The Internet of Money Volume III Summary, Notes, Lessons & Quotes

Cryptocurrencies may change the world more than the Internet did. Back in 1992, the author was a computer scientist who tried to communicate to others that the internet would transform life as we knew it despite very few people believing him back then.

The same exact critiques and narratives people lobbed at the internet are being lobbed at bitcoin now.

Money is a language to communicate value between humans, we have used many tools throughout history as forms of money. Now money is pure data with the advent of bitcoin. Money is open-source software built on top of a permissionless network with no admins to tell you how to use it.

Bitcoin is also programmable, as a result, we can code contracts, build automated escrow accounts, and do countless other functions. These functions were impossible with all other prior forms of money.

Bitcoin will help out two major demographics; the currently unbanked & those living under regimes with substantial inflation like Argentina, Venezuela, Turkey, etc.

Exclusion from the global financial system condemns billions of people into poverty. Basic financial services have become a privilege, and many people in “first-world” western nations are unaware of their personal financial privilege.

Physical cash has one fatal flaw; it’s slow to transmit across physical space. Bitcoin solves this problem by being on an internet-based network.

The solution for the unbanked is to adopt an open, public, borderless, transparent, neutral, and censorship-resistant currency. Adopting bitcoin gives the unprivileged not only a bank account but a virtual bank in their pockets.

Success means adoption rates, not short-term prices. If you got into bitcoin for short-term gains, a downturn might quickly get you out of it because they happen often. This is a movement, you have to understand the technology and be in it for more than the money for it to work long term.

The author argues that success will be when we have “mainstream adoption”. When you are asked about Visa or Mastercard you respond with bitcoin instead.

Linux succeed the same way that bitcoin will, by being adopted widely and universally and beating out the old incumbent (IBM). Linux is now universal and on countless devices, because it was an open-source permissionless operating system just bitcoin is open-sourced and permissionless.

Market capitalization is a terrible metric. It’s not a good metric because other cryptocurrencies have the opportunity to have a large market cap than bitcoin, yet bitcoin can be more widely impactful.

Facebook launching its own cryptocurrency; Libra marks an important milestone in this technology’s adoption cycle. Now there are three major parties competing to control the money; the Nation States, Corporations, and open-source software projects.

Libra is attempting to use a wide variety of components like virtual machines, Merkle trees, proof-of-authority, and many others to create this new cryptocurrency.

So far, Libra is simply a whitepaper and has not been shipped yet. Time will tell if Facebook is actually able to pull this off. As opposed to bitcoin, Facebook has an army of regulators, lawyers, MBA’s, and other parties to convince in order to ship this product whereas bitcoin had none of that opposition in the beginning.

Facebook’s Libra will also have the uphill battle of convincing adopters that Libra is free from surveillance and will be censorship-resistant. Given the company’s track record, they’ll have to create a product that is the opposite of anything they’ve previously built.

Silicon Valley is now coming for banks. That ecosystem was able to disrupt so many other industries; mail, media, music, and now has firmly placed its sights on money & banking.

Open blockchains have five pillars: openness, borderless, neutrality, censorship-resistant, and immutable. If these new corporate cryptocurrencies don’t have those five properties they’ll be no better than the existing fiat system.

The current fiat system is a system of control.  Due to the Bank Secrecy Act, they can monitor and track all of your non-cash financial transactions.

The internet has been a double edge sword, it’s allowed for innovation but it’s also enabled authoritarian-like financial tracking. We were sold an idea of protection with the FDIC, but that promise can be provoked on a long enough time scale.

We as citizens have the power of voice and exit. We can voice our preferences with votes or we can exit the current systems with an option like bitcoin.

AML and KYC rules are worse than useless, they add additional government tracking, and more points of failure or hacking, and they don’t solve the problems they intend to solve.

The irony of banks and governments calling out bitcoin being a safe haven for money laundering is that the current system they thrive on is the real safe haven for illicit and illegal financial transactions.

The current system is a cartel, pure and simple. A bunch of companies collude to set prices, fix markets, close off competition, and capture regulators. The idea that bitcoin is more harmful to consumers is laughable.

The banking industry has a litany of harmful if not downright illegal practices they’ve thrown at their customers year after year. Robosigning, withdrawal fees, shrinking yields, fractional reserves, and on and on.

Bitcoin finally gives an exit from this system. Our fate doesn’t have to look like Lebanon, Venezuela, or Zimbabwe. We can sever our times from the cartel once and for all.

Bitcoin’s motto doesn’t need to be “don’t be evil” because it can’t be evil. No one can co-opt the system for their own gain.

Bitcoin isn’t just a bank account in your pocket, it’s a Swiss bank. You can spin up as many wallets as you’d like, you can give out bitcoin-based loans, and you become your own bank. You become an institution with this technology.

Some may argue that not all governments are malicious or will tamper with your money and this system. Luckily with bitcoin, you don’t need to worry or place bets, you can jump into the life raft without worrying about the direction of the titanic.

Bitcoin empowers you, why wouldn’t you use it?

Cryptographically protected code is unstoppable. Even if you are asked to stop the bitcoin network, you can’t stop it. Shutting it down would be like trying to erase every copy of the bible from this earth; physical and digital.

The Silk Road actually reduced the violence involved with narcotics trafficking. “You can’t stab a TCP/IP protocol, but you can stab the person buying drugs from the street corner.

For every nefarious project based on code, there are 100 good-intentioned ones. You can’t stop this new system from being created and from being grown.

Asking which is the best blockchain is like asking which is the best pair of shoes. It depends on the occasion or the problem you’re trying to solve.

You don’t need a blockchain to solve every problem. If you can replace the word blockchain with the word database, then just use a database.

There are trade-offs when building these new cryptographic systems. Bitcoin sacrifices so many other characteristics to ensure security.

The users of a new technology determine its functionality. When DARPA created the internet did they ever intend for online dating? Of course not, but here we are. Vitalik Buterin never intended for jpegs of Monkeys in the form of NFTs but they happened anyway.

Cool neighborhoods don’t last forever. Gentrification inevitably happens and pushes out all the artists and small business owners who once made it cool.

That won’t happen with bitcoin this time around because the initial community can’t be forced out. It’s a permissionless system with no executive team to decide who can be a participant.

The initial online communities were full of weirdos. The original chat rooms were on the fringes of society just like the initial bitcoin community. Then came the corporations. This time around that can’t happen.

Crypto goes through the standard bull and bear cycles like all the other assets, just in a much more condensed timeline. Remember, success isn’t price-based, it’s adoption-based. Focus less on the market cap and more on the utilization and transformation of this new technology.