Your preconceived notions that is, if you have any. By now, pretty much everyone has heard of Bitcoin. But not everyone understands the technology beneath the concept- and beyond that, what implications the technology carries for the world. Digital Dropkick is about freedom. Freedom and the ability to act as a free agent in all aspects of your life. If this this is important to you too, keep reading. Each section has hyper links to more educational resources. Click and learn.
Below is a Very Broad look at the American economy and this technology. If what you read interests you, schedule an appointment or give us a call.
You get all your groceries in your cart and walk up to the register, pay and leave along with everyone else. At the end of the day everything taken off the shelves throughout the day is added up, and subtracted from a list of inventory so the manager can know what to order in the next shipment. That list is kept on a computer in the back office and is uploaded to headquarters at the end of the week. This list is a ledger of all incoming and outgoing items sold at the store. A Distributed Ledger works in much the same way, with the difference being at the end of the day the ledger isn't uploaded to a database at HQ - but is uploaded to multiple locations at the same time - on multiple computers instead of just one. Each list is an exact copy of the original and updates in real time.
Why is this important?
Well, when dealing with the inventory of a grocery store - it isn't really. But imagine for a moment we are talking about a Bank. Each customer has an account and money moves in and out. The bank has a ledger of all these accounts and keeps track of who spends what and who gets paid. At the end of the day, the bank uploads their ledger to the bank that owns them, or "Headquarters" - That way, when accounts are settled with customers of different banks, they all can see who owes what and to whom. There are twelve "Reserve Banks" in America - These are the different "Headquarter" banks that all the other banks report to at the end of the day, week and month. As transactions are recorded and finalized between customers, these banks pay each other the difference when it's all said and done. This is a very simple explanation of our current banking system. it's a working system... and it has some issues... - but it works.
What our banks use now is a centralized ledger. All the data we produce (spending and receiving money) is localized in one area.. This is done for easy retrieval and quick reference. Everything is digital now - all our money is represented as 1s and 0s on a database - and is available inside the system pretty much on demand.
This quick reference is a trade off for privacy. Everyone inside the bank, and inside their regulatory agencies (the government) will always know exactly how much money you have. What you spend it on. When you spend it and how you acquire it. Now, that isn't such a big deal if you don't value your privacy. But, if you do...well - you get the picture. These databases containing everyone's financial data are kept in one location based on what bank you use, and are open to those with who care to see.
This location, if compromised - could equal your money being lost, stolen, or frozen by the government. Hackers are real, and so is incompetence. Major financial institutions are hacked all the time, and the mishandling of sensitive information by bank employees could cause a major breach in your financial security. And as for the government, I think we all know that if they want your accounts - they're going to have them.
In 2008, the American government bailed out some of the country's biggest financial institutions before they could fail outright. Billions of dollars flowed into the sector to keep these business alive at the cost of the American tax payer. Since then, more legislation was written to perform this same function...just in a different way. A Bank Bail-In takes it's customer's deposits to stay afloat until it can resume business as usual. During that time, the bank basically issues an IOU.
The process of a bank bail-in typically involves the following steps:
However, a bank bail-in can also have negative consequences for depositors, who may lose a portion of their savings. Additionally, the uncertainty surrounding a bank's stability and the potential for a bail-in can lead to a loss of confidence in the banking system as a whole.
This Legislation, in conjunction with other recent laws that encroach on our rights means the banks can take our money, and not only can we do nothing about it, but we won't know about it when it happens until it's too late.
It's probably different than you think. If you were to guess that the government can print it, you would be correct. If you were to say Fractional Reserve Banking, you would also be correct. This is when -
But did you know that banks can also create money? Like, out of thin air - in the form of debt? If you did know this, you are in a minority.
Lets say you want a loan for a house, you go to the bank and ask for the money and the bank approves the loan. They add the money to your account with the agreement that you repay it in the future. The bank didn't go borrow that money from someone else like many people believe - they just add it to your account with a computer. Remember, everything is just 1s and 0s now right? This is one of the most common ways money is added to our economy. This creation of money, and it's an addition to the overall supply over time, is what causes inflation (among other factors). The higher inflation, the lower the value of the original currency. The more money created as debt, the less the money borrowed is worth...
If you were to save your money today, It would be worth less ten years from now. Many people do not know this - but do your own research and find out for yourself. If I am wrong, send me a strongly worded email.
When they believe that the American Economy would benefit from it doing so. Let's say the Fed wants to inject $1 billion into the economy, it can simply buy $1 billion worth of Treasury bonds in the market and deposit $1 billion of new money into the reserves of banks.
Right after the bailouts of 2008, an anonymous programmer (or group of programmers) began developing Bitcoin, a cashless, peer to peer payment system designed to circumvent the banks who had up until then, abused the trust of the people and lost the ability to perform a expected. This type of technology is known as
Disruptive technology is a development that allows a new player to service a lower market segment that incumbent players do not cover due to lower profitability. As the disruptive technology advances, the quality improves so that it supplants the incumbent in the more profitable high-end market.
Bitcoin is basically a computer file which is stored in a 'digital wallet' app on a smartphone or computer.
People can send Bitcoins (or part of one) to your digital wallet, and you can send Bitcoins to other people.
Every single transaction is recorded in a public list called the blockchain, and anyone that wants to verify these transactions can do so by running their own full node (the ever elusive "distributed ledger")
If the banking sector fails, Bitcoin could become an important alternative to traditional banking systems. This is because Bitcoin operates outside of the traditional banking system and is not subject to the same inflationary pressures.
Furthermore, because Bitcoin is decentralized and operates on a blockchain technology that is highly secure and transparent, it could help to reduce corruption and increase accountability in the financial system, ultimately leading to a more stable and sustainable economy.
In a scenario where the banking sector fails, individuals and businesses could turn to Bitcoin as a means of storing value and making transactions. Because Bitcoin is not subject to the same fractional reserve banking system as traditional currency, it is not subject to the same inflationary pressures.
Overall, Bitcoin represents a new and innovative approach to money that could provide an important alternative to traditional banking systems, particularly in the event of a banking sector failure.
We recommend you Do your own research!
But, here are a few videos to get you started
Again, Do your own research
But if you need a place to start, here are thee articles you can quickly reference.
Coinbase - Crypto Exchange website explaining in more detail what BTC is.
Time Magazine - Article that explains how BTC can help under authoritarian rule.
Intelligence Squared Debate as to BTC's role in banking the unbanked.
We accept Bitcoin as payment and believe in the importance of privacy in our everyday world. Cryptography is kind of out thing. If we can help you in any way, please don't hesitate to reach out.