Bitcoin is without a doubt the best economic invention of my lifetime. Created six years ago by a person (or persons) identified as Satoshi Nakamoto, Bitcoin is a game changer for two important reasons. The first is its practical use. Using Bitcoin, it is possible to send and receive payments anonymously and instantly without any intermediation charges, such as storage and transaction fees by the financiers. Second, and perhaps most crucial of all, Bitcoin operates outside the interest-based financial system.
In order to understand why charging interest is so injurious to society it is fundamental that we recognize its extreme power. In 1836, an American lawyer named John Whipple, made this stunning observation: "If 5 English pennies... had been... at 5 percent compounded interest from the beginning of the Christian era until [his] time, it would amount in gold of standard fineness to 32,366,648,157 spheres of gold, each eight thousand miles in diameter, or as large as the earth." For more than three millennia, the Torah, the Bible and Koran forbade charging or paying interest on money. Our spiritual traditions knew of its destructive potential for society. Only since Jeremy Bentham and Adam Smith advocated it in the late 1700's has charging interest gradually become acceptable. And we have all seen the effects of that bumpy ride of bust and boom, including the Great Depression and the severe economic inequality of our present time.
Though the financial sector, whose affluent members thrive on profits received from interest, will tell us that interest and transaction fees are a necessary lubricant of business, the fact is they have become a major parasitic burden on society. A recent study by economists, Adam Cole, Jon Bakija and Bradley Heim, found that the top financial professionals account for 60 percent of the top 0.1 percent of income earners in recent years. According to a recent Credit Suisse Report, the top ten richest percent own 87 percent of the world's wealth and at the very top, the one percent of the world hold nearly half at 48.2 percent. Just four years ago, research by Nobel Laureate Joseph Stiglitz, confirmed that the top 1 percent of Americans owned 40 percent of the nation's wealth. In fact, the world's financial elite, those who earn their income not by producing anything, but by living off their interest-accruing investments, have so skillfully rigged the financial rules in their favor that just 85 of the richest people on earth are worth nearly as much as half of the people of the globe. Obviously, they didn't earn all this money by doing hard work.
The invention of Bitcoin flew in the face of all that maddening inequality by establishing a novel means of credit exchange that rejected the harmful practice of money being made on money. Though based on groundbreaking computing technology, it was actually a throwback to the traditional clay and metal coin systems that first arose with the dawn of Mesopotamian agriculture about 11,000 years ago. Instead of using physical objects for trade purposes, however, Bitcoin fostered trustworthy encrypted electronic bits as currency. Like the ancient modalities of trade, it carried no interest, storage or transaction costs. Once again, the people had a truly free medium of exchange for goods and services. Its use grew like wildfire by young and old Internet users.
But all of that is now in danger of being destroyed by the machinations of the financial elite who see a way to cash in on Bitcoin's popularity. Under the pretense of protecting the digital currency from nefarious purposes such as drug dealing and the funding of terrorist activities, twin brothers Cameron and Tyler Winklevoss, are trying to gather support for the first regulated Bitcoin exchange. The wealthy Winklevoss twins are best known for their successful $65 Million lawsuit against Facebook founder, Mark Zuckerberg. It is their contention that Bitcoin's democratic and open-source technology is a hindrance to its true potential. As evidence, they point to Bitcoin's tumbling value and to recent highly publicized thefts through hacking. Yet they are firmly behind the buying and selling of Bitcoin with interest-bearing money. The result will be to absorb an independent exchange medium into yet another mechanism for amassing more wealth for a small group of rich people. Following the Winklevoss twins' advice will essentially destroy this equalizing, interest-free transactional system.
Converting Bitcoins to "real money" may seem innocuous but it belies a more insidious threat, the silencing of the populace. In our lifetime we have seen our already weakened democracy receive its final deathblow with the 2010 landmark Supreme Court decision in Citizens United vs FEC. The ruling made it clear that Americans are living in an oligarchy in which corporations are considered individuals and can vote with their deep pockets for the people they choose to serve them.
Bitcoin matters so much because it dispenses with that cynical approach to human value. By operating outside the purview of a government rendered suspect by its close ties to Wall Street, Bitcoin had remained independent and empowering. It had no trademark. Its intellectual property belonged to no corporation or individual. Instead, through the collective efforts of courageous, decentralized developers and users, it had wrought a truly emergent, equalizing counter-balance to a deeply un-equalizing monetary system.
It is crucial to our economic and political freedom that we expose and resist the intrusions of the Winklevosses of the world into the interest and transaction-free domain of Bitcoin and its iterations. Let Bitcoin be free from government regulation so that it remains a bastion of democratic participation. And if the financial class is successful in shackling the invention by its convertibility to "real money", do not give up hope. It merely means we must move on to the next software-based currency on the open-sourced model. Now may be the time for a new iteration of the encrypted digital currency. We could call it "Freecoin" and it would operate under the same principles of crowd-sourced independence and private trading as the original Bitcoin.
We must not allow this new "Freecoin" to be owned or bought and sold with real money. For the moment that a currency becomes interest-bearing and is subject to transaction and storage charges, it becomes a tradable commodity itself and it loses its equalizing value. It becomes simply another tool for the super rich to dominate the masses. Hallelujah for the perhaps unwittingly ingenious, freethinking young people and developers who are the scourge of fat cats the world over. The Bitcoin model is not just a sophisticated electronic exchange. It is part of a great bottom-up evolution that empowers people to trade the fruits of their labor, free from the yoke of financial and political tyranny. Bitcoin or its child, "Freecoin", and the progressive humanistic ideology they represent are our best chance to finally win back economic freedom and with it, true democracy.