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When an anonymous cypherpunk first published the bitcoin paper back in 2008, the hacker community rejoiced in the discovery of the first truly viable digital currency. Bitcoin was the first digital currency implementation to solve the double-spending problem and used a completely decentralized peer-to-peer network to federate the exchange of money within the system. The author also implemented the first ever blockchain database that was used to store the distributed ledger.

There’s no question that bitcoin and the invention of the blockchain advanced the state of cryptography and peer-to-peer networks in a significant way. Blockchain databases have proven to be instrumental in the development of a number of exciting new technologies, such as smart contracts and automated escrow services. The dazzling variety of applications will keep computer scientists and programmers busy for decades.

Of course one of the most compelling applications is a digital currency, which its kind has since become known as cryptocurrency. Indeed bitcoin and in turn the blockchain database was invented particularly to solve the problem of digital currency. Ten years after a computer programmer used bitcoin to purchase two Papa John’s pizzas and millions of dollars of trading later, the most valuable lesson we have learned is just how valuable our existing, pre-cryptocurrency financial systems are today.

Over one hundred years after the establishment of the Federal Reserve, the official central banking system in the United States, it is hard to imagine what the world of finance was like in a completely unrestrained and unregulated environment. In fact, it is so hard to imagine that it’s nearly impossible to resist fantasizing about it. After all, the most attractive ideas are the ones that are easiest to understand, and human beings will use all of the logical fallacies in our arsenal to defend this simplicity.

The gold standard is one of the easiest monetary systems to understand. It is an idea that is so simple that it took numerous financial crashes and a devastating economic depression to convince us that there might be something better out there. Multiple economic historians have blamed the gold standard of the 1920s for prolonging the decade-long Great Depression that started in 1929. Basing an entire monetary system on an inherently scarce natural resource forced the contraction of the money supply that naturally resulted in deflation. After many such painful episodes, nations around the globe have abandoned the gold standard and leading economists unanimously agree that a return to the gold standard would have devastating results for the average citizen.

Of course history is doomed to repeat itself. As central banking and the Federal Reserve matures and the developed world continues to experience an unprecedented amount of financial prosperity, computer programmers can’t help but wonder if there is something better out there. It is one of the many maladaptive traits that computer nerds have which turn every day life into a problem solving exercise. The phrase “if it ain’t broke, don’t fix it” never made much sense to us, and it’s not even grammatically correct for god’s sake.

Just like most technology products, bitcoin spawned a multitude of clones and imitators that spread throughout the Internet like wildfire. Litecoin, Ripple, Auroracoin, Monero, even something called Dogecoin, which the creator originally started as a joke and ended up reaching a two billion dollar market cap in 2018.

From an outsider it would appear that the cryptocurrency tech craze is exploding, and everyone wants to get in on the action. Bitcoin’s price in US dollars reached an all-time high of $20,809 in December of 2017, and wouldn’t you know it, has a volatility seven times greater than gold, and eighteen times greater than the US dollar.

A commodity like bitcoin must be rather useful to the developed world if it quadruples in price within the span of only a couple months. In fact this is not the case. The vast majority of bitcoin trades take place on exchanges rather than being used to actually buy things. Because transactions can sometimes take several minutes to confirm, bitcoin is nearly impossible to use in a retail setting, and the number of online retailers accepting bitcoin is actually decreasing.

Cryptocurrencies have been a godsend for scammers and crooks. The world of digital currency has completely returned to the days of Wildcat banking, except without even the loose and ineffective state regulations. Hackers with more knowledge than morals are pulling off some of the exact same scams that organized crime syndicates were pulling during the unregulated banking eras that were common near the end of the nineteenth century. The only difference is that instead of using telephones or newspapers to hook their victims, they’re using the world wide web.

Of course the innocent and well-meaning fans of cryptocurrency have their own reasons for thinking that it can potentially do some good for the world. Cryptocurrencies and blockchain database have the potential to significantly reduce the cost for sending money overseas, which can be a monumental cost for working immigrants over time. It has the potential to subvert greedy lending companies or real estate brokers that inappropriately profit from merely facilitating the transfer of wealth from one individual to another. Smart contracts can change the way we do business by entrusting a brainless, amoral computer program with our wealth instead of a human being.

Before completely turning over our financial systems to unregulated artificial intelligence agents, we should take a serious retrospective look at the history of centralized and regulated financial systems and the impact that they have had on society. When a sufficiently advanced civilization becomes comfortable and rich, it is far too easy to become complacent about the knowledge and experience gathered over decades of turmoil and grief. Instead of fondly revisiting the unregulated eras of banking and looking through rose-tinted goggles, time is much better spent looking forward from where we are standing now.