
Good day, friends.
You can’t single out its location on a map, yet this is what makes the internet inherently resilient—that it can exist virtually everywhere. So long as there’s a society of free minds willing to exchange digital information peer-to-peer, the internet is unstoppable. This is perhaps why it’s one of the most liberating technologies ever created.
Ultimately, the internet consists of a global system of billions of distributed users. But if we’re to preserve this decentralized & borderless marketplace into the future, I reckon it requires its own monetary sovereign, Bitcoin.
The internet facilitates trillions of dollars of capital flows per year, its economy is a phenomenon in its own right. Yet these capital flows are largely facilitated by intermediaries & institutions such as credit cards, PayPal like FinTechs, & legacy banks, all of which use fiat currency.
Some data is below for you to envision the magnitude of the scale of internet activity.
The issue with fiat currency being the primary method of financial transactions for the majority of internet users is that it is controlled by separate & closed networks such as Swift, ACH, SEPA & the like. Each being required to function based on the rules & interests of their respective sovereigns. And perhaps the most egregious part of this system is that it, by default, has unbanked millions of Americans alone, deeming them not creditworthy, thereby inflicting immense friction on their ability to participate in the opportunities the internet can provide.
This is in direct contrast with how the global internet marketplace was meant to exist & operate—frictionless, neutral, open, & permissionless, 24/7/52.
Furthermore, these dollars cannot exist within the realm of the internet unless they’ve a permissioned custodian of some sort. And history is replete with acts of censorship over citizens freedom to transact by various restricted gateways for a multitude of unjustifiable reasons. Imagine some day that nation states do introduce a CBDC & that is all that your homeland permits you to use for commerce on the internet?
Until Bitcoin was introduced in 2009, there had never been an available sovereign digital currency system that was open to anyone, existed as a bearer asset, exclusively built for the internet, without the need for intermediaries. (https://bitcoin.org/en/faq#general)
I engaged ChatGPT to describe sovereignty, & it did in various contexts, but for Bitcoin, as it systemically exists & pertains to the internet’s economy, I believe a blend of 1 & 3 is fitting.
Bitcoin is a logical evolutionary step if we’re to efficiently scale economic prosperity, as has been the pattern over thousands of years of financial history.
When tribes discovered waterways brought them to much needed resources beyond their local village, they soon realized that this required a new currency beyond what was already being used in barter—a currency that would facilitate this newfound expansion of trade yet address the coincidence of wants problem.
It was eventually gold that emerged because of its inherent properties, which allowed it to suffice to best meet the respective continental economies’ needs at scale for that period.
And when the size of trade expanded to such an extent globally, the portability of gold became cumbersome & untimely. So, centralized entities started to hold physical gold on deposit while maintaining a ledger of receipts that few would agree & trade on-again because this new scale required additional efficiencies.
Consequently, as gold became increasingly rigid to settle between its various largest holders’ receipts, currency pegs, & own political desires, the most dominant military power at that time, the USA & allies proposed a new global standard that would usher in USD as the global reserve currency, which would go on to facilitate a modern day industrial revolution—again to scale global commerce most efficiently.
Here’s how Sandra Kollen Ghizoni of the Federal Reserve Bank of Atlanta described the reason for the Bretton Woods Agreement to emerge:
Wences Casares said this about Bitcoin in 2017, “Sovereigns used to be kings & queens, now they’re mostly nation states, and now you have a little, very humble computer system that is sovereign, that only obeys its own rules.”
An old adage once aptly stated that, “the map is not the territory”, but amidst a transcedent information age that is rapidly transforming atoms into bits, perhaps a fitting adage for the internet’s ubiquity would be, “the territory is the map.”
I’m grateful for you taking the time to read my note today.
Image sources: https://www.federalreservehistory.org/essays/bretton-woods-created, https://www.weforum.org/agenda/2021/11/amazon-youtube-zoom-internet-minute-2021/
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