In 2008 the most significant innovation in our known history came into being. The digital revolution was well underway, but the invention of computer software that could keep records unique still needed to be discovered. Computer records prior to 2008 were easy to copy and change retrospectively, which gave computers limitations when storing information permanently. All of this changed with the invention of Bitcoin, the first blockchain. Once invented, users could transmit information and records via software, ensuring that nothing could be tampered with from this point on. This data, now recorded on the blockchain, could be considered immutable.
By solving this problem and with the additional parameters programmed into Bitcoin’s initial software, The remarkably anonymous Satoshi Nakamoto produced a digital technology he described as a form of digital cash and, in doing so, a potential form of money that could improve on the economic properties of gold.
Gold, as a form of sound money, facilitated the prosperity of Europe in the late 1800s and was crucial to the success of the British Empire. The break from the gold standard in Europe at the beginning of the first world war (see my previous newsletter, Government and Bitcoin) was the beginning of our most recent iteration of fiat money worldwide. Fiat money is an experiment that has been tried many times throughout history and has always ended in inevitable failure (see Bitcoin and Property Rights).
It is always tempting, when held hostage to discipline, to want to be free of those limitations. The break from the gold standard was no different, and the desire to win the first world war was a profound motivator for this. The subsequent attempts to return to the Gold Standard and the machinations that flowed from it generated unfathomable pain and suffering. The excesses created the roaring 20s and the height of the 1929 stock market, leading to the crash and subsequent depression of the 30s.
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