With a rocky cryptocurrency market and loads of negative press, some enthusiasts are losing hope. Others, of course, are settling in for what they see as the impending future of a crypto-based world. People in the middle are still asking, or asking once again, does cryptocurrency matter?
Australian crypto analyst, co-host of Decentralized Podcast and CEO of Amber app, Aleksandar Svetski, recently gave a talk on the importance of Bitcoin. It’s more important than most of us think, according to Svetski. That’s because most of us think of it as a technological innovation rather than a monetary one.
The talk takes some detours because, to understand Svetski’s position, you need to understand the rest of his philosophy.
Money in Society
The specific role of Bitcoin in Svetski’s worldview comes from his understanding of the
According to Svetski, the basis for all of civilised society is communication. Without communication, there is no society. Higher up in the stack is money, which both relies on communication and allows further societal systems.
Money is also very similar to communication, says Svetski, in that its rules must be agreed upon. The rules can be flexible but not arbitrary.
Money, says Svetski, was once very similar to cryptocurrency. It was a ledger of goods and services that individuals had agreed to exchange. It was only when individuals started trading outside of their own communities that they required what we consider money. These forms of money allowed society to grow further by allowing individuals to interact across communities.
What Is Money?
The general understanding of money is that it represents value, can be carried, is divisible and fungible, and is scarce. Bitcoin, points out Svetski, is very scarce and incredibly fungible.
Fungibility, by the way, is the ability to exchange parts of a thing for one another. Fungibility along with divisibility allows you to buy things that cost less than one dollar, one pound, one euro etc. The ability of Bitcoin to perform microtransactions comes from its limitless divisibility and fungibility.
That’s what money is, but how money works has to do with the unit and the network, says Svetski.
The monetary unit has to be hard to produce, hard to counterfeit, and limited in supply. The monetary system has to be resistant to change, shutdown, censorship, and manipulation.
Why Does Bitcoin Matter?
Bitcoin is both the only unit & network that executes on everything I’ve outlined as fundamentally important about money, writes Svetski in the article summarising his talk.
But, more importantly than the above, Bitcoin is an opportunity for a new beginning, in a new age.
It works, according to Svetski, because of its unique combination of different disciplines, the passion of its users and the anonymity of its founder(s), its priorities on basic functions, its scarcity and its digital nature.
If we’re to move toward a society & world that’s more functional, where unfair asymmetries & rent seeking are made more difficult and where the labour we transform into some unit of value (that’s able to be stored or exchanged) is impossible or at least impractically hard to manipulate or undermine, then we need to take Bitcoin a whole lot more seriously, writes Svetski in the first part of his article. He iterated later,
If we’re going to have a chance at creating a more open society, that resists censorship & the moronic attempts by the state (or the bureaucrats that run them) to centrally govern society via ‘theoretic’ models that don’t work in practice, then Bitcoin Matters.