Perché è nato Bitcoin? / Why was Bitcoin created? “Understanding Bitcoin” con Giacomo Zucco

The first videos with which we start our series will not actually talk about technology, cryptography, mathematics or computer science, they will instead talk about economics and even politics, because in order to answer the fundamental question when trying to understand bitcoin, which is: why bitcoin? what is its purpose? what is the purpose that its creators wanted to achieve? we have to dive into history, or at least into the philosophy of what money is. What is money? what is currency? Money, as we know, responds to a need that we have always heard about from an early age, which is to overcome the fundamental problem of bartering. Bartering is important because by trading we can overcome the limits of individual consumption, n, each of us produces something and consumes it, but if instead of producing and consuming individually, we produce and trade with others, everyone can specialise in something and the value of each can increase from trading. But trading becomes complex when it is made between objects that have a different type of value for each player in the market, to overcome this problem that is generally called “double coincidence of wants” in economy, a certain good that is exchanged more than others and is accepted more than others, emerges from the market and becomes money with the main function of helping the trade. However, there is a second function that is a bit less studied and a little less known but equally important, also in the case of bitcoin, that is the function of saving, which is helped by money. These two functions of money, the function of exchange and the function of saving are particularly effective when they occur together. However, these two values, these two functions of money seen together, create two problems. The first problem is that of censorship, that is, when the number of people who want to exchange among themselves grows, so do communications and interactions to facilitate this market, and also the temptation on the part of some central players controlling this market to become arbitrators, decision-makers, censors of exchanges, perhaps to increase their privileges. The second problem is the problem of inflation, the problem of the production of money. If a form of money becomes a good saving tool, those who can produce this good that has been chosen by the market as money, are encouraged to produce more and more and more of it, thus creating a problem of inflation. It is therefore necessary to understand the history of those goods that have become money because they had the characteristic of having their exchange difficult to censor and were difficult to inflate if they were used for savings. Bitcoin, as we will discover, is exactly one of the forms of money that is more difficult to censor and that is more difficult to inflate, so it meets very well the criteria that money requires. History has begun to converge towards a particular good, which is gold, the precious metal we call gold, which had some fundamental characteristics to become money. Gold is easy to divide, it is easy to exchange from hand to hand, it does not have a label stating the name of the person who owned it before, it is a so-called “bearer” tool, so very difficult to censor and track, gold is also difficult to produce in unlimited quantities because it has a cost of production, this cost of production is very high and the supply of money is not elastic compared to the demand. So gold behaved as a currency difficult to inflate at will and difficult to censor at will, but throughout history gold has also shown its limitations, physical gold was particularly difficult to recognize and also difficult to preserve, if we have millions of euros equivalent of purchasing power to move across a border, for example during a political persecution, moving gold bars results very complicated. So the tools that society has gradually adopted to succeed in increasing the ease of verification and the ease of storage of gold, are tools that have always, for now, taken into account, before bitcoin, the creation of a trusted third party. The interesting thing is that over time, this tendency to use trusted third parties has increased exponentially, so much so that we have arrived at a recent chapter in which, today, money is simply a sheet of paper that has as its only guarantor of value, the trusted third party. Bitcoin, as we will see, disrupts this relationship and allows us to improve the transportability and storability of gold in its digital form, which becomes more necessary the more we enter the age of information and the age of the Internet, where exchanging goods and services in exchange for physical gold would be absolutely anachronistic. A certain movement, born in the 90s, with a particular name, Cypherpunk, dreamed of a form of money that would return to the privacy and individual control typical of a physical gold coin, which can be exchanged from person to person without anyone censoring, spying on or tracing the exchange, but updated for the world of the Internet. As we said, physical gold can not be sent easily from one country to another in a few seconds, physical gold is anachronistic for the world of the internet, and instead this digital gold that the Cypherpunk dreamed of would have the same characteristics of online payment, with the same privacy characteristics of cash, or even better of gold coins, which did not depend on any third party. There is also another movement that dealt with the ease with which today’s money mass can be produced, inflated, manipulated, increased, this school of thought that opposed this type of manipulation, and tried to bring back the money to its inherent difficulty of creation, as in the case of gold, is sometimes referred to as the Austrian school of economics, and the second line of thought that led to the research on bitcoin. Bitcoin is basically the fulfillment of this dream, there were some previous attempts, but they were attempts concentrated in some companies, for example PayPal, when it started, it wanted to create a new type of money that was completely private and completely unmanageable, but these companies were easy to close, were easy to stop, the regulator or whoever had an interest in the status quo, could go to these entities telling them not to innovate. Let’s see how bitcoin instead manages to avoid this problem and avoid being stopped.

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