How Cryptocurrency Can Abolish the Fed (Part 2: Disruption through Bitcoin)

How Cryptocurrency Can Abolish the Fed (Part 2: Disruption through Bitcoin)

Knowledge of the Federal Reserve and its effects on the economy embolden people to abolish it. The vampiric embrace central banking has maintained on society has endured for too long. Technology now exists to push humanity into the next epoch, and move away from the current state of monetary cannibalism. The tools to propel this economic reformation have arisen from underground capitalism, from online shadow markets, and from the individual desire to be socially and financially independent.

This tech is referred to as cryptocurrency. It was established without the guiding hand of authority overseeing its manufacture. It was created by cypherpunks for the purpose of escaping clumsy and heavy-handed bureaucracy. It was built to be decentralized and to evade institutional control. It was meant to be the people’s money, to liberate the populace from the oppression and corruption of State banking. It was forged to shatter financial totalitarianism, and level the playing field. It is the ultimate form of technocratic nonviolent disruption and disobedience.

The White Paper

Many different cryptocurrencies exist. The most popular is Bitcoin. It first emerged in 2008 when an enigmatic figure named Satoshi Nakomoto submitted a paper to the cypherpunk mailing list referred to as the Bitcoin white paper. In the abstract of the paper Nakomoto elaborated on his intention.

He said, “A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.”

A year later, this culminated in the creation of the Bitcoin software and the Blockchain that it is founded on. The Blockchain is a public ledger that documents every transaction ever made through the protocol, and publishes it transparently. The blockchain is essentially the vertebrae of Bitcoin. It gives it all its fundamental characteristics.

However, it is not readily apparent how Bitcoin is going to revolutionize finance, much less bring down the banking conglomerate and Federal Reserve system. There are several major characteristics as to why Bitcoin and its protocol have the capacity to disempower and disrupt those who wield too much control over the economic infrastructure.

The Disruptive Power of Bitcoin

The underlying disruptive power of Bitcoin is simple yet elegant. Decentralization represents the mainstay of this tech. It does not rely on central planners. It is automated. It is programmed to spit out a limited number of Bitcoins over the course of years. The implications of this are huge. There will never be a crypto-authority, or a few guys sitting in a room deciding what is best for people, economy, or country. This is why the technology puts a check on human corruptibility, and invalidates the Federal Reserve.

Bitcoin is peer-to-peer. Transactions only occur between the people directly involved or chosen. There is no middleman. No institutional stranglehold. People no longer have to rely on a third party. They can send their money to each other without going through an organization. People can essentially debank, or become unbanked. Or looked at another way, they become their own bank. They are the masters of their own money. They do not have to worry about having their accounts frozen either. No one besides users have access to their funds. This removes the possibility of institutions stopping transfers or confiscating money.

Bitcoin represents the height of computer functionality insofar that it is also tamper resistant. If a group of tyrants or banksters wanted to access the money supply and control it for themselves, they could not accomplish this easily. The Bitcoin protocol is distributed over a large network and operates with many computers. This increases the strength and flexibility of the network, which deters hackers and tyrants. In its current State, it is almost impossible to acquire the computational power to successfully hack the protocol. Several security experts and professionals have already tried. They openly admitted failure.

As an aside, it is true that Bitcoin exchanges such as Mt. Gox have been hacked, but it was not the Bitcoin protocol itself that failed–only Mt. Gox’s servers. The protocol is currently resistant to outside threats because of its size. Bitcoin’s distributed nature is what makes it astoundingly resistant.

Targeting the CEO

The aforesaid reasons are why the Fed cannot deal with cryptocurrency on a practical level. Usually, when someone tries to compete with the Federal Reserve and government, they simply get arrested for counterfeiting or another bogus charge. Bernard Von Nothaus was a monetary architect who created the Liberty Dollar. His money was backed by gold, and it looked “authentic.” This caused it to gain popularity. Shortly after, the Feds caught on. They arrested Nothaus for alleged domestic terrorism and then confiscated his money. He ended up getting a light sentence and not going to prison, but he lost all his revenue.

This can never happen to Bitcoin. Since the system is decentralized and no one person controls it, the State cannot just issue a warrant and arrest a CEO for “domestic terrorism” or counterfeiting. There is no central commander. The Feds would have to run around and round up all the miners and programmers involved in the network. In other words, it is impossible for them to act against Bitcoin in an efficacious manner. The system does not care about authority and bureaucracy. It will function anyway, regardless. Even if they did arrest everyone, new miners would crop up and create new nodes on the network, like new dealers crop up to sell more pills in the drug market. There is a potential threat to Bitcoin neutrality, but realistic threats to the protocol will be examined in the next part of this series.

The Age of Economic Freedom

The most important reason why the Fed will die an agonizing death is because of Bitcoin’s utility. It is safe, secure, and efficient. It works and works well. There is incentive to use it. Anyone can send Bitcoin anywhere around the world for negligible fees. The fear of being defrauded is reduced because users don’t have to share private data. They can also keep multiple wallets with Bitcoin and spend their money from anywhere so long as they have an internet connection, which is becoming easier to access, even in third world countries.

Bitcoin will not dismantle the governmental banking empire by assaulting it with guerrilla warfare; it will abolish the system with guerrilla economics. The central bankers have to compete with it. Since they can’t arrest anyone, they will be forced to outpace it. Their attempts will fail, though. Decentralized currencies are the next step in innovation, not improvements of existing money and payment technologies. This implies the Fed has been subjected to a Zugzwang: all their potential moves worsen their situation. All cryptocurrencies have to do is continue growing. This is not a problem. Bitcoin has become of a phenom. It is not a matter of whether it goes mainstream, only when. The age of economic freedom has arrived, and the Fed is sounding its death knell.

Nonetheless, there will be battles over Bitcoin neutrality that have to be fought and won. The Fed and bankers will not go down without a fight. There are limitations and weaknesses in the protocol and network that the community must overcome in order to succeed…

(To Be Continued)

Do you agree that cryptocurrencies will usher in a new age of economic freedom? 
 
Image Sources:
jeff-gomez.com
scannellkurz.com
usnewsghost.wordpress.com

Resources:

http://dankaminsky.com/category/security/
https://bitcoin.org/bitcoin.pdf
https://www.cryptocoinsnews.com/digital-currencies-like-bitcoin-will-disrupt-global-finance/

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Sterlin Lujan is a journalist, editor, speaker, anarchist, and essayist. He has been involved with cryptocurrency and Bitcoin since 2012. Sterlin is especially interested in the intersection of psychology and cryptography. He has written on behavioral economics in regards to innovative technology, and was one of the first to write about the emerging field of cryptopsychology on bitcoin.com.