crisis. This one bank now has USD 2.5 trillion of assets! Debt has piled up rapidly since the last crisis at the corporate, government and personal levels.
The global financial situation has gotten only worse in the 10 years since Bitcoin was born. The Wall Street Journal just reported that total global debt has tripled in the past two decades and is approaching USD 250 trillion. Fiat money is starting to falter. Governments and central banks are proving once again that they cannot be trusted with the power to create unlimited money. This world is the world Bitcoin was created for.
Unlike fiat money, Bitcoin is scarce. There will only ever be 21 million Bitcoins, while there will be seemingly endless dollars. An equally important quality of Bitcoin is that it is uncensorable. No entity can stop a Bitcoin transaction from going through, unless they literally seize the person making it.
In 2010, Visa, Mastercard and PayPal cut WikiLeaks off from receiving donations through their networks. WikiLeaks turned to Bitcoin for donations and started receiving them in July 2010, when Bitcoin prices were around $0.06. Founder Julian Assange claims it made a 50,000% return on the donated funds.
I suspect the uncensorable aspect of Bitcoin will become even more important in the future. Bitcoin offers an alternative that is more than just sound money. It’s money liberated from the ideologies and views of particular groups and individuals. As it should be.
The longer something has been around, the longer its life expectancy is. It’s a real effect that can apply to anything. Restaurants, technology standards, people and, of course, Bitcoin. The longer something has been in existence, the longer it is likely to exist. Bitcoin has been around for 10 years now, so it’s likely that it will last another 10 and so on. In those 10 years, Bitcoin has been battle-tested. Hackers, governments and private groups have all tried to ruin, hack and destroy it. They have failed. The Bitcoin network is more robust than ever. It distributed more than tens of thousands of servers all over the world. The Lightning Network is making incredible progress and has the potential to make Bitcoin transactions nearly instant and free.
Basically, the world simply hasn’t found out and doesn’t understand what Bitcoin actually is yet. It’s a monetary revolution in the making and most people are still eyeing it like it’s a strange, speculative toy. The general public will come to understand Bitcoin with time and unfortunately, this will accelerate as more financial crises arrive.
Sven Franssen