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Understanding the root problem

Some interested readers may be wondering why we have only referenced Bitcoin and none of the altcoins (alternative cryptocurrencies) thus far. However, there is a good reason for this, as aptly described by Bryan Solstin in an interview with Robert Breedlove:

There are so many altcoins out there that are trying to be better than Bitcoin. And as a politician I’m running to fix a broken monetary system. Nothing else is sufficiently decentralised. Nothing else can fix that problem. Only Bitcoin can do that. It doesn’t matter if you have additional features or functions. Only Bitcoin fixes the broken monetary system.

Thus, the issue is the broken monetary system. And according to a recent Fidelity report, Bitcoin is the most secure, decentralised, and sound digital money currently available. That’s why other DLT solutions are often called DINO (decentralised in name only).

Here’s is the summary of the Fidelity report (page 2):

  • Bitcoin is best understood as a monetary good, and one of the primary investment theses for bitcoin is as the store of value asset in an increasingly digital world.
  • Bitcoin is fundamentally different from any other digital asset. No other digital asset is likely to improve upon bitcoin as a monetary good because bitcoin is the most (relative to other digital assets) secure, decentralized, sound digital money and any “improvement” will necessarily face tradeoffs.
  • There is not necessarily mutual exclusivity between the success of the Bitcoin network and all other digital asset networks. Rather, the rest of the digital asset ecosystem can fulfill different needs or solve other problems that bitcoin simply does not.
  • Other non-bitcoin projects should be evaluated from a different perspective than bitcoin.
  • Bitcoin should be considered an entry point for traditional allocators looking to gain exposure to digital assets.
  • Investors should hold two distinctly separate frameworks for considering investment in this digital asset ecosystem. The first framework examines the inclusion of bitcoin as an emerging monetary good, and the second considers the addition of other digital assets that exhibit venture capital-like properties.

According to this Fidelity report, Bitcoin’s success as a monetary good does not render all other DLT solutions useless. “Rather, the rest of the digital asset ecosystem can fulfill different needs or solve other problems that bitcoin simply does not.”

However, in this article we will only consider Bitcoin, as we are particularly interested in the solution to the underlying problem that sparked the entire DLT movement.

But before examining solutions such as Bitcoin, it is crucial to first comprehend the problem surrounding our current monetary system. One can only recognise the value of a solution after having grasped a thorough understanding of the problem at hand. In other words: The greater a person’s awareness of the harmful effects of centralised money, the sooner they recognise the advantages of a decentralised money system. If people are not yet aware of the gravity of this issue, the result is often reflected in articles such as There’s No Good Reason to Trust Blockchain Technology.

Regarding trust, the article has some interesting food for thought, but it becomes clear that the author (Bruce Schneider) is unaware of the immense implications of centrally controlled currencies, which is precisely why he does not recognise the value of sound money. Nevertheless, he makes a few valid assertions about trust, including:

Trust is essential to society. As a species, humans are wired to trust one another. Society can’t function without trust, and the fact that we mostly don’t even think about it is a measure of how well trust works.

This is very true. At least until the point at which trust begins to erode. The vast majority of people in the world are not as privileged as Bruce Schneider, who has the prerogative of living in a country and using a financial system that has not yet betrayed his trust (at least not to the extent that he would have noticed). However, once he also suffers this threat, he will likely no longer be able to claim that he “mostly [doesn’t] even think about it”.

Therefore, we only start considering the role that trust plays in any given situation, relationship, or system when it is removed. As soon as trust is broken, it often becomes painfully apparent. This is precisely what occurs to countless people all over the world, every single day.