The Most Significant Cryptocurrency Features You Need to Know

I'd like to discuss the hidden (but incredibly important) feature of cryptocurrency missed by almost everyone. This aspect of cryptocurrency is still not completely used in reality, however, when it happens, it will fundamentally change our society all over the world! To understand how and why, you need to study the history of money (which I will begin the story with).

"Birth" of money

The story of money creation can be described with just one sentence or even one phrase: “the ploy of violence” or in other words, supply control + coercion + violence. ➡️ You are awesome and run the world!

(There is a detailed instruction below 👇🏻)

“While having the money you have power” - the ancient kings know this secret, that’s why the money issue has been monopolized since ancient times. And their further distribution has the simplest mechanism: kings mint coins, pay their soldiers, who spend them on goods from local producers. Then it remains only to send soldiers to collect tribute (taxes) to merchants and manufacturers.

When power passed from monarchs to state entities, the right of minting money passed along with it, and everyone who tried to create “not authorized money” was destroyed, because it is not permissible to encroach on power (or the right of minting money).

E-gold or “electronic gold” was the one attempt to create an alternative currency in modern history.

Electronic currency, issued by a private company (E-gold Ltd.), for non-cash payments on the network, existed from 1996 to 2008.

Electronic gold in its prime of life (in 2008) had a $2 billion turnover. It surely attracted the attention of world leaders. The US government charged all of the E-gold Ltd. founders with illegal money transactions. This litigation bankrupted the company and its founders. Technically, "electronic gold" was not banned directly, but, in fact, it ceased to exist.

The rule of ancient kings is still existing: create an only coin, ban alternative payment methods, and use violence for keeping the reign. And any disobedience should be nipped in the bud (cause it’s much more easier to prevent its spread at the beginning). After all, any system is vulnerable to violence. Well, almost any...

Hydra and the Bitcoin creation

But there are always exceptions to any rule. Hydra. According to ancient Greek mythology, Hydra (or Hydra of Lerna) is a multi-headed snake, cutting off a which head, you'll get a few new ones on the same place. Decentralized systems like hydras.

So, in 2008, thanks to one (or a group of) anonymous programmers, the most large-scale modern decentralized monetary system arose. It’s Bitcoin.

Satoshi Nakamoto (it's the pseudonym of the Bitcoin creator (or creators)) being the symbolic “head” of Bitcoin, wisely preserves anonymity. Its protocol is able to resist the centralization of monetary power, and the total money state control. Therefore, every time Satoshi's personality is “exposed”, the authorities try to “get rid” of him by all means, hiding behind silly reasons. And as Bitcoin grows, the hunt for Satoshi will only intensify, because there are at least a million coins in his wallets. If the predictions are true and Bitcoin soars to $100,000 per coin, a Satoshi’s million will turn into $100 billion. And if Bitcoin hits $1 million per coin, Satoshi will become the world's first trillionaire.

The ability to resist the monopoly of monetary power is just one of the many incredible Bitcoin capabilities. However, other decentralized systems (other cryptocurrencies and blockchain) have a similar ability. Blockchains are distribution systems, providing the third entry in the world's first triple ledger accounting.

In the Triple-Entry Accounting system, all accounting entries are cryptographically sealed by a third entry and thus, it works as a deterrent towards manipulations and financial fraud.

And breakthroughs in accounting have always led to dramatic leaps in human development and economic growth.

❗️ But triple ledger accounting, decentralization and security are not the most important cryptocurrency qualities. These are just the mechanisms of the system that ensure its existence and prosperity.

The true power of cryptocurrencies lies on the surface and at the same time is carefully hidden from view - this is the ability to create and distribute money bypassing the central government. The power still held by the rulers is (thanks to the cryptocurrency) available to everyone now. And this can change the world: replacing the economy of scarcity with an economy of abundance. However, the achievement of this goal is hampered by the lack of the corresponding cryptocurrency. Satoshi solved only the first part of the problem: he gave everyone the opportunity to “create” money, but they still need to be properly distributed. And that is actually the most important piece of the puzzle - the flaw in the Bitcoin ecosystem. Instead of distributing the money evenly, he replaced the central bankers with miners. And now these miners are hindering the development of the system, holding back the necessary software updates in order to get more coins themselves at a lower price.

Any other options?

The most important factor that can change the world is how you allocate money. And the first one who can solve this problem and implement it bypassing governments will change the world! To understand the mechanism, let's turn to today's system of creating and distributing money 👇🏻

The pyramid

The existing monetary system can be imagined as a pyramid: money “come out” from above and “spread”. (There is a pyramid with an eye even on the dollar 😆).

One of the most common (and commonplace) arguments against Bitcoin is that it is a pyramid scheme. The Ponzi scheme (or financial pyramid) is form of fraud when the founders of the pyramid “buy” the participants, paying them for attracting new people. There are no goods or services in such a system, only the members. In the end, people who can be attracted run out, and the pyramid collapses. The first investors are attracted with fake profits, and those, in turn, attract even more people in the Ponzi scheme.

The irony is that fiat money (government currency like the dollar) is much closer to the Pyramid than Bitcoin is. Why? Because they are issued by states single central banks (i.e. at the top of the pyramid), and “flow” to the population, but not along flat slopes, but with obstacles 🤣, “settling” a part of the money on each one.

First in the pyramid hierarchy are the largest state-owned banks that either lend money or pay for labor. In fact, these are the only ways for people at the base of the pyramid can get their part of the money: they exchange their current time (work) or future (loan) for money.

Economics is a game where everyone wants to get as much money as possible. And to “start” the game, you need to “activate” the players by distributing money, and establishing the rules of the game.

If you were in charge of monetary system, how would you allocate money? Have you saved as much as you can? To do this, you need to establish the rules of the game that maximize your advantage in it. In fact, anyone would do it.

This is how ancient kings acted, and this is what states do today. That is why, in world history, money has always been distributed in the only way: from top to bottom. But for ordinary people, this unfortunately means that most of the money will never leave the top. Money is power, and its accumulation literally means the generation of more power, and no one will consciously give up this power of their own free will.

Therefore, the rules of the game we play are predetermined in advance and are not beneficial to ordinary people. How can We change them? A law “giving” money to everyone could be passed, or more participants could be brought into the distribution system. But simple democratic methods do not work, since it is unrealistic to REdistribute money after it has already been distributed. But what if they are NOT allocated yet?

Fractional Reserve Banking, which increases the money supply (lending it 10 times with fractional reserve), it also makes the economy cyclical, as it invariably leads to crises over and over again. Unlike credit institutions, which only pretend to increase the money supply, cryptocurrencies literally create money. And they don't loan them, they give them to miners to keep the network running.

Everyone participates in the game ...

And what if, instead of giving money to a group of miners, we expand the boundaries by radically changing the logic of mining. So that every person on the network is a miner.

For the smooth operation of the network, miners are selected constantly at random. Imagine you are asleep, and your PC is “rented” for a few minutes, then it turns off. And you get a profit for it. Sounds great, doesn't it?

And this is just one way.

If the distribution of money was completely gamified, sending it to everyone at the time of creation, it would forever change the current economic system, making it possible for everyone to “participate in the game”! And the more participants there are, the more effective and valuable the system is - this is a network effect.

Adding a new member increases the value of the network for all existing members.

Today, new members are not added to the crypto network quickly enough, so the system is still vulnerable to hacker attacks. The solution to exponential growth is gamification. If the system reach the huge size quickly enough, it will become unstoppable, everyone will have to join a new game that is fair and accessible to everyone. And such a new system gives an opportunity to develop to all its participants, ensuring control over finances. Nobody can take your money away from you.

Of course, not everyone agrees with such scenarios. Some people think that empowering everyone is dangerous. Power corrupts people, makes them violent, which will increase the level of crime and financial fraud. But let's face it, people did, do, and will do bad things. And restricting everyone, just to prevent “bad” people from getting power, is not effective. However, some people have unconditional (and unreasonable 😆) trust in the central authorities and their arguments.

Cryptocurrencies are finally giving us the power to control our lives. For the first time in world history, we have the ability to independently create and distribute money without the government. People will be able to control the money they honestly earned. We will be able to establish effective rules of the economic game ourselves, allowing everyone to participate in it.