The Ecological Vaccine Against the 21st-Century Digital Pandemic

By creating technologies, human beings shifted from contemplating nature to manipulating it, which led to millennia of extraordinary progress. However, technologies are a double-edged sword; the downside we always have to bear is that risks increase with technology’s effectiveness; unfortunately, these risks are sometimes misunderstood.

All recognize the nuclear threat, but many underestimate the danger of centralized data being used to implement citizens’ political control, destroying freedom and democracy.

Few realize that a digital “pandemic” started in China and is about to infect the free world. Once again, the insecurity bogeyman alienates and confines people to fear. Astonished, we observe how a “frightening” COVID virus is testing the proverbial Chinese patience, but we still ignore another kind of viral threat spread by central bank digital currencies (CBDC).

Some decision-makers are choosing to change Bitcoin’s original formula to create programmable currencies that can perfectly fit a “new normal” political framework. Such adulterated technology is about to “infect” European’s digital wallets.

It has happened before that a powerful technology has been created with good intentions and ended up falling into the wrong hands. 

At the beginning of World War II, Einstein was already aware of the energy generated by the chain reactions of nuclear fission. As a USA refugee escaping the Nazi threat, he warned President Roosevelt of the risk that it would be to let Germany win the race for nuclear weapons. That was the critical stimulus for accelerating atomic bomb research (Manhattan Project), and today we all are hostages from those that can use it.

Digital currencies are also too powerful to fall into the wrong hands, which is why they were born decentralized. After all, these incentives have an unusual granularity and, when centrally planned, can efficiently manipulate consumers individually, turning citizens into political puppets.

One should not tamper with a cryptographic formula that releases money from intermediaries, let alone “inoculate” citizens’ digital wallets with precisely the opposite version. This time, the downside of misusing technology may not be human extinction, as in the case of nukes, but the rolling out of a red carpet toward a dystopian freedom-less society.

CBDCs imply a brand-new trust mechanism centralized on proprietary digital networks. Like they did with nuclear technology (regarding uranium enrichment), policymakers are gathering critical mass to trigger new features with opposite effects to those initially intended. By centrally programming CBDCs, a “chain reaction” can reach all individual payments and transactions, confining citizens’ rights in a never seen digital pandemic.

Before that happens, there are some questions people should ask: who seeks to control each citizen’s digital wallet and rule everything that he can (or cannot) buy? Who wants to boycott competition between digital currencies, assuring CBDCs monopoly? Who pretends to exclusively mint digital coins which are equivalent to programmable rationing vouchers?

While CBDCs are coming to change our life, a misinformed narrative of Bitcoin’s excessive volatility and energy consumption was released to prevent competition. Such a bogeyman is a bad omen. Cryptocurrencies are innovative in dealing with monetary value, which is disturbing for some. The genuine concern is not about volatility or pollution but protecting a secular business model. The truth is that novelty is more than enough reason for Bitcoin’s still high volatility, and the world banking system uses much more energy than the Bitcoin network.

Bitcoin is the first cryptocurrency and works on the pioneer blockchain network. It lets people send and receive value using only a computer (or a smartphone) and an Internet connection, making it possible to send and receive money over the Internet without intermediaries. As simple as that.

In other words, this is the first public infrastructure to make payments and transfer value, available to everyone, and not owned by any public or private entity. Remarkably, such infrastructure is based on nothing else than a protocol and enables digital networks to provide integrity, authenticity, and confidentiality for peer-to-peer transactions.

Since the creation of the Internet, we have had a public infrastructure to share information through emails and websites. However, more than this was needed to handle value securely, and before the Bitcoin cryptographic protocol, cash was the only public infrastructure to make payments. Unfortunately, the problem with cash is that it only can be used for face-to-face transactions. Therefore, before Bitcoin, there was no public infrastructure to transact remotely; all money operations not carried out face-to-face required a middleman: banking institutions.

The Bitcoin network is overcoming this limitation and will change the money landscape unless misinformation and fear prevail to protect vested interests. After all, the same fate had other intermediaries greatly affected by the Internet, which now allows dealing with value and money. However, this time it is not just information circuits that change.

As we know, energy is a crucial factor for human survival, and energy shortages or cuts make people suffer in their pockets and lives. It is expensive and sometimes impossible (for example, due to war) to store and transport energy. Of course, this cost translates into the reduction (or unavailability) of energy to carry out work.

On the other hand, we also know that inflation reflects the breakdown of trust in money, diminishing purchasing power, which also affects the human condition. Unfortunately, trust is scarce and does not flow easily between people.

We know all this.

The new fact we still need to realize is that programmable digital currencies represent and monetize work, for instance, serving as utility tokens. For the first time in history, value units mean more than just capital, integrating specific functionalities and rights. In the economic wordy, the value of exchange encompasses the value of use, a fusion between capital and work with never seen political implications, both for good and evil.

Now comes the exciting part: if it is easier to store and transport digital currencies than to flow trust between people in this complicated world, cryptocurrencies must function as “digital batteries” to efficiently bind energy and economic incentives. Money is economic energy, and these units of distributed trust are portable confidence, which is easy to carry around in citizens’ digital wallets, making Bitcoin’s “proof-of-work” mechanism ecological in a new hope for humankind.

Several authors consider Bitcoin a vehicle for converting energy into work. Channeling energy through money can be an innovative source of trust for humanity. It can reduce negative externalities caused by energy waste, for example, by using surplus gas as energy to mine Bitcoin instead of being forced to burn it to prevent it from escaping into the atmosphere (usually, there is a waste of 25% to 30% of the gas consumed). Also, when considering solar energy, there is every interest in using, in the same way, the energy that is usually wasted at the end of each sunny day, avoiding buying expensive conventional batteries.

Bitcoin increases the needed public confidence in times of shaky institutional trust. Isn’t this reason enough to fight against misinformation and narratives to stop money reform and worsen the economic incentives system? Should we let centralized digital currencies thoroughly and exclusively scatter into our smartphones, or should we vaccinate society against such a digital pandemic? It will be sad not to find the correct answers to these questions because decentralized money brings the good old-fashioned distributed trust to the 21st-century global village, giving us hope for the future.

Dario de Oliveira Rodrigues

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