The Orange Pill

How Bitcoin Could Change the World

I attended the Oslo Freedom Forum a couple of weeks ago which, this year, had a very strong focus on Bitcoin. I met and socialised with a friendly and enthusiastic group of people known as the ‘orange-pilled’ - a term used to describe those who are alive to the full potential of Bitcoin. My subsequent discussions gave me a much better understanding of what Bitcoin is and why many people are so excited about it. This is what I learned.

Those in the orange-pill movement do not see Bitcoin as a mere asset to be bought and traded for profit, nor do they see it as just an alternative form of currency. Rather they view it as a revolutionary form of technology that has the potential to transform the global economic landscape and usher in a new digital era of equality and opportunity for all. In their view, Bitcoin has so many advantages over fiat currency that mass adoption is not only inevitable but necessary. So what is Bitcoin?

Bitcoin is the world’s first digital currency that was launched in 2009 by Satoshi Nakamoto, which is a pseudonym for an individual, or a group of individuals, who prefer to remain anonymous. It is built on the principles of decentralisation and cryptographic security. This means the currency cannot be mimicked, there is limited supply and no individual, institution or government has control over it. Furthermore, all transactions are transparent and immutable, thus reducing the risk of manipulation and fraud.

Bitcoin is essentially digital gold in that it is a secure store of value that can also be used to conduct frictionless trade around the world for anyone with access to the internet. It is a form of universal currency that can be used to make global trade cheaper, smoother and easier. A business man in Budapest can pay a graphic designer in Bangalore with a few taps on a smart phone, the payment will be instant, there will be very few transaction fees and there is no middle man.

However, it is Bitcoin’s ability to circumvent government restrictions and corporate exploitation that I find most exciting. The effect of this could be truly revolutionary if it was more widely understood and adopted, especially in more authoritarian and repressive states. From my conversations in Oslo, and subsequent research, I believe there are a number of ways in which Bitcoin can be used to overcome many of the hurdles and disadvantages that exist when trading with fiat currency in the existing system.

Firstly, Bitcoin can be used to promote financial inclusion and empowerment since traditional banking systems often exclude large segments of the global population, particularly those in underdeveloped regions. By providing an open and accessible platform that allows anyone with internet access to participate in the global economy, Bitcoin eliminates intermediaries and reduces transaction costs. It also enables individuals to transact directly, thereby bypassing the need for traditional banking services. This democratises access to financial resources and empowers individuals to take control of their own finances whilst reducing the risk of corporate exploitation.

Secondly, the decentralized nature of Bitcoin combined with low transaction fees has the potential to revolutionise the remittance industry. Currently, migrant workers and individuals sending money internationally face exorbitant fees, delays, and lack of transparency. By utilising Bitcoin, individuals can send and receive money across borders quickly, securely, and at significantly lower costs. This will directly benefit those who rely on remittances, enabling them to retain more of their hard-earned money, stimulate local economies, and enhance overall financial stability.

Thirdly, Bitcoin's fixed supply and decentralised nature make it a potential hedge against inflation and economic instability. Governments often manipulate currencies, leading to inflation and loss of purchasing power for individuals. In contrast, Bitcoin's limited supply of 21 million coins ensures its scarcity, safeguarding its value over time. Additionally, since Bitcoin is not controlled by any central authority, it is less susceptible to political and economic turmoil, offering individuals an alternative store of value and a means to protect their wealth during times of crisis.

Finally, Bitcoin’s decentralised structure challenges the dominance of central banks and governments over monetary systems. The control of money supply, interest rates, and capital flows by central authorities can lead to unfair practices and an unequal distribution of wealth. With Bitcoin, transactions are recorded on a public ledger called the block chain, which is accessible to everyone. Thus, Bitcoin's decentralised network resists censorship and protects individuals' financial sovereignty, enabling them to make transactions without interference from governments or other centralised institutions.

This means political dissidents who have had their bank accounts frozen could continue to engage in economic activity. Start-ups in developing nations could raise capital without having to rely on local banks and a limited number of investors. Savers and investors in developing nations will be exposed to less risk since they will no longer be reliant on exploitative banks, nepotism and bribes. Global trade will be made a lot easier since the transfer of wealth will be a lot easier. Bitcoin truly can decentralise and democratise finance for the benefit of the masses.

However, there are a few downsides too. Currently, the price of Bitcoin is somewhat volatile, or at least more so than many fiat currencies, and whether or not it can stabilise in the coming years remains to be seen. Governments in Europe are seeking to pass legislation that would pave the way for a regulatory framework around cryptocurrency and that could stabilise prices. If prices can be stabilised with regulation the digital currency would attract more institutional investment and gain wider adoption.

Bitcoin mining, the process of validating transactions and adding them to the block chain, requires substantial computational power and energy consumption. This is being addressed by some start-ups who are seeking to harness green and renewable energy for Bitcoin mining so that it is less environmentally damaging. Then there is the thorny issue of bad actors, such as terrorist groups and criminal gangs, using Bitcoin for nefarious purposes. Most crypto exchanges do have KYC (Know Your Customer) policies which does increase transparency and, potentially, deters bad actors. Furthermore, there are far more illegal transactions conducted via fiat currency then via cryptocurrency at a rate of 2-5% vs 0.24%. Regardless of these potential downsides, the orange-pilled consider these to be minimal and a price worth paying given the enormous advantages Bitcoin offers.

In May 2021, El Salvador became the first country in the world to adopt Bitcoin as legal tender and they were followed by the Central African Republic (CAR) a few months later. It is predicted that many other countries, such Ukraine and Venezuela, could also adopt it in the coming years. Dissidents and pro-democracy campaigners in Belarus, Hong Kong and Nigeria have used Bitcoin as a means of overcoming financial censorship. Human rights groups have also used the digital currency to support journalists in Myanmar who had their bank accounts frozen for criticising the military junta who seized power in 2021.

Bitcoin is clearly here to stay and given the obvious advantages it has over fiat currency, adoption is likely to increase to the point where it goes mainstream. Whenever a new form of technology replaces an old one, there is a difficult period of transition but eventually it is embraced and humanity is better off as a result. This is not just about the ease of conducting financial transactions. The monopolies of banks and their exploitative practises are threatened, overzealous government censorship of critics can be overcome and a truly globalised marketplace of economic activity is within view. A more democratised and equitable economic order is certainly a desired end goal and Bitcoin could be the tool that gets us there. So ask yourself – are you ready to be orange-pilled?