This article is a study on Bitcoin properties that comes from thoughts from a philosopher and a divulgator who is able to analyze in a very deep way the advantages and significations of Bitcoin. I am talking about Gigi. In this article i try to give an explanation of his thoughts about Bitcoin and also my personal interpretation.
All starts with an equation
Bitcoin = Money + Time + Energy + Information = Apolitical moneyGigi
The most important thing is that if you remove just one of these elements you get a shitcoin (either a crypto shitcoin or a fiat shitcoin, that’s is the same). This means that all the powers of Bitcoin come from all those elements together, and below we will see why.
Government monopoly on the issuance and control of money is the root of all monetary evilFriederich Hayek
If someone has the power to control and create (issue or inflate) the money, he will abuse of this power earlier or later. This happened since the Romanian Empire and it is happening nowadays as well.
Money is information. Money records who owes what to whom. This information must be kept forever. If you use coins (physical coins), then the coins themselves keep track of this information. But if you don’t use coins, then a ledger must be kept and this requires a central authority. Before Bitcoin, you must have a central list keeper. So the coins are timeless, but as soon as you put the money information in a list, then time comes into play. This is necessary because you must not be allowed to spend money that you don’t have. You must have an absolute order. Bitcoin creates consensus about this order in a decentralized way.
Bitcoin is a decentralized clock. Bitcoin puts in time order a list of transactions. Before they enter in the time chain, they are in the mempool and so they are timeless. When transactions get recorded in the timechain, they take a time order which cannot be changed and which everyone agrees on (consensus). Or better said the cost of changing the past becomes higher and higher as soon as new blocks are getting added after the block where the considered transaction is inserted in. At the current hashrate, as early as after 6 blocks elapsed, the possibility to change the past becomes infinitesimal.
Bitcoin resolves the need of something that makes the future uncertain (that has some random process embedded in it) and the past unforgeable.
Bitcoin creates an unforgeable history thanks to the POW. You cannot change the past. The reason why you cannot change the past, is that there is the POW. If you remove the POW, then you need a centralized authority which decide the order by decree ( and this leads to corruption and censor-ability as described above). Changing the past is exponentially more and more difficult as the time passes.
Thanks to the POW, this unforgeable order can be decentralized and can be shared even in an hostile environment. The communication can be open because of POW, you don’t need a trusted communication channel to transfer this information.
The energy which is spent, is not for issuing bitcoin. It does not depend on how many bitcoin are issued. The bitcoin issuance is linked to the time and not to the energy. The energy makes possible to produce the blocks. The mining is about distributing bitcoin. As when mining gold, you are not producing gold, but you are is extracting it from the earth.
The mining means to try to find a random number that satisfies certain (difficulty) conditions. When this number is found, everyone can verify that the energy has been really used to produce that work. The verification is fast and easy and available to every node on the network. With this use of energy an information is created, which is like a physical object. This is the magic of Bitcoin.
Bitcoin does not record anything which is outside of Bitcoin. It is something that works like a physical object. The 12 words of seed are not a password, are the value itself.
It’s all text all the timeBeautyon
The information, when verified valid, can be communicated also in an hostile environment. Each 10 minutes the information is added to the time chain and accepted globally. Bitcoin is “all text all time”, meaning that the system is like an exchange of information.