Why Bitcoin Matters

Caracas, Venezuela. 2018.

Maria Hernandez goes to the supermarket with a backpack full of cash. Not metaphorically. Literally. A backpack stuffed with bolivar notes. She’s buying groceries for the week. This requires carrying roughly 2 million bolivars.

Not because groceries are expensive in absolute terms. Because bolivars are worthless.

Maria’s salary as a nurse: 18 million bolivars per month. Sounds impressive. It’s worth about $3 per month at the real exchange rate. Not $3,000. Not $300. Three dollars. For a month of full-time work. For saving lives at a hospital.

She can’t survive on her official salary. Nobody can. So she works two other jobs. Cleans houses. Watches neighbors’ children. Barters her nursing skills for food. The cash is almost pointless, but she’s paid in cash, so she needs to convert it to something useful quickly before it loses more value.

At the supermarket, she checks prices. A carton of eggs: 900,000 bolivars. Last week it was 500,000. The week before, 250,000. Prices double every few weeks. Sometimes faster.

She stands in line for two hours. When she reaches the register, the cashier tells her the price has increased. Eggs are now 1.1 million bolivars. The price changed while she waited in line.

She pays. The cashier hands her change in rubber-banded bricks. She stuffs them in her backpack. The bills are so worthless that merchants don’t bother counting them anymore. They weigh them.

Maria is 32 years old. She has a professional degree. Works three jobs. Can barely afford to eat. Not because Venezuela lacks resources; it has some of the world’s largest oil reserves. Because the government printed money until the currency became worthless.

The official inflation rate is meaningless. Hyperinflation makes numbers absurd. In 2018, prices increased by over 1,000,000%. One million percent. A cup of coffee that cost 1,000 bolivars in January cost 10,000,000 bolivars by December.

Money stopped being money. It became trash. People stopped accepting it. Started using U.S. dollars when they could get them. But dollars were scarce. The government banned private ownership of foreign currency. Banks couldn’t hold dollars. Exchanges were illegal.

Maria had no escape. Her salary was paid in bolivars. Her savings, everything she’d accumulated over years, were in bolivars. Worthless.

Then someone told her about Bitcoin.

Separation of Money and State

For thousands of years, rulers controlled money. They minted coins. They issued currency. They determined what counted as legal tender. And whenever they needed funding, whenever wars required resources, whenever political pressures mounted, they inflated.

Rome debased its silver. Medieval kings clipped coins. The Spanish Empire flooded Europe with gold and triggered inflation. Every government in history, when given control over money, eventually abused that control.

The 20th century made this worse. Fiat currency removed all constraints. Governments could print unlimited money. No gold to redeem. No physical limitations. Just decisions by central bankers and politicians.

The results were predictable. Inflation became permanent. The dollar lost 85% of its value between 1971 and 2010. The bolivar became worthless. The Turkish lira collapsed. The Argentine peso failed repeatedly. Every fiat currency on earth was losing value because every government was printing money.

Bitcoin changed this for the first time in modern history.

Bitcoin separated money from state control. Completely. Finally.

No government issued Bitcoin. No central bank controlled its supply. No political authority could inflate it, debase it, or manipulate it. The rules were written in code. The supply was capped at 21 million. The issuance schedule was predetermined. Mathematics enforced what governments had always promised but never delivered: sound money.

This wasn’t just a technical achievement. It was a political one. A philosophical one. For the first time since nation-states monopolized currency, individuals had an option. You could opt out. You could store value in money that no government controlled. You could transact without permission from banks or states.

Maria learned about Bitcoin from a friend who’d fled to Colombia. She downloaded a wallet on her phone. Her friend sent her $50 worth of bitcoin. About 0.005 bitcoins at 2018 prices.

That bitcoin didn’t lose value overnight. Didn’t evaporate while she slept. Didn’t become worthless because some politician decided to print more. It held value because the supply was fixed. Because no authority could inflate it. Because mathematics, not politics, determined how much existed.

Maria started asking for payment in bitcoin when she could. Some patients paid her directly instead of going through the hospital. Some families she cleaned houses for sent bitcoin instead of bolivars. She converted everything to bitcoin as quickly as possible.

For the first time in years, she could save. Her savings didn’t evaporate. The number didn’t change. What it could buy didn’t collapse. Bitcoin gave her something the bolivar couldn’t: stability. Predictability. The ability to plan beyond next week.

This was what separation of money and state actually meant in practice. Not an abstract principle. Real people, in real situations, protecting themselves from monetary destruction. Opting out of failed currencies. Choosing sound money when their governments offered only inflation.

Digital Scarcity

Before Bitcoin, digital things could be copied infinitely. Photos. Music. Videos. Documents. Text. All of it reproducible at zero cost. Copy-paste. Download. Duplicate. The digital world was a world of abundance.

This was why digital money seemed impossible. Money requires scarcity. If something can be copied freely, it can’t be money. You can’t have digital gold if anyone can create unlimited digital gold.

Bitcoin solved this. Created digital scarcity for the first time in history.

Only 21 million bitcoins would ever exist. Not approximately 21 million. Exactly 20,999,999.9769 bitcoins. Precise to the eighth decimal place. The last satoshi, the smallest unit of bitcoin, would be mined in the year 2140. After that, no more. Ever.

This scarcity was guaranteed not by promise, but by mathematics. Every node on the network verified that miners followed the issuance schedule. If a miner tried to create more bitcoins than allowed, other nodes rejected the block. The network enforced scarcity automatically.

You couldn’t vote to create more bitcoins. Couldn’t pass a law authorizing more supply. Couldn’t have an emergency meeting and decide to inflate. The code said 21 million. The network enforced 21 million. Changing that would require convincing the entire network to adopt new rules, something that would never happen because it would destroy Bitcoin’s core value proposition.

This made Bitcoin fundamentally different from every other form of money in the modern world.

Dollars? The Federal Reserve could create unlimited amounts. No mathematical constraint. Just decisions by people in a room.

Euros? The European Central Bank could print as needed. Political considerations determined supply.

Yen? Yuan? Pounds? Every fiat currency operated the same way. Supply determined by central bankers responding to political and economic pressures.

Even gold, historically the soundest money, wasn’t perfectly scarce. New deposits could be discovered. Mining technology could improve. Asteroids contained vast amounts of gold that might someday be accessible. Gold’s scarcity was real but not absolute.

Bitcoin’s scarcity was absolute. Twenty-one million. Forever. Guaranteed by mathematics that couldn’t be changed without destroying the system.

This meant Bitcoin was, in some sense, the scarcest asset humans had ever created. More scarce than gold. More scarce than land. More scarce than anything physical. Digital scarcity, cryptographically guaranteed, economically enforced.

For people living through monetary inflation, this mattered enormously. Maria in Venezuela. Workers in Argentina. Savers in Turkey. Anyone watching their currency lose value understood immediately why fixed supply mattered.

Your money couldn’t be inflated away. Couldn’t be printed into worthlessness. Couldn’t be debased by governments desperate for funding. What you saved today would still exist tomorrow. Not just nominally. Actually. Really.

This was sound money. Digital sound money. And it was available to anyone with a phone and internet connection.

Self-Custody

Banks hold your money. Not you. Technically, legally, actually, banks hold it. You have a claim on the bank. A promise that you can withdraw your funds. But the money itself sits in the bank’s systems, under the bank’s control, subject to the bank’s rules and regulations.

This means banks can freeze your account. Restrict your access. Block your transactions. Report your activity to governments. Comply with regulations that override your preferences. They do this routinely. Sometimes for good reasons (preventing fraud). Sometimes for bad reasons (political pressure).

Rebecca Chen learned this in 2008. Her bank held her money. When she couldn’t make mortgage payments, they foreclosed. Took the house she’d worked years to buy. She had no recourse. The bank controlled the system. The bank decided the outcome.

Lisa Torres learned this in 2020. An algorithm flagged her account as suspicious. Frozen. No explanation. No human review. No appeal. Just locked out of her own money for five days while someone investigated something she never understood.

Bitcoin eliminated this problem through self-custody.

With Bitcoin, you hold your own money. Actually hold it. Not a claim on a bank. Not a promise from an institution. The actual bitcoins. Stored in a wallet controlled by cryptographic keys that only you possess.

Your private key is your money. If you have the key, you have the bitcoins. If you don’t have the key, you don’t have the bitcoins. Simple. Absolute. Mathematical.

No one can freeze your wallet. No bank can block your transactions. No government can seize your bitcoins without physically taking your keys. The money is yours. Completely. Finally. Actually.

James Sullivan found this profound. He’d worked in finance for twenty years. He understood how the system actually worked. How banks intermediated everything. How governments could access accounts. How control was baked into every layer of the financial system.

Bitcoin removed the intermediaries. Removed the control points. Removed the institutions. You didn’t hold bitcoin at a bank. You held bitcoin. Period.

This meant responsibility. If you lost your keys, you lost your bitcoins. No customer service to call. No password reset. No institution to appeal to. The system was unforgiving. But it was also liberating. Your money was yours. Completely. No one could take it without your permission.

For people in authoritarian countries, this was revolutionary. In China, the government could freeze bank accounts of anyone they considered problematic. Dissidents. Activists. Anyone who criticized the party. In Russia, the same. In dozens of countries around the world, banks were tools of state control.

Bitcoin let people opt out. Hold wealth that governments couldn’t seize. Transfer value that banks couldn’t block. Save money that authorities couldn’t freeze.

Self-custody wasn’t just a feature. It was the foundation of financial sovereignty. The ability to control your own wealth without permission from institutions.

Censorship Resistance

Bitcoin transactions can’t be blocked. Can’t be reversed. Can’t be frozen. This isn’t a feature you appreciate until you need it.

When Canadian truckers had their bank accounts frozen in 2022, Bitcoin donations still worked. When activists in authoritarian countries faced financial exclusion, Bitcoin still functioned. When people wanted to support causes their governments opposed, Bitcoin provided a way.

This works because Bitcoin has no central point of control. No company to pressure. No CEO to arrest. No servers to shut down. The network is distributed across thousands of computers in dozens of countries. Shutting it down would require shutting down the internet itself.

Governments have tried. China banned Bitcoin mining. Bitcoin adjusted and continued. Russia restricted Bitcoin transactions. Bitcoin still functioned. India flip-flopped on legality. Bitcoin ignored the regulations and kept working.

You can ban the on-ramps and off-ramps. the exchanges where people buy and sell Bitcoin for local currency. Some governments have done this. But you can’t stop the network itself. You can’t prevent transactions. You can’t freeze Bitcoin.

For people living under capital controls, under authoritarian governments, or under financial surveillance, this matters enormously. Bitcoin gives them an option they didn’t have before. An escape route. A way to preserve wealth and transfer value without permission.

A journalist in Belarus could receive donations in Bitcoin when her bank account was frozen for criticizing the government. An activist in Hong Kong could move money out when the Chinese Communist Party tightened controls. A Venezuelan like Maria could protect her savings when her government destroyed the currency.

This is what censorship resistance means in practice. Not technology for its own sake. Freedom for people who need it. Options for people who have none. The ability to transact without permission from authorities who might deny it.

Bitcoin doesn’t care who you are. Doesn’t care what you believe. Doesn’t care whether governments approve. If you have bitcoins and a private key, you can send them. No one can stop you. No one can reverse the transaction. No one can take them back.

This makes Bitcoin different from every payment system that came before. Credit cards can be blocked. Bank transfers can be frozen. PayPal can close your account. Every traditional payment method has someone in charge who can say no.

Bitcoin has no one in charge. No one to pressure. No one to regulate. No one to shut down. The network simply works. Processes transactions. Enforces rules. Continues operating.

For most people in wealthy democracies, this seems unnecessary. Their banks work fine. Their governments don’t freeze accounts. They’ve never been censored financially. Censorship resistance feels like solving a problem that doesn’t exist.

But for billions of people worldwide, this is their reality. Governments that control banking. Authorities that freeze accounts. Systems that exclude based on politics, religion, ethnicity, or location. For them, censorship resistance isn’t theoretical. It’s survival.

Bitcoin gives them what they couldn’t have before: money that works regardless of who you are or who wants to stop you.

The Convert

James Sullivan bought his first bitcoin in 2011. Not much. Ten bitcoins for about $100. He’d read Satoshi’s paper. Verified the code. Understood the technology.

But he hadn’t fully understood why it mattered. Not viscerally. Not emotionally. He saw it as interesting technology. A clever solution to the double-spend problem. Maybe someday it would be useful.

Then he started reading stories. People like Maria in Venezuela, using Bitcoin because their currency had collapsed. Activists in authoritarian countries, receiving donations in Bitcoin because their banks were controlled by governments that wanted them silenced. People who’d had their bank accounts frozen for political donations, using Bitcoin because it couldn’t be frozen. Journalists. Dissidents. Ordinary people living under systems that failed them or controlled them.

The technology was clever. But that wasn’t why Bitcoin mattered.

Bitcoin mattered because it gave people options. Because it let people escape systems that were failing them or controlling them. Because it separated money from state control for the first time in modern history.

This was what the cypherpunks had been fighting for. Not just privacy as abstraction. Freedom as reality. The ability to store value, transfer wealth, and participate in the economy without asking permission from banks or governments.

James was 43 years old now. He’d spent twenty years working in traditional finance. Twenty years watching how the system actually worked. How surveillance was built in. How control was expanding. How inflation eroded savings. How bailouts rewarded failure. How ordinary people bore the costs while those close to power captured the benefits.

Bitcoin offered an alternative. Not perfect. Not complete. But real. Actually functioning. Growing. Spreading. Giving people freedom they hadn’t had before.

James Sullivan, the skeptic who’d almost deleted Satoshi’s email, who’d spent years verifying before believing, had become a believer.

Not because Bitcoin was clever. Because it was necessary.

He thought about Dorothy Martinez, the seamstress whose savings had evaporated between 1971 and 2010. If she’d held bitcoin instead of dollars, her savings would still exist. Actually exist. Not just nominally. The purchasing power wouldn’t have been stolen by inflation.

He thought about Rebecca Chen, the teacher who’d lost her house when the system collapsed. If she’d held wealth in Bitcoin instead of home equity tied to fraudulent mortgages, she’d still have that wealth. Banks couldn’t foreclose on Bitcoin. The housing bubble couldn’t destroy it.

He thought about Michael Chen, drowning in student debt that compounded faster than he could pay it. If education were priced in sound money instead of inflationary dollars, maybe universities couldn’t have raised tuition 1,500% in forty years. Maybe degrees wouldn’t require decades of debt servitude.

He thought about Lisa Torres, whose account was frozen by an algorithm. If she’d held Bitcoin, no algorithm could freeze it. No bank could lock her out. Her money would remain hers.

Bitcoin didn’t solve every problem. Didn’t fix every injustice. Didn’t undo the damage already done. But it offered an alternative going forward. A way out. A system that worked differently. Better. More fairly.

For the first time in modern history, individuals could opt out of the monetary system. Could hold wealth that governments couldn’t inflate. Could transact without permission from banks. Could save in money that was actually sound.

This was revolutionary. Not the technology itself. What the technology enabled. The freedom it restored. The options it created.

James looked at his Bitcoin holdings. He’d accumulated several thousand bitcoins over the years. Worth hundreds of thousands of dollars now. Maybe millions someday. But the value wasn’t why he held them.

He held them because he believed in the alternative. Believed in sound money. Believed in freedom from monetary manipulation. Believed that what the cypherpunks had been fighting for actually mattered.

Bitcoin had freed money from government control. Proven that alternatives were possible. Demonstrated that mathematics could replace institutions. Given people options they’d never had before.

What Bitcoin Solved

Bitcoin separated money from state control. Created digital scarcity. Enabled self-custody. Proved censorship resistance was achievable.

For people like Maria Hernandez, it offered escape from hyperinflation. For activists, it provided uncensorable donations. For savers, it gave protection from monetary manipulation. For believers in freedom, it demonstrated that alternatives were possible.

Satoshi had solved the double-spend problem. Created money that worked without banks or governments. Given the world an option it hadn’t had before.

The revolution the cypherpunks had been building for twenty years was no longer theoretical. It was real. It was working. It was spreading.

James Sullivan had watched this revolution unfold from the beginning. From that first email in October 2008 to this moment, over a decade later. Bitcoin had gone from an idea to a movement. From an experiment to a system that millions used.

He believed in it. Understood its importance. Knew it changed everything.

But there was something that bothered him. Something he’d noticed while verifying transactions. Something about the way Bitcoin actually worked in practice.

A limitation. A vulnerability. A piece of the puzzle that Satoshi had solved brilliantly. and yet, in solving it, had created a different problem.

Bitcoin had freed money from government control. But it hadn’t freed money from surveillance.

Every transaction was visible. Every wallet balance was public. Every movement of funds was traceable.

Bitcoin was freedom money. But it was also the most transparent financial system ever created.

That transparency was about to become a problem.