BTC is, by its own publicity efforts, digital gold. However, this isn’t necessarily a good thing. In a new blog post by Dr. Craig Wright, he explains why Bitcoin was never meant to be considered gold and why allowing it to evolve as such is damaging the BTC ecosystem. Gold is not money and can easily be seized, at any time, by governments.
Wright explains, “It is interesting that a meme of digital gold has popped up around BTC over the last few years. The complete lack of understanding of how Bitcoin works from the Bitcoin Core team has led to such a narrative. In particular, the promotion of Nick Szabo’s failed concept of bit gold has crept into Bitcoin Core. In his comment where he says that using a new key for every transaction is utterly stupid, Mr Szabo, unfortunately for him, has demonstrated just how little he seems to understand about Bitcoin.”
As opposed to what BTC developers and enthusiasts have designed, Bitcoin was originally meant to have a new key pair for each transaction. This allows Bitcoin to remain private, one of the core components of the original Bitcoin. With a single address, it becomes simple to find and seize assets. Using single addresses ultimately removes all the privacy features initially intended to be incorporated into Bitcoin.
This ability to trace and seize has been seen before in history, most notably with gold. Says Wright, “[Widespread] seizures of gold have occurred throughout history. One notable example from the U.S. follows executive order 6102. Signed in 1933, the presidential order was created to forbid the hoarding of gold coin, gold bullion, and gold certificates within the continental United States. It was only repealed by Gerald Ford in 1974. Anyone discovered with gold other than in jewellery or without a valid reason for the use in trade and commerce would be subject to the legal seizure and likely the melting of it. Executive orders 6260 and 6261 and the Gold Reserve Act of 1934 continued the trend.”
Because it has gone so far away from the original intent of Bitcoin, BTC can no longer truly be considered a cryptocurrency. It has gotten rid of IP-to-IP transactions and simple payment verification (SPV), creating “a new form of financial institution.” BTC has created a system that forces the use of a mining intermediary, which processes the transaction before sending it to its true destination.
Wright concludes, “As such, it is incredibly interesting that Bitcoin Core have followed the mantra of digital gold. A part of the history of gold is made up of a history of seizure by government, warlords, and many others. So, by consolidating addresses and keeping the block size small, Bitcoin Core have delivered on their promise: they are creating digital gold.”
Read Dr. Craig Wright’s latest blog post, Digital Gold, here.
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