It was April 27th, 2013 when I first published an earlier version of this, and it is timely to start bringing this to life again.
The most marketable goods are what become the media of exchange.
The statement above has held true for all time. When exploring the history of money and barter it was not cows and chickens that were exchanged. The farmer with an excess of chickens would exchange first for grain, butter or some other divisible good. Grain could be divided into small parcels. These parcels could be used to trade for other objects. It is impractical to think that anything larger than a small village engaged in social barter long-term. Even a small group, no larger than a few families starts to collate obligations. What would’ve actually occurred is the use of improvised currency.
This started with divisible goods. Those common items that could be easily exchanged.
In Rome, salt was commonly used and forms the basis of our word today for earning. That is, salary.
Salt was ideal as a form of early currency. It was divisible into small amounts, did not degrade quickly and started as something people could trust. It was easy to taste salt and it was simple for the average person to determine the quality.
As the value of trade increased salt became insufficient as a medium of exchange. It was used for many small purchases and remained a staple up until today, but, the volume of salt has increased against labour leaving the amount of salt required to become excessive.
The quantity of salt was too large in the end for most trade. It was also too easy to lose. A rainstorm could literally liquidate your holdings. Slowly over time other sources of wealth came to replace early currencies such as salt. Gold is perhaps the best known of these. It is easily divisible and does not degrade over time. It has a use in jewellery and has been highly valued through the entirety of written history.
Supply and demand however has increased the value of gold. Gold has uses in electronics and jewellery even today but its true use is as a form of wealth measurement. This value has increased to many times its consumption value as it is in demand as a form of saving. Although gold is mined it is also consumed. The demand for gold is increasing for many reasons but one is fairly simple, you cannot print gold.
This is of course a powerful aspect of gold. The hidden tax of inflation cannot be hidden. The government cannot decide to increase the monetary supply and devalue a nation’s wealth. Yes, the arguments abound that the central banks control currency or not the government but remember in the US it was Pres. Obama who took an additional $1 trillion for his own spending experiments. The result of this was a severe drop in the US currency value. The US dollar which was worth far more than the Australian dollar was on par in 2012. The reality of this is that the US government took the wealth of the entire country and taxed it away. The international purchasing power of a US citizen has been drastically reduced. The result is every US citizen has less money. Their houses are worth less, their investments are worth less, they are less wealthy.
The reality, government has taxed them outside of Congress or anything they decided to vote for. The reality is a theft on a massive scale but one that has been hidden, overlooked and somehow blamed on commerce and business. Commerce and business of course being the engine that funds and powers the country but which is also denigrated.
So the question is what the hell does this have to do with bitcoins and trust?
If you asked this I will say is a good question. It is a fundamental aspect of what bitcoins are achieving. The key to currency is trust. That’s it, nothing special no more. The US dollar is not a promise of anything of value. Since the US dollar has been taken off the gold standard the US dollar is a promise of the US dollar. What this means is that if you go up to the treasury and hand them one US dollar they will hand you back a US dollar. This may be the same US dollar or it may be a different one. That is the extent of state-based promises in regard to currency. Basically, there is nothing to trust.
We’ve seen this again and again. States change leadership. Even when leaders are selected they do not do what they are selected to do. In Australia we have a choice of two parties. One a Labour Party who will lead us into a deficit that they have created. The other the conservative coalition who will promise to spend us into a deficit. We have a choice. A choice of who waste our money better. But is that really a choice at all. When given a choice of Mickey Mouse or Donald Duck as our leader I don’t see that we have a choice at all.
Bitcoins are like gold in many ways that I am not going to detail on this post. What matters is that government cannot degrade the currency. They cannot print more. They cannot steal the wealth of the nation for the half cocked ideas they tout without a clue of the effects.
Australia has an opportunity to be the breadbasket of Asia. Commercially speaking supporting the commercialisation of agriculture make sense. This is not the idea of handouts to farmers, it is the idea of allowing large-scale industry farming. Automated systems based on technology with highly educated people managing farms. This is an idea based on cutting subsidies and spending less. It is one where we don’t continue to pay car workers who are economically inefficient and who drain money from the entire society to produce inferior quality products. It is one where the most competitive forces win.
Right now, we have the same scenario in Bitcoin with regards to mining. Some want to scale and allow the world to have access to sound money. Others, want to be subsidised so they do not need to work and strive as hard.
Bitcoins can be trusted for the simple fact that government cannot print more. It is not a central authority that creates trust. It never has been. Money did not develop because of the benevolent government. Money was created by merchants and commercial entities as a means of engaging in trade. It was not a benevolent government who created money but rather a despotic government who monopolised and continues to monopolised the means and supply of money following a hostile takeover. Yes a hostile takeover. Quite simply put money existed well before government. Trust in the currency existed without government. We have been fed a lie designed to make us believe that we need a benevolent central body telling us what to do. We do not nor did we ever.
For this reason and for the reason that bitcoins cannot be created at will, we can trust virtual currency more than that issued by governments.
This brings us back to the initial statement of this post. The most marketable goods will always become the primary media of exchange. Right now Bitcoin is (and remains in) in the early phases of adoption. A limited number of markets are available but they are growing. It is a currency that is infinitely divisible allowing for small trades across borders. This is important. More so than many people realise.
We are entering an era of intellectual property.
There will be no traditional manufacturing in years to come. This is a big and even bold statement but it is one based on fact. Automated systems are becoming cheaper, faster and better. In just a few years they will exceed the best capabilities of the most skilled artisans and they will do this at a cost less than the lowest unskilled wage. 3-D printing remains at the stage computers were in the 1970’s and 1980’s. Robotics remain at a similar level. What people seem to forget is that all of these technologies gain in capability every year exponentially. The skills of individuals, even artisans increase slowly if ever. The best development a human can do is linear. Over time any exponential system exceeds a linear one. In my lifetime manufacturing and automated systems will produce more at a better quality in the lower price than any human could ever hope to achieve.
What people can offer is simply intellectual. We design and we create, it is our strength.
The result will be a world of little but intellectual property. Technologies such as 3-D printing as well as others I cannot even imagine and services will be the foundation of society. Manufacturing will not be. Even agriculture will be a technology. The romanticised ideal of the farm family has had its day. The agricultural corporation running automated devices will exceed the output in production of even the best farmer.
This is a world that needs a means of transacting engaging across borders. Intellectual property can be distributed instantaneously across the Internet to any place as it is needed. Your production device at home, the future intellectual child of today’s 3-D printing technology, will create a new cup as you need it. It will replace your shoes, your swimsuit, your computer tablets, the thing that passes for your phone with its visual display across your retina. All of these will be printable at home. To do this will require base materials and intellectual property.
Just like we purchase intellectual property for movies and videos online now we will purchase and receive instantly goods and manufacturing rights in the future.
This will be from any place on earth. We will purchase from Africa, Asia, Europe, the US and anywhere else instantaneously. Your Nike shoes will not require sweatshop workers in China. They won’t require workers at all. The result will be the download of an intellectual property right enabling you to print these things at home. And they will be better quality than you have now. They will be bespoke set to your exact measurement in a way that not even the rich know now.
The question to ask here is whether any existing currency can handle this world of the future. One that will be here in my lifetime and I’m not young. The simple answer is that US currency, the failing Euro, or about anything else you can select as a state currency will not be trusted internationally if at all inside their own borders. The trust in the US dollar has eroded as the country is slowly become more and more interventionist.
What bitcoins offer is a way to instantly distribute payments anywhere in the world quickly and cheaply. They offer a means of distributing intellectual property and selling the rights instantly anywhere in the world.
For those who argue about the need for trust based on the government I would add it is about time that you look at the world we are in and where it is headed. Innovation will change this earth in a way that none of us can comprehend but it is a way that will become based on intellectual property and intangible ideas. All wealth will become intangible at its primary source and foundation. Bits will become the foundation of all society as they already are starting to do, not just movies or music that hard physical goods will derive from ones and zeros.
Right now we can still transact using US dollars and other local currencies but in the future this will become less and less viable. This is the beauty of Bitcoin in this is the uppercut that has remained unseen until now when it is too late. The advances in intellectual property and its inevitable march to consume manufacturing as we know it will require an international currency that can be universally trusted. This is one without any government intervention. There is only one way to do this and no government can centralise it.
Bitcoin is not the only solution but it is the leading one. It is Bitcoin that allows Peer to Peer Electronic cash and it is BCH that remains true to this purpose.
Hold fast to your beliefs if you wish and I will place my bet is you did yours. For this is what it is. You may bet on currency controlled by state player and I will bet on something that is decentralised and which cannot be devalued at a whim. A currency that can be trusted by all.
Bet your way and there is a simple way of testing what will occur. It is time. I’ve placed my bet and it is against all of those who believe that trust requires a central authority. My bet relies on the individual as a collective whole. That we all have value in that society does not need to be ruled centrally through monetary control. In the next couple decades we will see who is right and if I’m wrong my words will be here as a marker and a lesson.
If I’m right…