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Why do we need the blockchain? Are cryptocurrencies important to the tech? How can decentralization change our lives?



The consice answer is: 



The blockchain has the potential to change the existing balance of power by eliminating trusted third parties. 



Here's what it means.



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<h2 class="wp-block-heading">Trusted third party and its flaws</h2>



 Our societies, economies and institutions are built on trust: we trust Central Banks to maintain our currencies, we trust commercial banks to keep our savings, we trust social media to handle our data, we trust charities to use our donations to do good... All these institutions that centrally manage a flow of data (scriptural money released in the economy or on our account, personal photos, donations) are called trusted third parties. With our lives becoming increasingly digital (e.g. money is just a piece of data stored on bank servers), trusted third parties' influence is growing more and more. 



However, these trusted third parties are managed by humans, and as humans we are subject to mistakes and corruption. Information stored by trusted third parties can be hacked and stolen, its infrastructures can be damaged. A trusted third party controlling our data means that de facto we're no longer in its possession: our savings could be lost when a bank goes bankrupt, our online profile data could be sold against our will...etc



Trusted third parties are the weakest link in any organization - the principle also known as a single point of failure.



<h2 class="wp-block-heading">The Blockchain Solution</h2>



The major blockchain's breakthrough is solving the problem of a single point of failure. The blockchain eliminates trusted third parties and replaces them with an [tooltip content="computer code accessible to everyone"]open source protocol[/tooltip] that defines the rules of a trustless data handling. This protocol is run by a multitude of different independent computers all around the world, making the system decentralized. The bigger the blockchain network, the more secure the data it contains. 



Cryptocurrency is an intrinsic part of a blockchain, as it financially incentivizes all those independent computers to participate in the network.



By cutting intermediaries the blockchain allows people to reappropriate their data and be free to dispose of it as they like. Furthermore, in the absence of trusted third parties the data is protected from any intentional or accidental prejudice that these third parties could inflict.



<h2 class="wp-block-heading">Bitcoin</h2>



Bitcoin was the first blockchain implementation, dedicated to the decentralization of the monetary system. 



Classic money,&nbsp;like dollars and euros, are also called fiat money, meaning that they are imposed by the governments who protect Central Banks’ monopoly. Fiat money are not backed by any asset (they are not exchangeable against gold, for example) and the Central Banks can manage their emission as they wish. Fiat money circulation is controlled by commercial banks who keep accounts and validate transactions.



Bitcoin's ambition is to liberate our monetary system and give control over the money to the people who possess it. Bitcoin is the first money ever that does not depend on any organization, that is not imposed upon anyone, and that gets its value from the people who made a choice to use it.



Bitcoin, and the blockchain itself, is a practical implementation of cypherpunks', libertarians' and Austrian economic school's ideas praising the right to privacy and individual freedom, as well as the independent economy. It has the potential to disrupt the society as we know it by making human interactions censorship-resistant and secure.



It is important to note that Bitcoin cannot be dissociated from the blockchain technology, for the mere term "blockchain" has only appeared to describe Bitcoin structure and Bitcoin is the first (and still the most accomplished) implementation of the blockchain.

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Blockchain is a technological outcome of the principles of freedom expressed in different intellectual currents.





Personal liberty, as guaranteed by constitutions of numerous countries, is usually defined as the freedom of individuals to do as they please, limited by the authority of politically organized society to regulate their action to secure the public health, safety, or morals or of other recognized social interests. Such definition leaves extensive powers to the authority and numerous intellectual currents have been questioning the limits of such powers for many years.&nbsp;



<a href="https://d.center/explore/bitcoin" class="ek-link">Bitcoin</a> was the first technology that could bring a concrete solution to this problem, establishing clear limits of the money institution by decentralizing it. Ideologically this undertaking follows the ideas of many liberty-oriented thinkers, with 3 intellectual currents particularly standing out: cypherpunks, libertarians and the Austrian school of economy. 



<h2>Cypherpunks</h2>



Probably the most obvious ideological base of Bitcoin, cypherpunks or crypto-anarchists represent a movement born in the US at the end of 1980s (not to be confused with cyberpunks from the dystopian sci-fi). Composed mostly by IT scientists and engineers, cypherpunks advocate the respect of privacy in the digital era, notably by using cryptographic methods to secure personal data on the networks.



<h2>Libertarians</h2>



Libertarian philosophy is a collection of convictions related to the protection of individual rights and the individual freedom from the state, companies and other institutions that could violate them.



<h2>Austrian Economic School</h2>



Austrian economic school calls for considering individual actions within economic studies: since individuals are acting independently and not rationally, mathematically aggregating their data isn’t efficient. Hence massive interventions of state institutions could be dangerous, especially when it concerns currency.

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<h2>General philisophy of the Austrian economic school</h2>







Contrary to the dominant economic theories, the Austrian economic school recognizes that the economy is made by people who act in a personal, and not in a rational, way. This means that a “homo economicus” supposed to act rationally and represent all economic actors does not exist, and thus cannot be used to build economic models and deduce economic laws.



The Austrian economic school advocates for a minimal (or even zero)&nbsp; intervention of the state into the economy, for every such intervention is based on the formulas and economic aggregates that cannot be trusted. Intervening with an unexisting “homo economicus” in mind is not only inefficient, but can be harmful. Moreover, every directive on people’s actions takes from them the possibility to act as they wish. 



The Austrian methodology is opposed to the mathematisation of the economy, considering it not close enough to the exact sciences like physics. Using very few formulas, the Austrian method is about trying to stay as close to the human-created reality as possible and deduce cause and effect relationships. 



<h2>The role of money&nbsp;</h2>







Together with the importance of people’s free will in the economy, the monetary aspect of the Austrian economic school is what makes it ideologically close to Bitcoin.



It considers that Central Banks’ monopoly for monetary creation and its closeness to the state are skewing the data and create a conflict of interest, as the state gets the power and “easy” financing via its proximity to the money.



Historically, money creation does not need a state monopoly or an organization that forces one money on everyone. A good money must not be imposed, but establish itself by the willingness of economic actors to use it - a gold is a good example. 



Bitcoin provides economic independence, and with its emission capped at 21 millions it opposes the excessive monetary creation by the Central Banks, which, according to the Austrian economic school, is a source of inflation and all sorts of bubbles and repetitive crises. 



<h2>Key figures of the Austrian economic school</h2>



Among the main actors of this economic school we can name Carl Menger (1840-1921), Friedrich von Wieser (1851-1926), Eugen von Böhm-Bawerk (1851-1914) Ludwig von Mises (1881-1973), Friedrich von Hayek (1899-1992) and Murray Rothbard (1926-1995).



 “The denationalization of money”, published by Friedriech von Hayek in 1976 is often cited as a "Bitcoin prophecy". Hayek points out that the dogma of a sovereign money is quite a recent invention and judges the rapid rise of inflation in the Occidental countries very preoccupying. For him, there's only two ways of avoiding grave consequences: come back to the gold standard or allow the competition of different currencies, striping the state of its monopoly.