Why Everyone Missed the Most Mind-Blowing Feature of Cryptocurrency

Why Everyone Missed the Most Mind-Blowing Feature of Cryptocurrency

Written by Daniel Jeffries / Courtesy of Hackernoon

There’s one incredible feature of cryptocurrencies that almost everyone seems to have missed, including Satoshi himself.

But it’s there, hidden away, steadily gathering power like a hurricane far out to sea that’s sweeping towards the shore.

It’s a stealth feature, one that hasn’t activated yet.

But when it does it will ripple across the entire world, remaking every aspect of society.

To understand why, you just have to understand a little about the history of money.

The Ascent of Money

Money is power.

Nobody knew this better than the kings of the ancient world. That’s why they gave themselves an absolute monopoly on minting moolah.

They turned shiny metal into coins, paid their soldiers and their soldiers bought things at local stores. The king then sent their soldiers to the merchants with a simple message:

“Pay your taxes in this coin or we’ll kill you.”

That’s almost the entire history of money in one paragraph. Coercion and control of the supply with violence, aka the “violence hack.” The one hack to rule them all.

When power passed from monarchs to nation-states, distributing power from one strongman to a small group of strongmen, the power to print money passed to the state. Anyone who tried to create their own money got crushed.

The reason is simple:

Centralized enemies are easy to destroy with a “decapitation attack.” Cut off the head of the snake and that’s the end of anyone who would dare challenge the power of the state and its divine right to create coins.

That’s what happened to e-gold in 2008, one of the first attempts to create an alternative currency. Launched in 1996, by 2004 it had over a million accounts and at its peak in 2008 it was processing over $2 billion dollars worth of transactions.

The US government attacked the four leaders of the system, bringing charges against them for money laundering and running an “unlicensed money transmitting” business in the case “UNITED STATES of America v. E-GOLD, LTD, et al.” It destroyed the company by bankrupting the founders. Even with light sentences for the ring leaders, it was game over. Although the government didn’t technically shut down e-gold, practically it was finished. “Unlicensed” is the key word in their attack.

The power to grant a license is monopoly power.

E-gold was free to apply for interstate money transmitting licenses.

It’s just they were never going to get them.

And of course that put them out of business. It’s a living, breathing Catch-22. And it works every time.

Kings and nation states know the real golden rule:

Control the money and you control the world.

And so it’s gone for thousands and thousands of years. The very first emperor of China, Qin Shi Huang (260–210 BC), abolished all other forms of local currency and introduced a uniform copper coin. That’s been the blueprint ever since. Eradicate alternative coins, create one coin to rule them all and use brutality and blood to keep that power at all costs.

In the end, every system is vulnerable to violence.

Well, almost every one.

The Hydra

In decentralized systems, there is no head of the snake. Decentralized systems are a hydra. Cut off one head and two more pop-in to take its place.

In 2008, an anonymous programmer, working in secret, figured out the solution to the violence hack once and for all when he wrote: “Governments are good at cutting off the heads of centrally controlled networks like Napster, but pure P2P networks like Gnutella and Tor seem to be holding their own.”

And the first decentralized system of money was born:


It was explicitly designed to resist coercion and control by centralized powers.

Satoshi wisely remained anonymous for that very reason. He knew they would come after him because he was the symbolic head of Bitcoin.

That’s what’s happened every time someone has come forward claiming to be Satoshi or when someone has been “outed” by the news media as Bitcoin’s mysterious creator. When fake Satoshi Craig Wright came out, Australian authorities immediately raided his house. The official reason is always spurious. The real reason is to cut off the head of the snake.

As Bitcoin rises in value, the hunt for Satoshi will only intensify. He controls at least a million coins that have never moved from his original wallets. If VC Chris Dixon is right and Bitcoin rocket to $100,000 a coin, those million coins will shoot up to $100 billion. If it goes even higher, say a $1 million a coin, that would make him the world’s first trillionaire. And that will only bring the hammer down harder and faster on him. You can be 100% sure that black ops units would be gunning for him around the clock.

Wherever he is, my advice to Satoshi is this:

Stay anonymous until your death bed.

But resistance to censorship and violence are only one of a number of incredible features of Bitcoin. Many of those key components are already at work in a number of other cryptocurrencies and decentralized app projects, most notably blockchains.

Blockchains are distributed ledgers, the third entry in the world’s first triple-entry accounting system. And breakthroughs in accounting have always presaged a massive uptick in human complexity and economic growth, as I laid out in my article Why Everyone Missed the Most Important Invention in the Last 500 Years.

But even triple-entry accounting, decentralization and resistance to the violence hack are not the true power of cryptocurrencies. Those are merely the mechanisms of the system, the way it survives and thrives, bringing new capabilities to the human race.

The ultimate feature is one that Bitcoin and current cryptocurrencies have only hinted at so far, a latent feature.

Continue reading the original article courtesy of Hackernoon.