Original link: nakamoto.com
Author: Balaji S. Srinivasan
Compilation: Share Finance Neo
Bitcoin represents an explicit encoding of previously implied value in the tech world. It's not just software-it's a Schelling point and a symbol. Therefore, in the 1920s, it will become a recognized technology banner.
In order to understand this statement, we need to define what is "technology", what "banner" means in this case, and why Bitcoin was chosen as this flag. Let us proceed in turn.
Technology is a culture built and exported by Silicon Valley. It is a global community of founders, investors, engineers and designers. It's code, applications, products, and billion-dollar companies. But most fundamentally, the values that underpin valuations.
These values are implicit in common terms such as MVP, product market fit, or idea maze. They are expressed in writing by the most accomplished people in science and technology through popular books.
But they are usually not directly expressed. If we enumerate them one by one, we will find that technology is international, capitalist, decentralized, extremely deflationary, networked, encrypted, digital, unstable, ambitious, Quietly changing. These are the values of technology.
Bitcoin (and cryptography in the broader sense) enables us to transcend implicit meaning by expressing these values in a piece of code that is also an investment vehicle. The code talks to developers, its advantages attract investors, and its intrinsic value speaks to both. If you believe in these values, you tend to buy Bitcoin.
Bitcoin : an ideological banner and a Schelling point
Recall that not every flag represents a geographic entity. Some of them represent sports. In this sense, Bitcoin has become a banner because it is an encoding of the aforementioned technical value and an ideological banner.
Recall that when a community coordinates without explicit coordination, the Schelling point appears. A typical example is when two strangers know that they must meet in New York someday, but do not know when and where they will meet. They need to guess what the other party will do without talking to them. The balanced solution for this is usually "Meet in front of the information kiosk of the Central Station at 12 noon".
Similarly, if we ask what two random people in the global tech community will coordinate, we will start to discover that technical experts in the United States, China, and Russia often agree that Bitcoin is valuable.
For example, Jack Dorsey, the founder of Twitter, Reid Hoffman, the founder of LinkedIn, and Marc Andreessen and Peter Thiel, members of Facebook's board of directors, all support Bitcoin. Similarly, Binance's founder Zhao Changpeng and Telegram's founder Durov are Chinese Canadians and Russian diasporas. They also support Bitcoin. Different countries and different backgrounds share common beliefs about digital currencies.
It's hard to get such people to agree. Think about it, the global tech community won't support Google, Facebook, WeChat or Yandex. Even if the founders respect the products created by these companies, as capitalists, they are always aware that economic imbalances may occur at some point in the future. What is good for Google may not always be good for you.
Technologists tend to focus on two areas: (a) open source projects, where consistency is less important; and (b) quantifiable investments. Bitcoin is a combination of both.
Regarding open source, perhaps the most similar to Bitcoin is Linux. Just like Linux, everyone can profit from Bitcoin, but no one can destroy it. For example, Google and Facebook are strong competitors, but they cooperate on Linux, because Linux is a demilitarized area, and one side cannot take away the other. Microsoft may have its own operating system, but now even Microsoft has to respect Linux.
Similarly, in the crypto community (which overlaps with the technical community, but is not exactly the same), no matter what project someone is starting, they know Bitcoin, respect it, and may hold some. No matter what exchange people are running, they will have Bitcoin support. No matter what password tutorial someone writes, they assume that users have some knowledge of Bitcoin.
Therefore, Bitcoin is the first choice of many people and the second choice of many people. This means that it will become the first choice of the community. This is why, in the sense of Shering Point, Bitcoin is a banner-something worthy of unity.
Bitcoin encodes the value of technology
When the global tech community gathers around the bitcoin banner, what is behind it?
As mentioned above, we believe that Bitcoin encodes the following implicit technical values: internationalism, capitalism, decentralization, extreme deflation, networking, encryption, digitization, instability, ambition, and quiet change. Let us discuss these issues in turn.
Bitcoin and technology are essentially internationalists.
The technology industry may have started in Silicon Valley, but at this point it is a global phenomenon. In the United States, more than 60% of the most valuable technology companies were created by first- and second-generation immigrants. Today, 51% of unicorn companies are located outside the United States. Technology companies have far surpassed Silicon Valley and entered every country with an Internet connection.
So is Bitcoin. There are millions of crypto traders around the world, thousands of Bitcoin parties in hundreds of cities, and every major country knows cryptocurrencies.
Bitcoin and technology are fundamentally capitalist.
The technology industry typically revolves around entrepreneurs, angel investors, venture capitalists, mergers and acquisitions, and ipo. The broader technology community also includes academic engineers and open source communities. Although neither is for profit, they are more capitalist than their counterparts in the academic humanities and traditional non-profit organizations.
Bitcoin is also related to capitalism. It is a transaction ledger. This is speculative investment. This is the digitization of currency. This is a form of transnational property rights. It brings risk and reward. It uses blockchain to encode the history of the entire economy. It is therefore capitalist in nature.
Bitcoin and technology are highly decentralized.
As Benedict Evans recently pointed out, the benefit of a tech monopoly is that there are so many options, and a market map for any tech industry will show the same thing:
There are hundreds of millions of websites, nearly 5 million startups on the angel list, thousands of angel investors, and hundreds of large venture capital companies. There is no bottleneck in the technology field. No financier or platform is what you must deploy to succeed.
The same is true of Bitcoin, and more generally encryption. Satoshi designed by Nakamoto is very famous. No miner can review transactions on the network. He claims that Bitcoin is "completely decentralized, without servers, and without central authority." Although there is still much work to do to quantify and improve decentralization, there are miners, nodes, exchanges, developers, and investors in this ecosystem, each of whom has competing interests, and (ideally) No one has veto power over Bitcoin.
Left: Mastering Bitcoin's expanded network diagram Right: Random sample of coins
Finally, there is another level of decentralization: decentralization through coins. There are enough different ways to reach consensus and protect privacy, so the phenomenon of cryptocurrencies is almost impossible to disappear. The loopholes in the work certificate are different from the loopholes in the stake certificate, commissioned stake certificate, and space certificate. It is not now possible to withdraw all coins and all exchanges at the same time in a single issue. At least part of it will survive
Therefore, in the absolute worst case in the world against cryptocurrencies, even if Bitcoin itself is found to have irreparable vulnerabilities, we can also expect to transfer part of it to surviving coins and import the Bitcoin ledger into one of the surviving ones. In the chain. The reason is that the Bitcoin ledger is highly copied, with so many stakeholders behind it, it is almost impossible to erase it from the earth. It will be snapped and restored over and over again-even if the original network is shut down.
Bitcoin and technology are both incentives for deflation.
The single most important chart in technology is arguably Moore's Law. This is a story of super deflation: if the number of transistors on an integrated circuit doubles every two years, the cost of computing will be halved in the same period. In other words, even with inflation in mind, the same dollar will buy more computing power tomorrow than today.
It's not just computing power. Those regions that have been disrupted by technology have witnessed plunging prices. If we compare the number of different hardware replacements for a mobile device, or if we compare the cost of browsing Wikipedia or Spotify with the cost of a physical encyclopedia or CD-ROM, we will see a difference.
If we compare the long-term cost trajectories of technology-reached industries (TV, software, mobile phones) with industries that have not been disrupted by technology (education, healthcare), we can see this intuitively.
Bitcoin is also the embodiment of extreme deflation. Not only is BTC the best investment since 2010, but the value of BTC relative to the US dollar has increased by several orders of magnitude over the past decade.
Moreover, Bitcoin represents a form of super deflation that is complementary to Moore's Law. If Moore's Law creates value by reducing computing costs, then Bitcoin gains value by shielding inflationary pressure:
In the end, if Bitcoin does fulfill its mission, we will use BTC as the unit of account. This is called hyperbitcoinization.
Bitcoin and technology are both web-based.
It is obvious to say that the technology is Internet-based. It's also obvious to say that it's about social networks, loose collaboration, non-geographic associations, and routing algorithms. But in the long run, this means that the geodesic distance between two points in a social network is more important than the great circle distance between two points on the surface of the earth.
The same is true for Bitcoin and more general cryptocurrencies. Perhaps only one in every 100 people on the planet today holds Bitcoin, with a maximum of 50 million people. In the early days of Bitcoin, this number was much less.
But due to the internet, they are actually in the same room. It doesn't matter how far apart they are; they are all part of the same idea, connected together by a computer network. They can either choose not to use their own currency (based on their geographic distance from their neighbors), or they can choose to enter this new world (based on their ideological proximity to like-minded people).
Based on the concept of computer network sharing, the freedom to associate with anyone anywhere in the world is the core value of technology and Bitcoin.
Bitcoin and technology are built on encryption.
The modern technology industry exists because of encryption technology on the Internet. Without SSH for encrypted connections, there would be no cloud, remote work, and deployment. Without SSL and HTTPS for encrypting credit card and line information, there would be no e-commerce, payment companies, advertising and subscriptions. The infrastructure and payment infrastructure that creates wealth on the Internet will no longer exist.
Similarly, Bitcoin exists because of decades of work in theory and applied cryptography. Without the concepts of public key encryption, digital signatures, hashing, and hashcash, or SHA-256, RIPEMD-160, and secp256k1, Bitcoin would not exist. The basic cryptographic structures needed to represent, transfer, and protect wealth through consensus will not be available.
Bitcoin and technology are both digital in nature.
This is even more obvious, but in the past three decades, the technology industry has digitized books, magazines, movies, newspapers, photos, letters, advertisements, music, documents, radio, television, and various forms of media. Technology has also digitized what we considered "digital" in the 1980s, from your Fitbit steps to your preferences in the app. Of course, digitization has enabled functions such as copying, sharing, editing, aggregation, and machine learning.
Bitcoin and cryptocurrencies are usually the next stage of digitization. Although the technology industry has digitized everything that is not scarce, until the Nakamoto consensus, we did not have a native representative of digital scarcity. Companies like PayPal use centralized databases to simulate digital scarcity, but fundamentally, they rely on a set of licensed participants with root privileges to ensure this scarcity. And Bitcoin's blockchain has changed all that.
Once people realized that Bitcoin's blockchain is a cryptographically secure way to represent a public database with digital currencies, they soon realized that a similar approach could be used to digitize stocks, bonds, commodities, derivatives , Reit, mortgages, loans, and every financial asset. In addition, like the first wave of technology-driven digital waves, we will be able to build these building blocks of digital finance to create new applications. We are also digitizing identity, property rights and ultimately governance itself.
Both Bitcoin and technology are highly unstable.
Entrepreneurship is unstable, many startup failures are common, and post-mortem inspections are common. Although failure is unpopular, it is budgetable, acceptable, and possible. Venture capital is all about power law. In power law, one investment can succeed and you pay for everything else. Persevering entrepreneurs can sometimes succeed. Be patient, long-term capital has a chance to get a return of 1,000 times.
The reason behind this is that the variance increases with decreasing sample size. When you have only 10 employees, a single resignation can put the company in trouble. Conversely, if you have only 10 customers and you bring in a big sale, an event can increase your company's revenue by 10%, attract key investments, and lead to long-term success.
Bitcoin is equally unstable. The price chart alone shows multiple declines of 80-90% over the past decade. Countless failed Bitcoin startups. The number of new Bitcoin millionaires is also increasing. In many ways, Bitcoin is the world's first publicly traded high-growth startup. It exposes millions of people to changes in entrepreneurial culture, the virtues of persistence and patience, and the disadvantages of premature abandonment and premature death.
Bitcoin and technology are amazing, but they also have rational ambitions.
Tech entrepreneurs' ambitions are often mocked. But without the belief in building spacecraft, making electric cars, organizing the world's information, or connecting billions of people, we would not have the company of today. The power of technology lies in realistic ambitions, rational ambitions, ambitions based on calculable risks and quantified benefits.
Bitcoin's ambition is no less than developing a new digital currency to compete with the US dollar. Ten years later, it is clear that every central bank and financial institution in the world has heard of Bitcoin. Today, with the existence of multiple digital dollars, China may launch a blockchain-based digital currency. Bitcoin is ranked 40th in the market value of fiat currencies. It is not crazy to say that Bitcoin has changed the world, and it is likely to The U.S. dollar fought.
But in 2009, the idea that Bitcoin could compete with the US dollar was crazy. In the first exchange after Satoshi Nakamoto posted the white paper, it was clear that Hal Finney and Satoshi Nakamoto had crazy and rational ambitions.
Hal envisions a scenario where each bitcoin is worth $ 10 million:
"As an interesting thought experiment, imagine that Bitcoin is successful and becomes the main payment system used around the world. Then the total value of the currency should be equal to the total value of all the wealth in the world. My current estimated global household wealth totals from 100 Trillion dollars to 300 trillion dollars. With 20 million coins, each coin is worth about 10 million dollars.
Therefore, the possibility of generating coins with a few cents of calculation time today may be a pretty good bet, with a return of approximately 100 million to 1, even though the odds of Bitcoin successfully reaching this level are very small. "
Last but not least, Bitcoin and technology are quietly undergoing revolutionary changes.
Technology has not disrupted the music, taxi or newspaper industries through traditional political activism. It just makes better products, allowing millions of people to voluntarily choose to buy or use them. Great changes have taken place through these quiet, personal decisions, as shown below:
Similarly, bitcoin does not make change through civil society. This is a web-based phenomenon that has revolutionized monetary policy through billions of private actions, rather than standing on the street corner and shouting slogans. This is a silent revolution.
We have explained how Bitcoin (and broader encryption) encodes the hidden value of the technology. It is international, capitalist, decentralized, extremely deflationary, networked, encrypted, digital, unstable, ambitious, and quietly changing.
I believe that in the 1920s, as part of a broader international reorganization, the technology industry will eventually support Bitcoin and cryptography. Cryptocurrency also reflects many basic values of the United States (such as freedom of speech, freedom of contract, freedom of association, protection from unreasonable search and seizure, right to privacy, etc.), and it also shows millions of people across the world a wide range of international Attractive.
This adjustment will not be right-to-left in the traditional sense, but land-to-cloud, country-to-network, concentration-to-decentralization, new money to old money, internationalists / capitalists to nationalists / socialists, MMT (generation Monetary theory) versus BTC, and (perhaps most symbolically) Hamilton's neutral nature.