What Bitcoin Is

A New Dimension of Power

Bitcoin is a new dimension of power. Source: Yours Truly (Frank)

This weekend, I had a conversation about politics, macroeconomics and Bitcoin with an uncle of mine who’s done incredible work people of lower socioeconomic status around the world throughout his life.

Bitcoin isn’t really his thing, though, and while I can understand why, I came to realize that maybe he could see the value in it — especially for those who’ve historically been financially disenfranchised — if I’d been doing a better job at explaining it.

So, I created the illustration above to put it in the simplest terms I could imagine.

Long story short: Bitcoin adds a new dimension of power to the world.

Prior to Bitcoin, individuals — especially those who weren’t landowners — were largely subject to the decisions that governments and corporations/the wealthy made. They were stuck in between slow-moving bureaucracies that didn’t always have their best interests in mind and corporations, which largely see humans as little more than soulless consumers.

(Given the current state of lobbying in the US and how the US government has access to private communication platforms to unconstitutionally surveil its citizens these days, it’s borderline laughable to even think of the state and corporation as separate entities in this current era, but I digress...)

In 2009, Satoshi Nakamoto (not to be confused with Saratoshi Nagamoto)…

Source

…offered the world Bitcoin, a technology that allows individuals to transact permissionlessly with the most scarce asset — the most pristine collateral — the world has ever know.

This puts an incredible amount of power back in the hands of individuals.

Before proceeding, I’ll also note that other blockchains have value, too, because stablecoins (tokenized versions of fiat currencies) can be transmitted across them and can help people living under regimes with failing currencies to get access to fiat currencies like the US dollar.

I’m focusing more on Bitcoin for the sake of my argument, though, for a few reasons:

1. Bitcoin is the only truly permissionless, decentralized blockchain out there.

2. Once Bitcoin is more fully monetized and/or no longer primarily measured in fiat currencies, people will view it more like a currency and less like a speculative asset.

3. Versions of stablecoins exist on the Bitcoin network, as well. See “Stablesats”:

During the conversation, my uncle asked a number of good questions, one of which was “Do you think that Bitcoin is already as powerful as the state and the corporation?”

“Absolutely not,” I replied. “And this is why I find it to be the most important project to which I dedicate my life right now.”

I don’t think we’re anywhere near a point where Bitcoin (BTC) could or should replace fiat currencies. Actually, I’m not sure it ever should, TBH, because I don’t believe Bitcoin should be forced on anyone. It should only be used by people who want to use it.

Also, the network is far too young to play a bigger role than it already does, and there isn’t enough even close to enough infrastructure built around it for hyperbitcoinization to happen any time soon in any sort of manner that wouldn’t turn the world into a Mad Max hellscape. Bitcoin is more of a tool than anything else right now.

My uncle also brought up the speculative side of bitcoin (lower case “b” for the asset, upper case “B” for the network).

I agreed that speculation was a part of it and that people do like to trade it. But I also shared that this was true with the financial products that have represented all recent emergent technologies (see Amazon and Facebook stock). The financial representation of anything new, promising and often misunderstood tends to be volatile; hence, some people choose to actively trade it.

Therefore, I try to help you all understand that there are good times to buy BTC and good times to “take profits” back into a fiat currency via this newsletter. This is important because:

• We still live in a fiat-denominated world. In other words, US dollars and other fiat currencies are still the denominator, and it’s straight up silly not to acknowledge that 99.999999999% of us still measure our financial wealth in fiat terms.

• I felt more at ease once I’d taken my principal investment out of Bitcoin (BTC). It can be difficult to make some money in fiat terms with BTC and then watch those gains disappear. Once you’ve owned BTC for a while, you become more comfortable with its volatility, but I often write with Bitcoin newbies in mind, and the reality is that many come to Bitcoin for the speculation and stay for the revolution. You’re not going to want to stay if you buy in at the top and panic sell at the lows. So, in my view, you have to learn to acknowledge and work with BTC’s volatility. It’s not going away any time soon. At the same time, I very much don’t recommend actively trading BTC. I often go months at a time without selling or buying it.

• There’s nothing wrong with speculating in markets. Because central banks consistently devalue fiat currencies, we’re forced to speculate to preserve our wealth. If you have a 401k or an IRA, you’re speculating (you can call it investing if you’d like, but, to me, that would presuppose that you have any idea what’s in the mutual funds and ETFs you hold in your retirement account) in markets as we speak, albeit in a more passive manner and on a longer time horizon. I find investing in BTC to be a more ethical option as compared to feeding Wall Street my money to preserve my wealth. Because BTC is volatile, though, I sell some when I feel like it’s trading a premium and I buy more when I feel like its trading at a discount. I don’t depend on trading BTC to make a living, nor do I want to.

With all of that said, you can both use Bitcoin as a tool for speculation and still believe in the notion that it empowers people.

Recently, I’ve become much more interested in how Bitcoin (BTC) empowers people than I am in the price of it (though, the two are partially linked), which is why I started the new renaissance capital You Tube channel/podcast. I find the stories that my guests share about how Bitcoin changed their lives to be utterly inspiring and they make me want to work harder to get people to understand the importance of Bitcoin.

To my uncle (if you’re reading), I know we have different views on Bitcoin, and I think I understand some of your concerns with it. I appreciate where you are coming from but also ask that you listen less to my voice when it comes to Bitcoin and more to the voices of my guests as I continue to have conversations with people from around the world who have found Bitcoin to be something of a life raft. I think you’ll hear echoes of conversations you’ve had in the Global South in your years of working there.

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The Yzer app

If you don’t want to spend your hard-earned fiat on BTC, you can also earn some sats (fractions of a bitcoin) via the Yzer app (available in the Apple Store and the Google Play store).

Through the app, you learn about Bitcoin, finance, macroeconomics and other money-related topics and then take quizzes on them. If you score high enough on the quizzes, you earn some sats.

If this sounds appealing to you, use my referral code — 6191350 — when you sign up to use the app. (When you reach level 2, we both receive 50 sats, which is currently worth about US$0.01. Big money!)

Keep in mind that the sats you earn in the app are on the Lightning Network, a layer-2 network that facilitates faster and cheaper BTC transactions. So, to claim your rewards, you’d have to download a wallet with Lightning capabilities like Muun or Phoenix.

Here are some videos to help you learn how to use those wallets:

In the following section, we’ll take a look at whether it’s a good time to buy BTC or not…