The world faces many problems today. Significant problems. We’re concerned about the increasing global population, and the associated risks. We’re fearful of the rising levels of international terrorism, and armed conflict. We’re impacted – directly and indirectly - by global economic issues and policies, and we consider deepening income inequality, growing unemployment and political instability to be amongst the top worries of worldwide affairs. The interesting (or is that alarming?) aspect of these issues is that the root cause can be drilled down to a single denominator. Money.
A lack of money fuels many, if not most, of the socio-economic plights we endure today. ‘So what does this have to do with bitcoin?’ you may be asking. It’s not like Bitcoin can address and solve these pressing issues, right? In their entirety, you’re right; it can’t. But that’s not to say it doesn’t have a role to play in alleviating some of the pertinent problems.
Quite likely the most weighted quality of Bitcoin is its decentralised nature. Every other currency on the planet is controlled by a central authority. If we review Satoshi Nakamotos's original abstract he was unambiguous in his objective: “A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.” His goal was to remove the need for a financial institution to be involved in a transaction.
By cutting out this otherwise omnipresent player in the traditional payment structure, Nakamoto's ideology formed the basis of a currency that isn't affected by the monetary policies of the government in question. A monetary system that isn't subject to random or unlimited quantitative easing that robs the existing money supply of value to factor in the newly minted funds, otherwise known as inflation. And a currency that means your money is yours and yours alone. There's no risk of government controls freezing accounts and confiscating or limiting funds.
You and I can quite easily walk into a bank any time we please and open a current account or apply for credit. We're privy to the required identification and documentation needed to do so. But imagine for a moment you weren’t.
Imagine you were never issued with a birth certificate or identification card. Imagine the time and cost involved to prove you are who you say you are is more than what you earn in a month. This is the reality faced by more than 2.5 billion unbanked adults due to accessibility, administrative and affordability issues.
Following on from the former point, is the issue of fees on transactions processed via traditional systems. If we consider an international payment, for example, we're forced into using one of a handful of predominant payment processors in the market. Our transaction is subject to numerous cost collections as the funds are moved from one party to the next for verification and authorisation. These fees can quickly climb to between 10 and 30% of our original amount. This holds grave consequences for those who rely on the remittance market, and represents a massive opportunity for bitcoin adoption.
Bitcoin transactions, on the other hand, are processed for a miniscule fee, typically less than a penny, irrespective of the amount being transferred. This is due to the fact that the miners that comprise the network, and who perform the proof-of-work to process the transaction, are incentivised to do so by earning bitcoin for blocks being verified and added to the blockchain.
Would you consider sending a £0.30 payment across your credit card? Not likely. And if you're dealing with a merchant, chances are they wouldn't accept it either. If we consider the fee structure for transactions through traditional payment systems, micropayments are simply not feasible as the costs involved outweigh the gains.
Bitcoin is designed in such a way that it not only makes microtransactions plausible, but encourages them too. Bitcoin is divisible up to 8 decimal points, meaning that you're able to send even a fraction of a penny across the network and not have to worry about prohibitive fees.
So, coming back to our question - can bitcoin alone solve the world's problems? No, it can't. It wasn't meant to. But what it can do is empower us to emancipate ourselves financially. It can free us from the financial restrictions imposed on us by controlling authorities. When we can disengage from governments’ permission-based use of money, we create a world where our socio and political status doesn't dictate our economic activity, and that, in my opinion, is a far better world than one that we currently face.