What is Bitcoin Good for?  > Bitcoin is more like the Federal Reserve than like VISA

 

• Banks are build on top of the Federal Reserve clearing system. (Layer 1)
• Payment systems like VISA (layer 3) are build on top of the banks (layer 2), (which are built on top of the Federal Reserve system.
• Millions or Billions of VISA Transactions on layer 3 are aggregated in vastly fewer, but much larger Fed Wire transactions on layer 1.

 

• If Bitcoin competes with the Federal Reserve as a Layer 1, VISA could operate as a layer 2.
• With Bitcoin as layer 1, Lightning functions as a layer 2 competitor to VISA.
• Millions or Billions of VISA and Bitcoin transactions are aggregated into fewer, but much larger transactions.

 

 

More likely, the Fed and Bitcoin will coexist and VISA will settle transactions with each.

 

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What is Bitcoin Good for?  > Claim: Bitcoin is used by money launderers

• Bitcoin developed a reputation for money-laundering based off of criminal activity in its early years (2012-13) because the technology was new and unknown to law enforcement.
• Today, savvy criminals have learned to avoid Bitcoin because the log of Bitcoin transactions (the Bitcoin ledger) is public and the FBI has learned how to analyze the transaction logs to find the illicit activity .
• The FBI learned how easy it is to catch crime when they caught two of their own agents stealing (Ted-talk video) from the Silk Road, an early black market which used Bitcoin.  Government Agents who had authority to order Internet Service Providers to erase their logs failed to cover their tracks because they couldn’t delete the Bitcoin logs of their theft.

Former Government Prosecutor of the Silk Road black market: Kathryn Haun

How Does Illicit Bitcoin Activity Levels Compare to the Existing Banking System?

• Bitcoin has less than half the illicit

  

  use of the existing banking system according to Michael Morell, former Acting Director of the CIA. (pg 3-4)

• Michael Morell quoted an expert who said: “if all criminals used blockchain, we could wipe out illicit financial activity” (pg 6)

What is Bitcoin Good for?  > Digital Property Rules can be exercised without using Violence

1. In the physical world, property rights are enforced through violence.
   • Gold must be guarded and, when stored centrally in banks, make fraud, mismanagement, or seizure relatively easy.
   • By contrast, to defraud or sieze Bitcoin from individuals censors or thieves now must go from key holder to key holder and extort each individual key.
2. In the digital world property rights do not have to be enforced with violence.
   • Bitcoin’s property registry (ledger) is mirrored on tens of thousands of computers around the world which makes it virtually impossible to steal.
   • Bitcoin can be configured to require multiple keys which may be distributed around the world.
     Gold can’t do this.
3. You can give backup signing rights to people you trust, rather than your bank and government.
   • In the event that you get locked out of your house, you may keep a key with family or a neighbor.
   • Give people you trust backup keys to your digital money vault.
4. Digital property rights apply across national borders.
   • People can send money to family that live in other countries.
   • People can flee war and bad governments with Bitcoin more easily than they can with gold or paper money.

Bitcoin Info > Main

• Is the deflationary block/transaction reward system sustainable in a multi-crypto world?
• How does a Bitcon-as-an-asset ecosystem without centralized control function within our existing laws and regulatory frameworks?
• Are Russia, China, or Iran a systemic-risk to Bitcoin through mining centralization?
  • China kicked its miners out of the country.  Bitcoin has become more decentralized.
• Could Bitcoin survive a sustained nation-state level attack against an adversary without a financial incentive?
• Is such an attack even possible given the distribution of mining hardware currently available on the planet?
• Will Bitcoin volatility ever settle enough to make it a viable everyday medium of exchange?
• Does Bitcoin help or hurt inequality?
• Ben Hunt: Governments will co-opt Bitcoin, neuter its independence, and turn it into a panopticon.
• This isn’t a Bitcoin concern, but a concern about tokenization of real estate: If tokenization makes it is easy to sell off shares in your house, will this make it easy for the wealthy to fleece  financially vulnerable homeowners, one token at a time?

These and many others are genuine concerns about the future of Bitcoin that deserve intense debate and scrutiny, but they don’t fit into an outrage headline and don’t have clear answers so you won’t hear them everyday.

Optimism about Bitcoin

If you want some compelling optimism for why Crypto could change the world for the better (or be the investment of a lifetime) try these:

• How Bitcoin may be a life-saving boon to people in developing nations with no infrastructure
• Bitcoin adoption in Venezuela against crushing inflation

 

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