Bitcoin once a toy for computer nerds is now soaring in price triggering in your gold rush is it just another bubble or the glimpse of the radically new financial future? Jump in, before being left behind!
We asked Rick Falkvinge of Bitcoin cash and founder of the Swedish Pirate Party the new Bitcoin craze is making people rush into cryptocurrency investment with the digital money skyrocketing value putting it into the spotlight but aside from causing a new gold rush.
Bitcoin is promising to completely transform the way we use money what will peer-to-peer money exchange due to the global banking system what role will the world’s governments be left with when Bitcoin goes global and can it overcome its unstable nature to bring about a radical financial revolution.
Question: Bitcoins thousand fold increase back in 2011 and indeed from one dollar in February 2011 in a record high of almost seven thousand eight hundred eighty dollars last week then had a plunge and is back up again now why does it keep growing and is there any price limit for Bitcoin?
Answer: Yes, there is a price limit for Bitcoin and cryptocurrency it is not it cannot displace more money than exists in the world so there is an upper ceiling but that upper ceiling if you’re just regarding Bitcoin as a commodity on the market which I think it is like any currency can easily go to 1 million or more per Bitcoin. Now it’s important to remember that Bitcoin might not be the final cryptocurrency. Cryptocurrency will displace the central bank money but with social networks we had 6 degrees which was reflected replaced by Friendster which was replaced by MySpace which was replaced by Facebook so some cryptocurrency is going to be worth a lot of money which one well that’s a gamble so we’re having this Bitcoin split.
Without going into too much detail we have two different versions of Bitcoin as of now you’re the man behind the Bitcoin cash this is new version of Bitcoin that was created according to your organization in response to ears of mismanagement of the Bitcoin legacy network is bitcoins decentralized nature its Achilles heel is it going to keep splintering because there will always be someone in the community who will be unhappy about the way functions the a key aspect of Bitcoin is that its permission less you don’t need to ask anybody’s permission to do anything and this is key in the entire community which is why I decided to publish a letter where I was chief executive officer without asking anybody’s permission.
Everybody was buying them up to furnish Bitcoin mining farms but can become really make everybody rich no Bitcoin cannot make everybody rich. Bitcoin right now is a huge wealth transfer to those who understand who its implications early on the last wealth transfer of this magnitude was around 1850 and it was about those who found oil there’s a huge wealth transfer going on right now where those who used to be poor nerdy geeky sitting in their mom’s basement, if you like, are suddenly the new millionaires and that perhaps more than anything is going to have a profound effect on what the future of our society looks like because for the last 200 or so years it was the people who found oil that decided where money went who what research was made and when the geeks and nerds are sitting on that money and deciding what research gets made it’s not gonna be a better diesel engine, it’s gonna be a better solar panel, it’s going to be teleportation it’s gonna be space travel!
I think that’s gonna be one of the more profound changes happening here a wealth transfer to an entirely new type of people so can everyone jump on this bandwagon or is it too late well it comes and goes I mean if I can’t give financial advice but if cryptocurrency fulfills it promise and there is no indication it wouldn’t then the equivalent of one Bitcoin needs to be in the two to five million dollar range but at that point it doesn’t make sense to measure it in USDollars anymore because the US dollar won’t have an any measurable value so it is absolutely not too late, just like it wasn’t too late when Bitcoin was a $3 or $30 or $300 or $3,000.
But this is a very high volatile instrument this is a really risky investment and if you’re asking me whether somebody should invest then the answer is nobody should ever invest more than being capable of losing every single last cent of it Calma Sachs CEO Lloyd Blankfein says Bitcoin may be another bubble just like that of the dot-com and JP Morgan’s changed CEO Jamie Dimon compares cryptocurrency to the Dutch 17th century tulip mania. Don’t this man have a point I mean a booble forms one there’s public ignorance and with Bitcoin most people have a vague idea of what it is and how it works. I think that I think you absolutely have a point that most people don’t really understand what bitcoin is it is a peer-to-peer electronic money that means.
I have a phone here I can use that phone to transfer money to a nearby phone or to phone on the other side of the planet the transfers instant it is practically free nobody gets to decide whether I can make that transaction or not, including financial authorities and that in itself will mean a financial revolution. This is an extinction-level event for banks. Banks will no longer be a necessary middleman and that’s more than anything why I believe that this is the future of finance we anonymity makes Bitcoin obviously very popular but it also enables crime, just remember the in tourists wanna cry ransomware attack this may this can potentially make government’s restrict frequent rates substantially and that was called the drastic slump in its value.
Do you think cryptocurrency can partially sacrifice its anonymity to ward off shady users it is more traceable than any money that came before it because every every single unit of Bitcoin is traceable through its entire monetary history through anonymous account but once you are not anonymize one account you can start unraveling where the transactions go. The second part of that question which which is more interesting is that governments Bitcoin has a peer-to-peer currency appear to appear technology means that there’s no middleman governments have been trying to stop peer-to-peer technologies since Napster and they have been as completely unsuccessful as anybody could possibly be in that so I don’t see them being able to stop here to be a currency either which leads me to the last observation: that since there is no middlemen there is nobody giving permission when I’m buying a bottle of water with a credit card somewhere in the background is a bank giving me permission to buy a bottle of water with a credit card and that is a horrifying thought, because that means that the bank can also deny me permission to buy a bottle of water.
Nobody thinks of this but it’s there with Bitcoin this is not true there is nobody needing to give it permission in the background there’s nobody who gets to say no to a transaction no money can be forced, nobody can be seized and here’s the big problem for governments in the future, taxes can no longer be forced.
Do you think the government’s can come up with its own version of blockchain currency make it traceable, registered and ensure nobody ever evades taxes or fines or heights their profit? Bitcoin it’s about the underlying innovation of Bitcoin called the blockchain which is a solution to a really really really hard problem as in essentially how do you make sure that a lot of people are agreeing on everybody’s account balances because there’s obviously an interest in somebody saying that no, I have more money and everybody else needs to not agree with that governments and banks don’t really think in this way banks think that they can start a blockchain technology and then issue more money down the road governments think that they can start a blockchain currency and issue more money down the road but the whole point of a blockchain technology is that you are trusting in the mathematics and not in the issuer. In this way the blockchain a blockchain currency versus a central bank currency is a lot like open source software versus proprietary software like Apple Mac OS or Microsoft Windows.
It took 30 years but in the end pretty much every single computer web server is running an open operating system in in the same way I predict that will go from proprietary money to open money and permissionless money like Bitcoin. You know Bitcoin enthusiasts say the cryptocurrency will eventually replace all regular currencies become the world’s only money but yet cryptocurrencies really work for everyone in the world.
Cryptocurrency fill in the vacuum if that is so I mean how will it change banking I think you’re spot on there the European Central Bank is printing used to print 80 billion euros per month just propping up a gigantic bubble happening right now it doesn’t do that anymore. It just prints 60 billion euros per month in the US Federal Reserve was printing trillions of dollars inflating the money supply we know how this ends once a government starts printing money to pay off its own debt the story doesn’t have a happy ending anymore. It just doesn’t history is brutal on this point so cryptocurrency doesn’t really need to replace the US dollar replace the euro it just needs to survive while those behemoths collapse under their own weight and that when it happens it’s gonna go fast so will they widespread use of cryptocurrency while promising a new level of Liberty. It won’t be easy for older folks to get used to this complicated digital stuff right, well it does it manage them, it is complicated, in the 1920s when households were electrified there was a training curve where older folks were being shut out from all these new electrical appliances because they had to relearn.
When computers arrived, it was the same thing when smartphones arrived, it was the same thing there’s always a problem where a younger generation needs to take responsibility for – if you like introducing the elders to the ongoing changes of society fortunately there’s a you there’s usually somebody in every family who does that – but the concern is absolutely valid the first time Bitcoin was used to pay for a real service as it cost a user 10,000 bitcoins to get two pizzas. Now, the guys were yes I mean 35 million dollars per pizza I wonder if that man really wishes had cooked at home… Cash is backed by a theoretically gold or the government’s ability to pay dad where do all this insane values come from in Bitcoin what’s backing a Bitcoin like any commodity, it has value because of two simple characteristics it is useful and it is scarce meaning that there is not an infinite supply of it.
It is useful because I can use it to transfer value to Malaysia on a Sunday without anybody interfering with that transmission and it’s finite because there is only ever going to be about 21 million bitcoins those two things make it valuable not that it’s backed by a government because it isn’t you know it’s kind of like gold.
This is a transcript of an interview offered by Rick Falkvinge. a CEO of Bitcoin cash founder of the Swedish Pirate Party and cryptocurrency evangelist, discussing Bitcoin and the future of Finance.