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In his book The Bitcoin Standard, Saifedean Ammous wrote:
Bitcoin’s first and most important value proposition is in giving anyone in the world access to sovereign base money. Any person who owns Bitcoin achieves a degree of economic freedom which was not possible before its invention. Bitcoin holders can send large amounts of value across the planet without having to ask for the permission of anyone. Bitcoin’s value is not reliant on anything physical anywhere in the world and thus can never be completely impeded, destroyed, or confiscated by any of the physical forces of the political or criminal worlds.
Part of the economic freedom that Ammous mentions derives from the fact that Bitcoin enables peer-to-peer payments via a decentralized network.
Let’s say your cousin wants to send you a birthday gift. She runs out of time to buy a present, so she pops a $50 check in the mail instead. This was issued by her bank, and when you deposit it, you must wait several days for your bank to verify with hers that she has sufficient funds to cover the amount she gave you.
Only then will the $50 be shown on the plus side of the ledger in your checking account. PayPal or Venmo are basically electronic applications that accomplish the same thing a little quicker, but as we’ve already seen, they still have the same main limitation: the transactions are mediated through a middleman and therefore can be disrupted or stopped on a whim.
In contrast, if your cousin sent her birthday gift to you via Bitcoin, she would send the designated amount of satoshis via the Lightning Network, and you’d receive it within milliseconds, providing instant settlement.
Before we go any further, let’s break down a couple of important terms.
A public key is a cryptographic code that authenticates your identity as a user of a decentralized network. Just like your email address or phone number, you can share your public key without jeopardizing the security of your account.
A private key is like a password that enables you to access your Bitcoin account and spend, withdraw, or transfer funds to any other user, no matter where they are in the world.
The key can be a string of numbers or a 12- or 24-word phrase that you should keep secret and have a backup copy of.
With this private key, you can utilize any computer, tablet, or cell phone in the world — even if they’re not yours — to conduct Bitcoin transactions safely, quickly, and securely. As Nik Bhatia wrote in Layered Money,
“Bitcoin gives people around the world the first genuine alternative to their national currencies…Our multipolar world is looking for a monetary rebirth, and Bitcoin offers exactly that…transactions once confirmed are impossible to override, making Bitcoin the ultimate tool of financial freedom anywhere in the world.”
Ralph Merkle, who invented a kind of tree data structure that enhances the efficiency of Bitcoin, takes this notion further when explaining the advantages of Bitcoin over centralized banking:
“It can’t be changed. It can’t be argued with. It can’t be tampered with. It can’t be corrupted. It can’t be stopped. It can’t even be interrupted.”
Central banking stops this from happening with fiat currency, but with some cryptocurrencies, it’s difficult to verify who owns digital tokens. This can enable a digital thief to steal by duplicating a transaction to make it look legitimate, even though it isn’t. In this way, the victim’s account spends the same token twice. Bitcoin eliminates this possibility with the use of the blockchain (a sort of universal ledger), through which every transaction is verified.
According to a post by Team InnerQuest,
“the blockchain prevents double-spending by timestamping groups of transactions and then broadcasting them to all of the nodes in the Bitcoin network. As transactions are time-stamped on the blockchain and mathematically related to the previous ones, they are irreversible and impossible to tamper with.”
The freedom and efficiency of using Bitcoin.
This an excerpt from our book, Unapologetic Freedom
