Welcome to crypto! Since June, the entire climate of cryptocurrency has been in a complete state of calamity. There’s no doubt you’ve heard about them from your nephew, co-worker, or religious leader. Bitcoin and Ethereum have been featured prominently in the news media, forcing everyone to share their ill-informed opinions of the space. With the upcoming fork(s) and the price of Bitcoin hitting new all-time highs (and lows), I’m here to comfortably guide you through the magnificent world of crypto.
I’m going to do a (let’s say) three part series on the current climate of cryptocurrency. Act 1 will focus on the history. Act 2 will focus on the players. Act 3 will focus on you.
As this is Act 1, let’s talk about Bitcoin’s history. It’s a topic that has been covered and overcovered. There are a million renditions of what happened behind the simple whitepaper… and as a forewarning, most other versions of Bitcoin’s history will be far more accurate than what follows. Sit back, set your phone to night mode, close the curtains, and read on.
Act I: The COBRA CONSPIRACY
After the economic collapse of 2008 (the Great Recession), the secret shadow organization that runs the United States had to find a solution to the quickly dwindling value of their fiat token called the United States Dollar (USD). We’ll call this organization COBRA from this point on. As the dollar was removed from the gold-standard in the 70’s, the only thing that gave USD any value was faith and the United States control of FOREX trading and oil. The US dollar was backed by oil and war…just the way COBRA liked it.
COBRA projected that within 10 years, China would open FOREX trading against CNY and eventually allow OIL/GOLD pairs on their national exchange (oil futures coming this month). This would likely cripple the dollar and spiral the entire world’s economy into a fatal nosedive. Although COBRA had tried to find a simple media-driven solution, none of the past options were on the table. Realistically, there was no way to return to the gold standard for the United States, not only due to the massive supply of the dollar, but also because the gold mentality had shifted away in younger generations.
- There was no trust that their “shares” of gold would ever or could ever be claimed, and a new gold economy started — the “Apocalypse” standard. These buyers weren’t buying gold to improve their positions. They were buying gold to hold for the impending economic collapse.
- For those who didn’t buy ‘prep’ gold — gold just didn’t matter to them. There was a strange momentum growing for digitally connected communities and security, freedom, and technology was their appeal.
In 2007, Ben Bernake and his banking buddies decided to go for broke. They came up with an exit scheme for the USD token. It tanked the economy. COBRA had to speed up its plans, as the public had been floored by panic. Fortunately for COBRA, Apple released the iPhone in July 2008, which sparked an idea. COBRA funded several R&D projects across the scope of government.
One of those projects came from No Such Agency or as we know them today, the National Security Agency. A small team at the NSA had created a currency proof-of-concept based on cryptography. Because of the improvements in cryptography, as well as a mobile technology that could make it easy to make transactions, the time was perfect to set the foundation for this “cryptocurrency”. They presented it to their shadowy COBRA overlords and divulged their plan to introduce it to techies and speculators on the internet.
“No one understands how much money it takes to mine gold. Our concept works because of proof-of-work. It works because it is public. The banks’ hidden ledgers threw us into this collapse — we’ll make a public ledger. People will buy in, because they understand the value of electricity. The banks will fail and because the ledger is public, we will be able to view all transactions, movements, and more.”
It was an intriguing idea and solved both the banking problem and the USD value problem. The libertarians would love it too. The notion of a currency free from government oversight was too good to pass up, and they’d quickly adopt it. However, COBRA decided that it could not just be released by the United States government. There needed to be a story behind this mysterious discovery. Here comes the tale of Satoshi Nakamoto. The genius who invented blockchain and distributed ledger tech, and who lost a few million Bitcoin. Oops.
The fairy-tale sold it.
To add legitimacy, the NSA and COBRA planted the seeds to convince several cryptography experts to join the space. Nick Szabo, Craig Wright, Hal Finney, Gavin Andressen…the list grew over the years. Their buy-in made the fairy-tale a mystery backed by smart, unknowing players.
The ‘Bitcoin Initiative’ was launched, and COBRA became one step closer to their new global currency, a digital asset that USD could be paired to.
In 1 year, the early adopters will be called fools.
In 10 years, cautious adoption will begin.
In 20 years, the largest transfer of wealth in history will occur.
Bitcoin has a long history of being dead, crashing, and being used for criminals (great meme). Most of these calls are written by people with no understanding of the underlying technology.
What does Bitcoin do? You can “Google” that and find lots of articles. For the sake of this series, here’s what cryptocurrency does: Distributed ledger technology (blockchain, cryptocurrency) allows financial transactions to be conducted between individuals without a middleman (ala bank). This makes the transfer of wealth very easy, secure, and trustless.
The most important thing to understand when considering getting into the cryptocurrency space is: Everyone is trying to sell you something. Journalists, bankers, figureheads, developers, coin holders… it doesn’t matter. Bitcoin has been compared to a ponzi-scheme. I don’t believe it is, but as alt-coins continue to grow and more people enter the space, the only way to increase the value of an asset is to have more people buying it.
So, who do you trust? Obviously, you shouldn’t trust me. Also, consider not trusting:
- Bitcoin Maximalists
- Alt-coin holders
- The Media
These are the players. The COBRA stage is set.
In Act 2, we’ll review the performance.
Also published on Medium.