Bitcoin: The Global Digital Asset

TenGlobeBitcoin

by @IntlBitcoin

At no time in the history of humankind have we had an asset that exists beyond the physical world. Never before have we seen a good that has no material existence and not only retains value but increases in value over time. Bitcoin is the first global digital asset. Bitcoin is a revolutionary idea.

So what is an asset? An asset is simply an object that has a monetary value. An asset is not money because money is nothing more than a tool to communicate value between parties. An asset is a good that holds specific properties that make it valuable, and that value is expressed through price. Homes have value because they have utility. They function as a shelter, a place of safety, and a place to live, eat, and raise a family. The qualities and combinations of these factors give a home value.

Value is subjective, and each person values every object differently. If I am a rancher, I may place a higher value on open land on the plains than on an apartment in a city. Therefore, I may be willing to pay more for said land. It has a greater value to me.

Anything can be valuable if there are people who desire it. Assets retain value across time and space and are considered desirable by a large group of people. The longer more people perceive a thing as valuable, the more likely the object becomes an asset.

Many items have been considered valuable assets throughout history: Precious metals, including gold and silver, livestock, land, natural resources, art, and many more. Most of these items have been considered valuable for centuries and continue to be to this day. Regardless of where you live, most people place varying degrees of value on these items. These assets are foundational to how our species lives and how modern civilization evolved.

We trade assets to increase our standard of living. We hold them to secure our wealth, our time, and our labor. We pass them on to the next generation because we believe they will continue to be valuable in the future. We use these invaluable assets to function in an efficient and modern society.

This brings us to Bitcoin. Bitcoin is an asset. But, it is a unique asset, something the world has never had before. Bitcoin is a “digital native” asset. What does it mean to be “digital native”? It means to exist without a tangible form or a physical presence. The idea of “digital” is simply a way to share and distribute information electronically, without physical representation. As the technology of civilization advances, more and more of the physical world becomes digital.

Until recently, humanity only had physical assets or assets that have value derived from a physical form. For example, gold, silver, and diamonds hold value because people desire them for their physical qualities and function in society. And more recently, we also have trade-able paper or digital versions that represent these goods. Still, one thing common among all of these digital versions is that they are in some part backed by tangible, physical assets.

Yet, Bitcoin is different. It’s different because it was invented purely in the digital realm with no physical good or asset creating its value. It exists exclusively in the digital sphere, and before Bitcoin, this wasn’t possible. There is a whole history of why it was impossible, but that is another topic for another time.

So what is so important about Bitcoin being “digital native”? For most of human history, we only had four ways to transfer information: verbal communication, body language, the written word, or the exchange of goods. All of these forms are physical. Yet, with the invention of electricity, computers, and the advent of the internet, humanity created a new mode of communication. And right before our eyes, knowledge, ideas, books, processes, and information transformed into digital forms found only on computers. With electricity, we took information out of the physical world, converted it, stored it, and used it in the digital world.

Yet, only two things exist on a computer for all the countless things we have digitized: information and instructions. Information is all the real-world data we have stored on computers, and the instructions are the code written to tell the computer what to do with the information. Instructions are programs. And programs are the language that allows computers to function and communicate with us and with each other. Programs and protocols running on computers and computer networks are “digital” information. Bitcoin is one such protocol. The Bitcoin protocol is the set of instructions that tell computers what to compute and how to communicate on the Bitcoin network. There are no physical forms of bitcoin. It only exists as digital information.

Asking yourself, “Why didn’t someone do this before Bitcoin?” is a good question. There is a simple answer. Many people tried and failed. For decades prior, many people and institutions attempted to create a digital form of money or a digital asset. They envisioned a token, currency, or good that would carry the internet economy forward and bring the financial world into the technological age of information.

But, there were a few problems that none of these prior attempts could solve. Some worked well for some aspects and not for others. No one could fully solve a handful of problems that plagued the creation of digital money. One such problem was the Byzantine General’s problem. Online you can research and find a historical thread of the cypherpunks and coders who spent countless hours working to find solutions.

That is until the anonymous Satoshi Nakamoto showed up online. He brilliantly solved these problems and created the first usable, secure, and decentralized form of cash. He found a creative way to blend some of the best parts of previous attempts with his solutions to the few remaining problems of digital money. It was an elegant yet unproven solution.

So he wrote the Bitcoin White Paper to explain his work, released the code, and then began running the protocol. At that point in 2009, Bitcoin began. Bitcoin became the first digital native money and the first digital native asset. And thus far, it has proven to be the most widely adopted, secure, decentralized, and successful digital native asset.

As time has progressed, many others have attempted to improve, change, or modify aspects of Bitcoin. So there are a countless number of other digital native tokens called cryptocurrencies. Most attempt and fail to enhance some quality of Bitcoin but have to do so at the expense of other crucial attributes. At no point has any other cryptocurrency implemented a superior, complete technology to unseat Bitcoin as the premier global digital asset. It was the first, and some would argue that it will be the last and greatest digital asset humanity will invent.

by @IntlBitcoin

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