Why is Bitcoin a revolution at the monetary level?

Leaving aside technical aspects, Bitcoin is novel because it works without a central authority that regulates the issuance of currency, or accepts or denies transactions. Thanks to its distributed architecture, it is the users of the system who implicitly make these global decisions “democratically”. Using concepts that have not been presented in this article, it is possible to approach this philosophy through two examples:

1. As a reward for collaborating with the network, users receive bitcoins (we will see how this is done in the following sections). Up to this point, it may seem that users could cheat the system to increase their reward, but by construction of the system, most users will have to subsequently validate that reward. Thus, if the user were to surreptitiously increase it, that action would be rejected by the rest.
2. A user A makes a payment with a bitcoin b1 to another user B. To prevent A from subsequently using b1 again to pay a third user C, in Bitcoin, transactions are made public and are recorded in the so-called “Blockchain” or “Blockchain”. Therefore, when the rest of the network detects the second transaction, it will reject it, making it impossible for user A to reuse b1.

As can be seen from the above examples, it is the users themselves who make the decisions that normally correspond to a single central authority. This makes Bitcoin a “democratic” currency. As in any democracy, its evolution adapts to what the majority of the population wants. However, in this case there is no equivalence of “one user = one vote”, since the weight of each user depends on the computing power that the user devotes to the network. Thus, the above equation in Bitcoin, would rather be “x% computation = x% votes”. Therefore, as long as more than 50% of the computational power of the network is controlled by honest users, the network will follow the evolution that they decide. The idea can be seen as a “weighted democracy” based on involvement in the system.

In light of the above, Bitcoin creates a totally new economic and social scenario until its emergence. This is because, if Bitcoin, or an equivalent system, were adopted, governments and financial authorities would not be able to control the evolution of money directly. They could influence it indirectly by legislating it, but never control its behavior. However, an electronic currency does not have a national character, but an international one. Therefore, legislating on it effectively is more complicated. Moreover, considering this diversity of scenarios, unprecedented in economic theory, the effects of a massive acceptance and use of the currency are unpredictable.