Bitcoin is on everyone’s lips today. While few have understood him, he is criticized all the more sharply by many. But why should Bitcoin be relevant at all? Why for the banking industry or even the entire financial world? Why for society as a whole?
The answer is as clear as it is easy: Bitcoin symbolizes a milestone in human history. The crypto asset is the new digital, programmable gold. There is no turning back for banks, insurance companies, and asset managers — sooner or later they will have to deal with it.
Due to its programmability, Bitcoin itself offers the foundation for a new financial system that is based on completely different premises compared to the established version of today. As an alternative and antithesis to the existing order, Bitcoin feels a vacuum and will inevitably have an impact on the current financial world. And since the area of finance is currently indispensable in its relevance and importance for society, a change in our financial system through Bitcoin also means a profound upheaval in our present society.
Well: What sounds great are mere assertions for the first time, the reader may interject at this point. But how can these be substantiated and what does Bitcoin’s revolutionary potential actually consist of?
The revolutionary potential is best illustrated with a historical comparison. The discovery of Bitcoins equated with the invention of the printing press. For the first time, that sounds like a very daring thesis.
When Johannes Gutenberg, a goldsmith, by the way, invented modern letterpress printing around 1450, success was by no means guaranteed. With the Reformation, there was a breakthrough in this technology, which in turn first accelerated the Reformation and allowed the latter to reach the great dimensions.
The invention of printing made it possible to reproduce information. One was no longer tied to the limited human typist but could intensify the production and copying of information by means of machine letterpress printing. The printing press made it possible to disseminate information quickly and more widely and thus to scale knowledge.
In the 16th century, Luther nailed his 95 theses to the door of the Wittenberg Castle Church. He disintermediates the church, decentralized religion, and ultimately thought. The combination of Luther and the printing press paved the way for modern times and our present day.
Soon after, money over paper was scaled. The so-called paper money was born. The result was an explosion in material wealth. Book printing, paper money, and now finally electronic databases allowed us, humans, to enter into a Faustian temptation that surrendered humanity to unimagined heights.
But the scalable detachment of money from a scarce, material reality, which was always given by precious metal money, turned out to be both a blessing and a curse. An ever more pronounced expansion of credit money became possible, which demanded more and more of the economic individual. It is likely to be the most fruitful catastrophe that has ever happened to mankind.
A Faustian pact that was recognized by the poet and polymath Johann Wolfgang von Goethe. He called the modern zeitgeist “Velociferic” and thus described a time that was speeding up diabolically. In his maxims and reflections he recognized the importance and scope of modern paper money:
“As little as the steam engines can be dampened, just as little is this possible in the moral sphere: the liveliness of trade, the rushing through of paper money, the swelling of debts in order to pay debts, these are all the tremendous elements that a young man is currently responding to is set.”
What made Goethe uncomfortable back then is far advanced today. Recurring bubbles and financial crises over the past decades have made us realize that we may have overused the blessings of printing. Money is detached from its natural scarcity, which has made possible seemingly infinite money printing.
With the last financial crisis in 2008, the financial system was on the brink of collapse and had to be rescued by the states and central banks — a “rescue” that merely corresponds to postponing the problem.
In the course of the then tumultuous events, a certain Satoshi Nakamoto put a nine-page thesis paper on the Internet. In it, he described a digital peer-to-peer payment network called Bitcoin. What nobody suspected back then and is still hardly understood today. Indeed, its discovery is as significant as the invention of printing: digital scarcity.
By its nature, Bitcoin is digital and the ease of transferring information over distances is inextricably linked with it. At the same time, Bitcoin is absolutely in short supply. For the first time in human history, we have something that has an irrevocable digital scarcity.
In this way, money remains abstract, digital, scalable, and programmable, but it is placed on the foundation of absolute, digital scarcity. With Bitcoin, the breakthrough that book printing has brought is tightened without reversing it. The crypto asset is the missing link, the missing link that modernity was still missing.