Is Bitcoin the Goose That Lays the Golden Egg?

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11 Jul 2024

We've all heard that children’s story, right? I'll recap just to be sure. It goes like this;

Once there was a poor farmer who captured the most precious goose in the world. The goose laid one golden egg per day, and the farmer would take the egg and sell it every day. Gradually, he became the richest man in the town by selling these eggs. One day, however, he became greedy and complained that waiting for one golden egg per day was not making him rich fast. He wanted to have all the golden eggs the goose could produce and sell them once to immediately become the richest man in the world. So, he came up with a plan. He'd kill the goose and retrieve all the golden eggs in its stomach for sale. He then executed his plan, but after cutting the goose open, he could not find even one golden egg in the belly of the goose. Now his goose was dead, and he couldn't get any more eggs. After some time, he spent all the money he had made and became poor again.

This old tale is supposed to teach people about the dangers of greed but a more recent technology seems to actually be recreating the story in real life.

Bitcoin is the first global digital currency and was released in 2009 by an anonymous individual with the pseudonym Satoshi Nakamoto to facilitate easy worldwide trade. Eventually, it was merged with blockchain technology and came to be the world’s first cryptocurrency. Currently, bitcoin is the most valuable crypto in the world, with a current price of about $57,000 per coin, and has produced thousands of millionaires around the world. With the success of Bitcoin, other cryptocurrencies, like Ethereum, Solana, etc., have also been created and are doing very well.

Even though bitcoin was primarily meant to be a means of exchange for international trade, recent events like periodic explosions in the price of the currency have made it to mostly be used as a store of value. Basically, investors buy Bitcoin and hold it while waiting for a period when the currency will explode in value, then sell it to make money.

To better understand why this switch of usage is significant, let’s time travel a bit to the birth of Bitcoin.

Nakamoto’s dream

Note: The story below is mostly fictional, but it's based on real information concerning the creation of Bitcoin.

The revolutionary glanced again over his code, marveling at the great wonder he had been able to conjure. He had been debugging that code for the last couple of months. It had taken all the determination he could muster, but at long last, it seemed it was going to work now. His code was compiling, and the last runtime error that he had been fixing for the past three weeks didn't show up this time. A smile was sprouting on his face as hope kindled inside him. Is this it? Is the moment of truth? He had dreamed for many years about developing this world's first peer-to-peer digital currency, but the recent financial crises that began last year finally inspired him to complete the project he had started a few years before the crisis.

The revolutionary glanced again at the TV. Another Christmas commercial had just concluded, and people were being interviewed on the streets about how the financial crisis of that year had affected their Christmas plans. Most people responded sadly. You could see it on the faces of parents; the sadness from not being able to give their children the best Christmas they could due to a financial crisis that they played no part in. Who could blame those parents? Many of them started saving money in banks from the beginning of the year, only to be told that they couldn't access their money months later. They said it was a financial crisis, but in truth, it was just a mismanagement of customers’ money by greedy bankers. And the saddest part was that they would not even be punished for it. Now, people have to suffer the hardships that others have caused.

They called it the "2008 financial crisis". What a fitting way to label top-level mismanagement and absolve all of the blame for the offenders. Like it's one of those things that just happens. In truth, it began in 2007, and it was caused by the lending of money by banks to the high class, leading to financial shortages and hardship for regular customers. They said it was the worst financial crisis since the great depression. Yet no one would be punished for it except, of course, the regular people who would mostly suffer that hardship. That incident had inspired him to complete the decentralized peer-to-peer currency he had been toying around with for a couple of years. It was just perfect timing.

In truth, several people before him tried to create a digital currency for easy international exchange. It had not worked out very well because centralized banking institutions had always killed it with stringent regulation. But he had found a way to completely bypass these centralized institutions. He had merged his own digital currency named Bitcoin, with a recent decentralized storage system called the blockchain. This would allow Bitcoin to be distributed on all devices that connect to it with no central server, which can be easily hijacked for selfish agendas or shut down. He was basically going to create a decentralized financial system for everyone around the world (not just finance professionals and their circle) to equally access and benefit from. This was his dream.

The revolutionary was breathing fast now. His heartbeat was racing as excitement built up inside him. The software was 90% compiled. He had never been able to make it beyond 60% due to all kinds of errors. He remembered all the errors he encountered. The funniest was a syntax error that kept him bugged down for almost a full month. That was the most frustrating error he had encountered because it did not even allow the program to start compiling. Whenever he hits compile, the compiler just comes to a halt, screaming syntax error and highlighting hundreds of lines of code for correction. He went through each of those lines and even rewrote many of them, but the error kept occurring, making him scream many times in frustration. In the end, it was just a missing semicolon on one line that fixed the month-long issue. C++ was a very funny language. The revolutionary now surveyed his workbook. It was his project guide and was currently on the specifications page. His electronic money had five main objectives;

  1. Digital
  2. Decentralized
  3. Functional
  4. Sustainable
  5. Public

The first two objectives were achieved through software development and blockchain technology, respectively. He had checked those two with his pencil. However he had been stuck on the third objective for almost a year now. Getting his program to work was the hardest part. Out of frustration, he had skipped over that third objective, and he had figured out the fourth and fifth. Those were simpler. To make the technology sustainable, he would make it open source so that the code would be maintained by like-minded developers around the world who were pushing for technological globalization. And to make it fully public, he had a trick up his sleeves.

In truth, he knew that releasing the first globalized electronic money would put him at risk of being accused of trying to hijack the entire international financial system for himself. He wasn't trying to make an animal farm kind of move, though. He was a true revolutionary and just wanted to gift mankind with a truly fair system. So, he had come up with a brilliant plan. A stroke of genius. To truly decentralize the bitcoin, he would release it under a pseudonym and completely distance himself from the operation of the technology. He had the code name written on his palm;

"Satoshi Nakamoto!"

Nakomoto then checked objectives four and five with his pencil and returned his gaze to objective three. He tapped nervously on that objective as he looked back to his computer screen. Compilation was 97% done. He clasped his hands and prayed silently against any further error. Everything was going according to plan.

It was Christmas day 2008, and all that was left for his big new year gift to mankind was for the damn program to work. He had already released the bitcoin whitepaper in October that year and it had created a lot of excitement online. Now, everyone was waiting anxiously for the program to be released, and he planned to release it on New Year's Day 2009. That would rekindle people’s hope after the crisis. The prospect of having an international means of exchange that, by passing the selfish bureaucracy of banks, would be a great victory for all lovers of freedom and fairness. The bitcoin would see that happen.

Satoshi Nakamoto held his breath. His program was 99% compiled. The cursor was blinking about to usher in a new era. "A moment of truth" he thought but eternity seemed to pass in that moment. The silence was loudest now as the world seemed to stand still. What would this great pause birth?

The answer was rage!

Nakamoto smashed his computer screen as the program crashed in error. Seemed like he would miss his new year day release date.

Evolution of the bitcoin

On 3rd January 2009 the bitcoin was released to a mostly ignorant world. But tech geeks were all over the technology within just a year. It was a long anticipated alternative to the rigid, slow and unfair centralized banking system that limited international financial transactions. This new system was simple, efficient, crazy fast and free. It was just brilliant.

Many looked to celebrate the inventor(s) of such groundbreaking technology, but all they were met with was a pseudonym;

"Satoshi Nakamoto!"

That name had attained godlike status on the internet, and whoever it was would definitely be proud.

On May 22, 2010, the first Bitcoin purchase was carried out, and 10,000 Bitcoins were used to purchase two boxes of pizza. After this event, bitcoin experienced mass adoption as many enthusiastic young people embraced the new payment system. In fact, countries like El Salvador and the Central African Republic have come to accept cryptocurrency as a legal tender. Simply put, bitcoin has achieved its goal of being a successful global means of exchange.

Over the years, bitcoin has soared in value from being almost worthless to becoming worth tens of thousands of dollars per bitcoin. This has created many bitcoin millionaires. This explosion in the value of bitcoin has, however, created a new trend in the bitcoin and crypto community. Originally created to be a decentralized means of global exchange, Bitcoin has rather come to be a decentralized store of value. This means that people just hold the coin in expectation for the value to rise so they can sell it and make money.

Hence, instead of being a simple means of exchange to facilitate international trade, bitcoin has become more like a digital asset that is itself held and traded for profit. This pivot has had a number of effects on the cryptocurrency industry.

Effects of this evolution

The pivot in the usage of Bitcoin has had both positive and negative effects, which are promptly highlighted below;

A. POSITIVE

  1. Rise of crypto millionaires:

    It is not particularly clear if Bitcoin was intended to be an asset rather than just a means of exchange. But Satoshi Nakamoto seems to have outdone even himself in the problem he was trying to solve. According to techopedia, there are currently about 88,200 crypto millionaires around the world, and about half of these (40,500) amassed their wealth from Bitcoin.

  2. This explosion in its value has made bitcoin more valuable than any other currency around the world. Infact, most people now just want to hold bitcoin rather than actually using to make payments. It would seem that Nakamoto not only gave the survivors of the 2008 financial crisis an alternative to those who caused the crisis but he also helped them recover what they lost. This needs not go unnoticed.

  3. Explosion of Web 3 technology:

    Originally developed as a little-known decentralized storage system, the integration of blockchain technology with Bitcoin has resulted in a new network infrastructure known as Web 3. Due to its decentralized and distributed nature, the blockchain provides a sophisticated networking tool. With its explosion in value and global adoption, bitcoin practically transformed the blockchain network into a new internet with no central control. Open source developers around the world immediately discovered the opportunities provided by this new internet and have invented new technologies like NFts, crypto games, DAOs, Dapps, Exchanges, Metaverse, etc., from the network. All this was only possible because Bitcoin exploded in value to become an asset that attracted investors.

  4. Development of crypto trading: With the evolution if bitcoin (and subsequently other crytocurrencies) into a full blown digital asset, traders of financial assest (e.g. forex traders) have come to discover the opportunities the asset provides and have began to trade the asset to great financial benefit. Traders spend all day studying charts to predict the rise and fall of crypto assets and make money from it. This is a rather new industry which has been facilitated by the success of bitcoin as a valuable financial asset.

B. NEGATIVE

  1. The rise of crypto fraud:

    Bitcoin, like any other valuable asset, has come to attract thieves and fraudsters. Lots of people hold Bitcoin and other cryptocurrencies in wallets as a store of value. This attracts hackers who try to break into such wallets to make away with the bitcoin. Other fraudsters launch fake crypto projects to steal investors' money, and concepts like rug pulls have arisen where worthless coins are promoted aggressively online to attract unsuspecting investors who pump up the value of such coins through hasty investment, then the creators of the coins sell the coins after they "explode in value.” Investors in such a rug pull lose their money because the coins they bought were never really valuable.

  2. Clamp down on cryptocurrencies:

    Countries like China and Saudi Arabia have out rightly banned the usage of bitcoin. This is because corrupt government officials have turned to cryptocurrencies as a means of laundering and storing stolen money since the value keeps rising and there is no central authority to reject the looted funds.

    Another country like Nigeria, which continues to battle corruption and internet fraud, has recently been harassing crypto exchanges like Binance because fraudsters in the country seem to have turned to crypto to bypass government oversight. This clampdown was only facilitated by the seemingly unintended pivot in the usage of cryptocurrencies.

So what's the point?

Bitcoin and other cryptocurrency technology are exploding in value and popularity leading several rather unexpected applications. These applications are explored to keep lovers of the technology updated and well guided while using the technology. Bitcoin users could apply the following guidelines.

  1. Consider investing in promising new crypto projects instead of just using crypto to make transactions.

  2. Tech professionals are advised to get into Web 3 to increase their chances of getting a well-paying job.

  3. Consider getting into crypto trading.

  4. Invest carefully in Web 3. Watch out for hackers, rug pulls, and other inventive crypto fraud.

  5. Check country regulations on crypto before traveling or investing there as a Web 3 user.

  6. Research to discover other new ways of benefiting from Bitcoin.

  7. Promote ethical usage of cryptocurrencies.

To conclude:

I end this exposition by answering the burning question on the topic. Again i ask, is bitcoin the goose that lays the golden egg? Well, I think that Satoshi Nakamoto has realized that ancient story by inventing Bitcoin and cryptocurrency. Everyone around the world now has access to this generous new technology that seems to create millionaires out of thin air. We all, as poor farmers in gratitude for this great gift that has been handed to us, should not get greedy and kill cryptocurrency through corrupt applications.

Crypto is only as valuable as people make it. Kill not this golden goose but wisely profit from it.