The social functions of Bitcoin and the cryptocurrencies

Bitcoin

Joseph Stiglitz, Nobel Prize-winning economist, has made the claim that bitcoin ‘ought to be outlawed,’ because it doesn’t have any useful social functions.[1]

Bad way to start an article, but I’m triggered. For once, I will begin with stating the obvious, even if it doesn’t seem related:

  • Gold doesn’t have any useful social function (other than making wedding and engagement rings out of it, but we can make them from better metals nowadays).
  • Natural diamonds are nearly useless, everything we can do with them can be done better with artificial ones. But may be jewelry fits the social theme.
  • Dollars don’t have any social function They are just a symbol of a value, meaning we can use any type of paper or cloth the same way we use them.
  • In fact, having economists doesn’t give us any socially useful functions. They only helped us exchange the goods trade for the trade of prospect of goods.

Yet.. we mine deep for gold and diamonds, and we exchange countless type of money variations for dollars, and last, but not least – we even have a nice prize for some economists. Despite the fact the Earth economy as a whole can be roughly conveyed as “everyone trying to squeeze more from the others”. Where does Bitcoin and cryptocurrencies as a whole fit? Well, you know, Bitcoin is money. It’s all the money put into mining it, plus all the money spend on the transactions, plus the value each of us are ready to pay for it. If one doesn’t want to buy it, they can still mine it. You can invest in electricity and hardware and “manufacture bitcoins” out of nowhere. It is mining. So, in essense. it’s like saying the Gold Rush wasn’t “socially useful” when it was the reason North America was settled by the Europeans.

But mining was only the beginning. Today you can mine what not. Some cryptocurencies went so much further than being decentralized “currencies” that they became platforms for launching enterprise level businesses. Take Ethereum for example. It created economy out of nothing. Well, you might be too old to get it, so let me explain – it created the possibility anyone – and that is ANYONE to create assets and use them as any possible form you can think of. Like securities, access tokens, currency, simple reward points, and this is scratching the surface as people created blockchains for so many various things, that it would be hard to even list them.

Back on the Bitcoin – it’s the broad back we all have for the crypto world. It became a thing to invest to keep your money secure. Because it’s so limited that it’s guaranteed to be expensive. It also created strong community, in fact we call it the “crypto world”. We have a common cause – mine, trade, help establish the cryptocurrencies and assets as at least equal to the paper money you print in the backyard of almost every country. It’s so decentralized, that we are allowed to be here just for the money or we might be more involved than that. There are people owning billions in cryptocurrencies as well as poor guys mining with a single card. Would you try to imagine a goldmine owning whale having anything in common with a poor Indonesian gold digger owning a pair of shoes, a tool and a set of thorn overalls? Nope. Yet I sit equal to people that can buy few islands in the crypto world, and we all have one thing in common – we want (Bit)coins to become… more.

Oh, and, mind you, the average crypt nerd IQ is not to be laughed at.

Sure, it’s so libertarian. We just don’t like being forced into anything. But then – not much you can do if I decide to go in heavy mining and went to live in a country that laughs at regulations, yet the oh so strong of the day don’t anything about it because their dirty money are also there. Fuck it, it’s called social justice, I get richer for being smarter than you your whole nation is build on that, right?

 

And then something even more “socially functional” emerged. There are countries in the world where the local government is fucked up. They simply fail in everything, mostly out of greed and incompetence. And people still live in those countries, and their salaries are either converted to dollars or euros, or… bitcoins. The social function is savings. In countries where banks could not or would not guarantee anything about your savings. Or they are the reason of the crisis in the first place. I live in such a country, we lost everything overnight. Out of my hands, everything I worked for was lots of zeroes. No reason. Not even debts. Big heads thinking about it couldn’t prevent it. If we lose everuthing in Bitcoin – it’s on our heads, not some government that someone else voted for.

Would you call banks “socially functional” outside the option to lend you some money? What’s their social importance when they are the reason for so much of the regulatory mess? Cash was fine, now half the countries in the world limit the amounts you can exchange because they want to control the money flow. Because of the socially functional banks that have a hard time attracting money flow with lousy interest rates.

Finally – there is another form of social justice behind Bitcoin: we left the institutions out of it. Yeah, all of you, morons, are late. You can only help us by trying to catch up.

 

So, dear Nobel-Prize winner, stfu and go buy some Bitcoins before you are too late.

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