One of Bitcoin’s most amazing properties is that it puts the users in direct control of their own money. What you may not fully understand are the immense implications that really has on the daily lives of billions of people around the world. Bitcoin is a financial system that is based on ownership rather than debt and that will prove to be world-changing as time goes on.
What Is Debt?
When we think of debt, we tend to think of owing someone money or some sort of payback for a favor. When you use a credit card, you are using money today that you will need to pay back in the future. When you get a loan for a car, you get the car today but you pay for it over the course of years that you use the car. When you borrow money from a bank to buy a house, you are going into debt to get a house and pay it back over the course of the next 15-100 years.
In short, debt is when you don’t own something. That something is owned by someone else or they have some sort of control over it or control over you by requiring you to pay it back.
Fiat Money Is Debt
Before we can fully get into this article, we need to define a few terms that you are likely to hear in the Bitcoin space. Fiat is probably one of the most common terms that gets thrown around. Fiat currency is any money that is issued by a central bank and backed by a government. Fiat currencies are usually “backed” by governments in form of legal tender laws as well as requiring the people to pay their taxes in that legal tender.
This can be US Dollars, Euros, British Pounds, Mexican Pesos, etc. All of these are fiat money.
What most people don’t know is that the vast majority of the world’s money is actually not owned by you or even your government. It’s actually an interest-bearing loan from your central bank to your government. That means that when your central bank prints money and lends it to your government, your government is required to pay back that loan with interest. So if your central bank loans $100 to your government, they have to pay that $100 back + some interest. That’s “The Interest Rate” they are talking about on the news when you hear about “The Fed” raising or lowering the interest rate.
Every single Dollar, Euro, Peso, Pound, Yen and dozens of other fiat currencies are all on lend from their respective central banks to the governments that back those currencies. What’s worse is that the government has to repay them plus more than what they borrowed. The entire fiat monetary system is based on debt rather than ownership.
Ownership is the opposite of debt.
What Is Ownership?
When you own something, you are in complete control of that something and you don’t owe it to someone else. It belongs to you. Period.
It’s also ownership when something cannot be taken from you by force such as your own body. When you own your body, you are able to make decisions about what you do with your body as long as you are not violating the right to ownership of other people’s bodies or their property. Part of what makes you free is your ability to determine your own future.
Most monetary instruments are not actually controlled by you. They are controlled by another entity.
Bank accounts can be frozen.
Checks can be stopped.
Money Wires can be obstructed.
Cash can be devalued.
Even precious metals like gold can be seized.
If any of this can happen to you at any point, then you are not free and you do not own your own money.
Bitcoin functions differently than any of these means of payment. Bitcoin is the first time in the information age that then people have had the ability to actually own their digital money.
Bitcoin Is Ownership
Bitcoin is not just some magic internet money. Bitcoin is a system that is based on ownership rather than debt and is one of the most amazing inventions in history. As time goes on, its amazing potential will become more and more evident.
Since Bitcoin is not issued by a central bank, it is not on loan from a bank to any government. Bitcoins are not on lend from the miners to the network. Whoever has control of some bitcoin is the owner of said bitcoin.
There’s an old saying “Possession is 9/10 of the law.” Well, when it comes to Bitcoin, possession is 10/10 of the law. If you are the only one with the private key for any given bitcoin address, then you own the bitcoin at that address. Period. This isn’t something that can be legislated against. It is a de facto law that is backed by math rather than some sort of de jure law.
This is probably the main reason why most bitcoiners suggest that everyone who has some bitcoin uses a cold storage hardware wallet to hodl all of their bitcoin. This is commonly called “proof of keys” and it’s not just a security precaution. It’s an active move to take control of your own money and future.
Use Bitcoin
If you would like to get free of a debt-based monetary system, I would like to encourage you to use bitcoin for as many things as you possibly can. Instead of using paper money for savings, use bitcoin to save up for something. Instead of using your paper money to purchase goods and services, use bitcoin to buy things from merchants who accept bitcoin. Instead of using paper money for anything at all, use bitcoin. It’s the only monetary system that is based on ownership rather than debt.