– Is all the paper money doomed then?
– The 20th century economic model is based on consumption rather than saving. Interest rate manipulation allows banks to loan more money that doesn’t go into investments but for day to day spendings. Instead of witnessing our savings grow through sound investments, we are paying more interest from constantly growing debt and higher taxes. This way we aren’t able to put aside enough money for a peaceful retirement. At present a loan is the only way of financing major expenses. 100 years ago people used to pay for their home and education with their own savings. Today even the wealthy don’t want to live below certain standards and use their position to loan even more money. When the value of money is manipulated with lies of politicians wanting their reelections to be financed by future generations, it is difficult to make financial decisions. Incentive to save is killed by incentive to borrow and spend. As a result less people decide to start a family, more marriages collapse and those who survive will have less children. Our physical and mental health is probably next in line.
– And all of this is caused by paper money?
– Please notice that most modern technology was invented in the 19th century when gold was a global monetary standard. Thanks to its stable growth people were more prone to saving and investing in their families and the good of their children. Stable value of money and faith in a better future gave birth to the greatest artists in the world such as Bach, Mozart or Michael Angelo. Artists devoted time to master and improve their craft to be able to produce a better work of art in the long run. No one stood a chance to be called an artist without years of hard work. Michelangelo spent years suspended from the ceiling improving his paintings. In today’s world no artist is able to work equally hard. It’s enough to take a stroll in the modern art galleries where to produce the majority of displayed art doesn’t require more talent than a bored six year old has. In an era when governments decide who wins or loses and bureaucrats become art experts, the success is not dependent on people’s opinion who are entitled to give it but on mere opportunists. This approach can be likened to times when Soviets financially backed up communistic works of art to reach their propaganda goals.
– Future looks definitely grim. Is BTC a panacea for some of the issues you mentioned?
– BTC belongs to people. It isn’t controlled by anyone and it will become whatever people want it to become.
– How would you explain the tech behind BTC in layman’s terms.
– The keyword here is verification. Majority of people doubt the success of the decentralized cryptocurrencies. Each BTC transaction must be registered in an online ledger and verified by every computer connected to the BTC network. We call them nodes. Each node apart from the verification process does other complicated mathematical calculations as well. No need to get into details here. The amount of work each node does is equivalent to its processing power. This work is rewarded and paid out in bitcoin. The more nodes there are in the network the more secure it becomes since the verification process is overseen by the growing number of units.
– So the biggest risk of BTC getting hacked was at the beginning when the network of nodes was small. Is that correct?
– Yes, it is. At present hacking BTC is impossible. It wouldn’t be worth to even try it. It’s much more lucrative to invest in miners and join the network. The obvious benefit of digital peer-to-peer transactions is lack of intermediary so nobody can interfere with the transaction. There is also no risk of technical problems like major delays or governmental inspection. On the other hand comparing it to other popular payment processor like Visa, BTC network is not fast at all. But that goes with all decentralized solutions. BTC Network can process about four transactions per second whereas Visa can do 3,200. Visa is a real Fort Knox when it comes to infrastructure. Monster server rooms and the fact that records of all transactions are kept in one location together with a few backups, allows for speed and quantity of processing transactions. BTC uses computers connected to the network. All of them must take part in verification process at the same time what significantly slows down the whole process.