The first line of Satoshi Nakamoto’s white paper reads as follows: “A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.” The goal is achieved quite simply by removing three frictions to the exchange of value among people.
The First Friction:
The Bitcoin protocol goes to great effort to foil the bad players and reward the good kids with game based incentives. The probable cost of an attack is greater than the likely benefit of attempting to do so. This wipes out the massive and hugely expensive vetting apparatus of verification, fraud investigators, audits, charge backs, legal claims, and courts.
The Second Friction:
With the judicial use of cryptography, the BCP wipes out a colossal industry of third party brokerage activity that withholds information about transactions ostensibly in the name of trust, fairness, and privacy.
The Bitcoin Protocol Analogy
The most obvious Bitcoin analog is to Gold; everyone gets this. Due to the economics of scarcity, miners have an incentive to expend resources in order to add more gold to circulation. However, as the scarce resource becomes more expensive to extract, the incentive shifts to transaction fees as reward for participating in the digital value exchange.
Transactions are abundant. There is potentially no limit to the amount of transactions that can take place. Participating in a transaction today does not remove future transactions from the account balance. In fact, transactions can be created by anyone at any time, and combined or subdivided in any number or ways.
The Third Friction:
The social analogy should be crystal clear, if not prophetic. As Consumption Capital becomes unsustainable, Abundance Capital will emerge as the primary generator of value creation between people. As such, the strategy for success in the BCP era, is not in the domain of tangible consumption, it is in the domain of intangible transactions. In other words, everything that we call “intangible” in the Era of Scarcity, becomes “tangible” in the Era of Abundance, and vice versa.
The New Tangibles:
The tangibles assets of the post BCP era are knowledge, innovation, and wisdom of people and communities of people as an abundant and recurring resource. The business methods of the post BCP era will require the promotion, exchange, and manifestation of knowledge, innovation, and wisdom among communities of people.
New Factors of Production:
Productivity is in the old economy meant increasing the amount of stuff that can be made a certain amount of time. In the new, productivity will involve maximizing the interaction of people within a certain amount of time, where the largest denomination is a natural lifetime. The World According to the BCP is the world that was meant to be, not the world that exists today.
