Bitcoin’s War On Money | Savior or False Messiah?

gold round coin on white paper


Ask most people what they think of when they hear “Bitcoin,” and you’ll be met with a blank stare or strong opinion. For some, it’s just some funny money they heard about on the news; computer money that they’ve been warned is a scam. For others, it’s a volatile and risky investment that’s a threat to economic stability. Ask the enthusiasts, however, and Bitcoin is their ticket to retiring early, fat stacks, and a shiny new Lambo.

For Bitcoin’s creator, however, its promise is to revolutionize money, decentralizing power, and ward off financial corruption.

Exciting stuff.

Take a look at the original Bitcoin whitepaper, however, and you’re likely to find it short, technical, and a little boring.

Written for online cryptographic communities, the paper assumes some prior knowledge of the technology involved and an ability to decipher indecipherable equations. At only nine pages long, however, it’s worth wading through this yawn-inducing document to see what is now considered a piece of history.

In the paper, an anonymous individual (or group) going by the pseudonym Satoshi Nakamoto describes a way to safely conduct electronic transactions using software and networks of computers.

green and white round ornament
Bitcoin’s Big Idea | Photo by Karolina Grabowska on


Nakamoto’s big idea is that we don’t need third parties like commercial banks, Visa, or Mastercard to send, receive, and store money safely. We should turn to cryptographic technology instead. The upshot of this approach is that customers need to divulge less information, money is safer, and transactions ultimately cost less.

The only slight problem is it means completely replacing our monetary system and currency.

And while thirteen years ago, the idea may have sounded ridiculous, the reality is now closer than you might think. With El Salvador now adopting Bitcoin as legal tender, Ukraine and others soon to follow suit, plus an army of loyal fans, Bitcoin’s challenge to money may just be getting started.


In order to understand why Nakamoto invented Bitcoin, we need to jump back fifty years to the collapse of the gold standard. Appearing on TV in 1971, the then President, Richard Nixon, announced to the world that the US would no longer accept dollars held by foreign governments for gold.

Prior to the announcement, the US was operating under the Bretton Woods system, established in 1944. This agreement meant currencies from other countries such as the British pound, German mark, and French franc were pegged to the dollar at a fixed exchange rate. The dollar itself was fixed at the rate of $35 an ounce.

In other words, money simply represented gold. Until 1971, the dollar in your wallet held value because a scarce asset-backed it. Gold was, in turn, valuable because, as any fan of gold hunting TV shows will tell you, getting the shiny stuff out the ground is no small feat.

The consequence of this arrangement meant that foreign governments could cash in when the dollar weakened through inflation. Over the decades, however, the gold reserves at Fort Knox took a serious beating, with Nixon eventually calling a timeout on the system to let reserves replenish.

Overnight, the dollar became a fiat currency, untethered by a real-world asset.

Fifty years later, the gold standard has still not returned. With no real-world commodity linking it, the dollar holds no intrinsic value.

Instead, fiat’s value is determined by the amount of money in circulation dictated by the central bank and trust that others will respect it as valuable. Fiat money allows governments to micro-manage national currencies, stabilize (and upset) markets, and stimulate economies through the control of the money supply.

By becoming fiat, money effectively became a tool.

During the COVID-19 pandemic, for example, the Federal Reserve “printed” around 40% of all dollars (ever) in a fourteen-month window. Through a process called “quantitive easing,” fiat economies allow central banks to print money with the aim of purchasing state-issued bonds from companies that hold them. This creates more liquid cash in the economy, driving down interest rates, making it easier for companies to spend money.

In times of low economic activity, like during the pandemic, this is considered a temporary fix to help kickstart the economy or keep it going while on life-support.


While fiat currencies make it easier to support economies during times of hardship, it’s also used as a bit of a crutch for financial recklessness.

In 2008, after banks made a bit of a mess of things, the financial system collapsed. They’d essentially loaned out more money than they held in reserve and came unstuck.

In order to ward off a Mad Max type situation and keep the current financial system up and running, the world’s governments stepped in and bailed out the banks.

For Bitcoin’s creator, Satoshi Nakamoto, this was the straw that broke the camel’s back, believing a better system could be created leveraging peer-to-peer networks.

Evidenced by their posts on the P2PFoundation messageboard around the time, Nakamoto wrote:

“Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts. Their massive overhead costs make micropayments impossible.”

Clearly not a fan of traditional finance, Nakamoto launched Bitcoin in 2009 as a theoretical alternative to fractional reserve banking.

silver round coin on white and blue calendar
Blockchain To The Rescue| Photo by Olya Kobruseva on


The idea is that the network as a whole verifies transactions through mathematical consensus, checking each other’s work, replacing third parties with code. Computers verifying these transactions are tipped a small amount of BTC, known as mining, and are incidentally partially responsible for chip shortages across the globe.

This list of transactions is known as the blockchain and is duplicated and distributed in its entirety to every computer in the network, making it about as secure as a payment system can get.

The Bitcoin network came alive on January 3, 2009, with Nakamoto mining what’s come to be known as the Genesis Block. Encoded inside this first link of the Bitcoin blockchain was an encoded message revealing his anti-banking motivation that read:

“The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.”

No one knows the true identity of Nakamoto, with theories ranging from Elon Musk, the controversial John McAfee, to the yet more controversial Jeffrey Epstein. However, analysis of the Bitcoin white paper and his message board posts suggests a person of British origin with double space breaks and wanton use of the letter U.

While some are eager to figure out precisely who Nakamoto is, for others, their anonymity only adds to the allure giving the space a suitably enigmatic origin story, an origin story with an almost Robin Hood edge. Recent adorations like Hungary’s statue of the synonymous figure reveal that Nakamoto, whoever they are, has become a figurehead for decentralization, in the same vein as Anonymous.


In the intervening years since Nakamoto forged the first block in the chain, the crypto space has exploded. With a hard limit of 21 million virtual coins, Bitcoin is considered a scarce asset, just like gold. As a result, the price of Bitcoin has tended to increase over time, beating inflation, now with a market value of over $1 trillion.

In the early days when it was just Nakamoto and his crypto-buddies trying out the software, a single Bitcoin was effectively worthless though, valued somewhere between nothing and a cent.

Progress was made, however, after Laszlo Hanyecz managed to convince Papa Johns to take 10,000 BTC for a pizza order. While only worth around $40 at the time, with Bitcoin’s price trending ever upwards, Hanyecz 10,000 BTC splurge would be worth $470 million at today’s prices. With Bitcoin’s creator estimated to have mined one million BTC himself before slipping silently into the night, they now sit on a fortune worth at least $47 billion dollars.

Despite the launch of other blockchain networks that solve some of Bitcoin’s shortcomings, it still remains the de-facto cryptocurrency, with its price dictating the general direction of the crypto market.

Nowadays, Bitcoin is being adopted by financial institutions with investors eager to get involved in the space. No longer seen as just the funny money of nerds and those looking to launder their cash, Bitcoin began to get a reputation as a hedge against fiat inflation. Over $20 billion in institutional money flooded the market in the first six months of 2021 alone, with investment expected to increase in the coming years.


For many individuals, Bitcoin represents an opportunity for financial freedom, a risky investment with potentially huge payoffs. For these enthusiasts, “hodling” is more than a meme; it’s a belief that Bitcoin and other cryptocurrencies will play a massive role in the future. 

Chief amongst these hodlers is the President of El Salvador, Nayib Bukele. Despite concerns and pushback from all corners, Bukele pushed through legislation to make Bitcoin legal tender, requiring all vendors to accept the cryptocurrency as payment. To facilitate this radical change, Bukele introduced the Chivo app, a digital wallet for storing, sending, and receiving Bitcoin all from your smartphone. As an incentive, after downloading the app, Salvadorans received $30 worth of Bitcoin as a reward.

The rationale is to make it easier for those working in other countries to send money back home and resolve issues with dollarization. Since 2001, El Salvador has adopted the US dollar as legal tender, with the native Colòn steadily usurped. Despite two million Salvadorans living and working in the USA, over 70% are unbanked, with little to no access to financial services.

The hope is that Bitcoin is the answer, regaining some control with Salvadorans reaping the benefit of any increases in value.

Come the big day, however, on September 7, 2021, the price of Bitcoin crashed. The $30 worth of Bitcoin given to Salvadorans almost instantaneously became worth only $25. To make things worse, the Chivo app was found to be buggy and, at one point, simply stopped working entirely.

Despite the volatility, Bukele’s response was to “buy the dip,” investing in 150 more Bitcoins worth over $6 million.

One week later and Bitcoin ATMs are being burned in the street, and adoption is sluggish, to say the least.

gold bitcoin
Photo by Worldspectrum on


Putting aside Bitcoin’s energy problem, the situation in El Salvador highlights a fundamental problem with decentralized cryptocurrencies.

Namely, they are extremely volatile and liable to manipulation by the financial elite. A simple tweet by Elon Musk, for example, sent the price of Doge coin surging, while another led to Bitcoin’s value plummeting. While these swings in value can be used to investors’ advantage, the reality is it leads to uncertainty for those using it as currency.

When the online ramblings of an eccentric billionaire are enough to shake the value of cryptocurrency, it’s evident just how young this movement is. Should Bitcoin become legal tender in more countries, the argument for regulation grows stronger.

Thought of by many as an anti-establishment panacea, for some, subjecting the crypto sector to regulation is tantamount to blasphemy. For the hodlers, the ups and downs are simply growing pains, and the network will self-correct itself as it develops.

For Salvadorans, however, and nations soon to follow their lead, Bitcoin’s current volatility only cements further the financial inequalities. Treating the Salvadoran people like economic guinea pigs, Bukele’s beta-testing of Bitcoin means savings can halve in dollar value suddenly and sharply. While Bukele’s plan has been put forward as a way to create a tech-utopia, just as the dollarization disadvantaged the poorer citizens in 2001, the adoption of Bitcoin could prove to do the same. 

And therein lies the rub. Without stability, Bitcoin may ultimately fail as a currency. Stability, however, appears to necessitate centralization. With investors looking to exploit and even encourage instability, Bitcoin may eventually find itself resembling its fiat equivalent more than enthusiasts may want.

This story was written by contributing writer Matt Wiliams.

Matthew is writer with a focus on lifestyle and technology. 

Check out some of his previous stories below.

Zoomshock | How It’s Reshaping Our Lives

the Rise Of NFT Art.

Posted by

Sue Dhillon is an Indian American writer, journalist, and trainer.

Leave a Reply