The original idea behind Satoshi Nakamoto’s Bitcoin was a peer-to-peer cash system that could be verified and finite, rooted in a sound monetary system that he believed the US no longer possessed. The big deal was the ability to self-custody without the involvement of any intermediary. Fully owned, censorship-resistant money.
Interestingly enough, censorship resistance discussion seems to have died down in the wider crypto community. Given that most voices are from leading western countries, naturally, there is no sense of urgency. Most people residing in these countries have not experienced losing access to a safe, stable currency. However, this experience cannot be deemed common, it is more so an anomaly.
Citizens of countries with high inflation often have to deal with devaluing money causing major consequences such as lack of food, water, and basic necessities. Not only this, but citizens in authoritarian countries can have their bank accounts frozen for reasons other than criminal/illegal activities. People in many countries don’t even have access to bank accounts! Cryptocurrency has allowed these people to have direct access to money they can control, with a stable value that can be transacted almost instantly around the world. This has evidently benefited developing countries the most.
According to a 2021 Chainalysis report, the countries with the highest cryptocurrency adoption include:
All countries on this list are considered “developing countries”, apart from the USA.
A developing country is a nation that fares poorly on the HDI and has low levels of industrialization.
Whilst Bitcoin is popular, evidence shows Stablecoins are currently preferred for everyday transactions and international payments in some of these nations. For example, in Venezuela, most people do not know what Bitcoin is. The coin they are most familiar with is USDT.
The key reason for Stablecoins is its non-volatile nature providing a solid unit of account. Whilst this is understandable for solving hyperinflation scenarios, these currencies’ properties may cause problems in the future. The problem with most Stablecoins today is that they are heavily centralized. This creates a single point of failure open to censorship, which many wish to avoid in their own countries.
At Purse, many Shoppers & Earners have requested Stablecoin support to reduce volatility. The volatility issue stems from the Bitcoin price fluctuations between an Earner ordering an item and the Shopper receiving it. This causes a form of “Buyer’s Regret” on either side of our Marketplace regardless if Bitcoin goes up or down. However, most of our Shoppers & Earners are happy to continue using Bitcoin given its long-term strength against the dollar.
Stablecoins can be centrally seized, whereas Bitcoin’s self-custody makes it much harder to seize. One example is where the largest Stablecoin, Tether, had frozen 1.7M USDT that had been stolen as part of the hack of the Yearn DAI v1 Vault. Tether’s capabilities do not allow it to move USDT between addresses: it can only freeze, destroy, issue, and send tokens — thereby allowing it to adjust the overall token supply. Whilst it is evident that this was done with good intentions to follow basic financial regulation, it does not provide an exit for those who treasure personal financial sovereignty, which those in developing countries truly need.
Whilst it cannot be proven that this ability to ban addresses will pose a threat to Stablecoin holders en masse anytime soon, it is very possible. Stablecoin CEO’s can potentially freeze coins of anyone which the government requests, meaning that it leaves open similar risks to a bank account being frozen, leaving those who used it as an escape in the same place they once were. No matter the ethos of a centralized entity, they always have to give in to regulation, which is not always a good thing.
The current total USDT in banned wallets:
- 407,590,988 USDT
- 708 banned addresses
The answer is Bitcoin. It is the most decentralized currency to exist, given that there is no central point of failure, no foundation, no VCs, no premine… the list goes on.
Why is this relevant? Unless you use a centralized custodian, your Bitcoin can never be frozen, and if you are truly being oppressed in your nation, you have a monetary escape route. Bitcoin is censorship resistant.
Many citizens around the globe understand this idea, creating community hubs to increase adoption by providing education, infrastructure, and tools. If Bitcoin is not used, it is simply not useful. They understand this idea more so than the west because they experience the pitfalls of underdeveloped economies.
Some of these communities include:
Bitcoin Beach is the first ever Bitcoin township in El Zonte founded by Mike Peterson on the coast of El Salvador. Its success was actually a large catalyst for the El Salvadorian government to look into adopting BTC as a legal tender. The initiative began once an anonymous donor to Missionsake, a Christian charity Peterson had at the time, gave him a large sum of Bitcoin but with one condition. That Peterson would not sell it for cash but use it to create a circular economy in his town.
Bitcoin Beach sees Bitcoin as a technology that can help the unbanked access online currency. This allows for better financial management, easy international payments, and access to online products and services.
Bitcoin Lake is a township in Guatemala around Lake Atitlan. When asked what they see bitcoin as they responded “Digital gold”. They believe Bitcoin and Bitcoin mining is the only way to truly align incentives in the communities around Lake Atitlan to help preserve the national treasure, which has become polluted by unsustainable farming and waste management practices. They are deploying a first-to-market technology to convert unsorted waste into energy for Bitcoin mining in a completely sustainable and renewable manner completely off-grid, calling this DBI (Decentralized Basic Income). Bitcoin Mining using waste management is providing a basic income for Lake Atitlan people!
The Ekasi Bitcoin community is a township on the coast of South Africa. Hermann Vivier and his wife initially began a non-profit organization to help underprivileged children learn how to surf, as they believed learning something difficult would help them in all aspects of life. At one point, he received a large Bitcoin donation and began to explore aspects of the currency.
The Ekasi community was drawn in by the short-term utility of Bitcoin and bought into its long-term vision. Currently, they see Bitcoin as a savings vehicle. “They do not have access to other forms of saving. Bitcoin can be a very simple way to do this if you are unbanked.”
They state: “Widespread adoption of Bitcoin could alleviate many of the otherwise apparently-unsolvable social ills that plague our societies like wasteful wars and corruption at the highest levels of governments and corporations.”
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Bitcoin is the superior money not just because of its technological innovations but its ethos and identity which breaks the chains of authoritarian governments that control the monetary destiny of its citizens. It continues to be a technology that serves as a medium of exchange, saving mechanism, and international payment network, all achieved without compromising on its core principle of decentralization. Many currencies have come and gone because they lacked consistency in their purpose. Bitcoins purpose is simple, to be the hardest money the earth has ever seen.
Will we reach Hyperbitcoinsation? No one knows… but its worth a shot.