I can imagine why you have chosen to read this article; after all, Bitcoin is rarely associated with poverty – given that its earliest investors and enthusiasts have done so well financially. Indeed many wonder how and why Bitcoin can be considered suitable for society when some are already very wealthy thanks to it, while many could be left behind by investing in it later.
Propaganda about Bitcoin being a Ponzi scheme by influential speakers has also nurtured this view among many, particularly those who have yet to exert themselves in learning more about this new technology.
Such reasonable concerns also troubled me when I first learned about Bitcoin. It took some time to comprehend how the infrastructure of the financial system truly worked before I could tackle these issues. If you are a first-time reader, you may want to examine some of my previous newsletters, such as Government and Bitcoin and Bitcoin and Property Rights, to gain a foundation for the subject I will discuss here.
Gold
Before I heard about Bitcoin, I had spent several months learning about Gold and why it was considered a form of ‘sound money’ as it had been used as money for over 3000 years.
It is difficult to create more gold, which can only be mined and added to the money supply slowly. As such, this scarcity provides an excellent metric when trading goods and services because it means gold doesn’t lose its value. People and businesses can store economic energy for future use by holding onto it, as the slow increase in the money supply means that gold retains its value over time.
My initial interest in Bitcoin was sparked by the revelation that, as a software system, it had been programmed to mimic the economic properties of gold.
By replicating the attributes of Gold, I realised that Bitcoin could give us the advantages of its qualities as a form of sound money without the disadvantages of being heavy and therefore needing to be managed and distributed in the form of paper notes by banks.
As a result, the technology of Bitcoin could potentially allow us to return to a time when money operated on a gold standard, such as the late 1800s. A time of tremendous technological change for humanity and prosperity, one discovers when one begins to research the realities of that era.
However, my most pertinent recollection of the 1800s comes mainly from the novels of Charles Dickens, who famously illustrated a time of abject poverty.
Would returning to a ‘Gold Standard’ again give us the unresolvable problem of poverty? Hadn’t the welfare services of the 20th century solved that issue? How would society manage if these services, supplied by the government and our taxes, no longer existed?
I worked as a dentist for twenty years and spent some time working for the National Health Service (NHS) in the UK, caring for people who relied on these services. Hence, consideration of how these people would have fared in the late nineteenth century was a matter that truly troubled me.
However, the scope of this problem is more significant than just the UK and other Western countries, so I decided to probe the issue in further detail.
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Thank you for your kind comment – I appreciate the feedback!