Friday, March 29, 2013

Bitcoin and the Greatest Bank Run Ever

As mainstream society learns about Bitcoin and what it offers I seriously think we could be looking at the potential for the biggest bank run in history.

When mainstreamers start to trust the Bitcoin block chain (the anonymous cryptographic peer to peer network that stores the bitcoin transactions) Why would there not be the biggest bank run the world has ever seen ?  Bitcoin still has two risks to be aware of 1. that the protocol could be compromised in some way , and 2. that you could loose your password. But the longer it stays up the more trust will grow.

I believe fiat currencies (or at least debt based currencies) are in a slow dying process as a valid concept in our modern world. (Fiat money is the money we have today that is created by central banks and sanctioned by government 'Fiat')

Fiatleak is a fun site that in real time shows the worlds fiat money moving to Bitcoin.

Fiat currencies are inflated unpredictably. So the question will become, why would anyone leave their value somewhere where it gets worth less and less over time though the debasement of inflation. Its dumb once there is a truly viable alternative. Also the fact (that many seem totally unaware of) that money in the traditional Fiat system has interest due on it, is a form of robbery from the people using the system. Traditionally the only alternative to this Fiat system was gold. But gold can not be traded easily long distance and is heavy and physical, so the banks had it their way.

I see it only as a matter of time before we shift to better systems of value representation as a replacement to the current banking system way of creating and managing money. Further, as I covered in my infostate post it is my belief that 'nations' of the future will be bounded not by borders but by the use of a common crypto currencies. The features of which will embody the policies that people have already agreed on by virtue of choosing those currency 'systems'. No voting, just joining the 'nation' or nations! that you agree with the thinking on. The value of each nation will be reflected into the exchange rates of the currency.

Its going to be an exciting few years if this really gets going. As confidence continues drop in the fiat system and continues to grow in block chains,  the point will hit where everyone wants to get their hands on what ever is the leading set of virtual currencies, it will be a world wide phenomenon, not a local country based one.

It wont exactly be fair either.. the people who got in early will have a massive advantage. The present money system is hardly fair in this way either. But I do believe that the ability to choose which crypto currency you use will over time start to balance this out. There are some pretty alternatives to Bitcoin already appearing, I see these as the beginning pillars of the new 'infostate' nations of the world.

Here is a good list of next generation currencies by market cap in $ or BTC

We are in the beginnings of a transfer of wealth into a new paradigm. One where I believe wars and inequality are much harder to exist simply because the monopoly on creating money (the thing everyone used to fight over)  is now gone.

1 comment:

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