Why Bitcoin? The only store of value you can keep in your head

We live in a world that is moving at a completely crazy pace. Artificial intelligence, robotics, self-driving cars, blockchain, space exploration… Even when you follow these subjects every day, it becomes hard to keep up. And this is probably only the beginning.

I don't think technology is good or bad in itself. A technology is a tool. A hammer can be used to build a house, just as it can be used to destroy one. It all depends on who is holding it.

Bitcoin is a tool too. And if I had to explain why this tool fascinates me so much, I would start with something we all use every day: money.

The problem with our money

When people talk about inflation, they usually mean the general rise in prices. But behind that price inflation lies another phenomenon that interests me in particular: monetary inflation, meaning the increase in the quantity of money in circulation. If the quantity of money grows faster than the quantity of goods and services available, each monetary unit mechanically becomes less scarce.

And the problem is that you don't see it directly on your banknotes. A 10 franc note will always read 10 CHF. At the end of the year, nobody comes to replace your 10 franc note with a 9 franc note.

The loss of value shows up elsewhere. In the coffee that costs more. In the rent. In the groceries. In property. In services.

Your note is still the same. But what it lets you buy changes.

A currency whose printing press nobody owns

This is where Bitcoin becomes interesting. Bitcoin has an extremely simple rule: its issuance is known in advance and there cannot be more than 21 million bitcoins under the current rules of the network.

Not 22 million because a government needs money. Not 30 million because a central bank is going through a crisis. Not a few million more because someone reckons it would be good for the economy. Nobody owns a 'Create 1,000,000 BTC' button.

The rules are verified by the participants in the network. A single actor cannot decide to change them and force the others to accept their new bitcoins. It is probably one of the features of Bitcoin that I find the most powerful.

Everyone can use Bitcoin, but nobody owns Bitcoin.

You can take part in the network. You can own bitcoins. You can run a node. You can mine. You can build on top of it. But you cannot unilaterally decide to change the rules for your own benefit.

Technology can free. It can also control.

There is another reason why Bitcoin interests me. New technologies give us extraordinary capabilities. But they also give enormous power to those who control them.

Automated surveillance, facial recognition, artificial intelligence, digital identity, fully digital currencies… All of this can be extremely useful in a healthy society. But the same tools can become far more worrying when power changes hands.

History shows us one thing: no government, no company and no institution is eternally benevolent. That is why I find it important that systems also exist which do not ask permission from a central authority in order to work.

To me, Bitcoin is a way out. Not necessarily a door everyone has to walk through. But a door that exists. And sometimes, the simple fact that a door exists changes an enormous amount.

Why can Bitcoin be a store of value?

A bitcoin obviously has no magical value. It is worth something because human beings give it value. Exactly as we did with gold for thousands of years. Or with other scarce objects used as money over the course of History.

Bitcoin does add something new, however. It is scarce, divisible, global and digital. You can send a small part of a bitcoin to someone on the other side of the planet without physically moving anything.

And above all, you can take possession of it yourself. Not a promise of bitcoin. Not a line in a bank's database. Your bitcoins.

The only store of value you can keep in your head

This is probably the idea that struck me the most when I discovered Bitcoin. With a wallet whose keys you control yourself, access to your bitcoins can be restored thanks to a recovery phrase, often made up of 12 or 24 words. Those words represent the key that lets you find your wallet again.

In theory, you could memorise them. Cross a border. Lose your phone. Lose your computer. Change continent. And recover access to your money from somewhere else.

Obviously, I do not advise making your human memory your only backup. Forgetting one word could have fairly catastrophic consequences. But the principle remains incredible.

It is not your bitcoins that you carry in your head. It is the key that gives access to them.

No need to carry a gold bar. No need for a suitcase of banknotes. No need for a bank to be open. A few pieces of information can be enough to take back possession of value stored on a global network.

I find it hard to grasp just how new this idea is in History.

That, to me, is Bitcoin

Bitcoin is not perfect. Its price is volatile. Using it requires understanding a few concepts. Taking responsibility for your own money also means taking on certain risks yourself.

And Bitcoin obviously does not solve every problem in the world. But that is not what I ask of it.

Bitcoin is a tool. A monetary tool whose rules are public. A tool that nobody can control alone. A tool that lets someone own and transfer value across the world. And even, under certain conditions, keep the key to that value in their head.

That, to me, is freedom.

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