With all the volatility and headlines that have been going on in Bitcoin lately, it’s really easy to get lost. The various altcoins are becoming more and more distracting, albeit useless, and new entrants continue to make us forget the real reason we are here. Unfortunately, the people behind these plans just don’t understand what a crucial time we are going through.
Bitcoin is a solution to the current corrupt system.
Traditionally, governments have levied a percentage of the goods and services produced and manufactured in their respective economies in the form of taxes (the inevitable evil everyone hates). The state takes taxes on productivity, then collects them and reinvests them in the country. These investments can be anything from infrastructure to military. The original The purpose and function of all governments (then and now) and taxation are to protect people, protect the country and develop infrastructure. Ideally, there is an incentive alignment where what is good for the people is also good for the government. By reinvesting this tax revenue in the economy, the country is growing and can modernize its infrastructure to make everyone more productive.
A higher productivity combined with the reinvestment of tax revenues allows an economy to grow and thus increases its overall tax base. A government can raise more taxes the more production grows. The organic growth of an economy prevents the government from increasing tax rates.
Today, however, our economies are heavily driven by central banks. Enter “money printer go BRRR!”. Our economies are driven by excessive quantitative easing. Instead of funding government spending with tax revenues and maintaining a balanced budget, central banks provide new money to buy government debt, allowing the government to spend over and above its means. The core problem with a central bank-driven economy, in which the government can simply have their central bank print new money, is that at this point the state no longer has to worry about reinvesting tax revenues in the economy, infrastructure or education system for people to help and increase the tax base. The state is no longer dependent on taxes alone. She can just use as much new money from the central bank as she needs. Take a look at the current US federal budget for fiscal year 2021 and ask yourself: “HOW is that sustainable?”
In this system, taxes do not go away. You go way up. Wealth and savings wither due to “2% annual inflation”. In this central bank-driven economy, the alignment of incentives between the government and the people has been broken. With monetization, the prices of assets like stocks and real estate increase over time. As a result, we get more wealth inequality as those who own those assets get richer. The people who do not have wealth have no protection against excessive money printing as their cost of living increases. Pointless killing and wars are financed by governments through their central banks. Wealth inequality drives social unrest. Instead of governments being honest with their citizens, they prefer to lie and pit them against each other.
When I talk about Bitcoin, it’s not about “increasing numbers” or “having fun staying poor” (even if these jokes may be humorous), but rather about buying and holding Bitcoin. It’s one way to fight the central bank-driven economy. Bitcoin is the only unique way to protest – and possibly overturn – this system.
There are many deep thoughts that went into Bitcoin and are still flowing into Bitcoin. How the Bitcoin network works is, in and of itself, flawless and majestic. Bitcoin is still a mystery unfolding before our eyes. I would even go so far as to compare it to how chaotic yet impressive our universe is. You just don’t see that in other projects. As Alex Gladstein notes in his amazing article, “87% of the planet is born into autocracy or significantly less trustworthy currencies. 4.3 billion people live under authoritarianism and 1.2 billion people live under double or triple digit inflation. ”People like Paul Krugman, Charlie Munger and Western elites annoy me when they lend their thoughts on Bitcoin to the rest of us. They enjoy a level of civil liberties and stable currencies that most of the world just don’t have. In the summer of 2018 I visited the Palestinian Territories. I’ve seen what our current central bank controlled economic system has done around the world.
Fix the money, fix the world.
This is a guest post by Paul Opoku. The opinions expressed are solely their own and do not necessarily reflect those of BTC, Inc. Bitcoin magazine.