Or so the mining industry wants you to think. The terms was first used in 1938 when after the great depression sales of diamond started plummeting. [De Beers],(http://www.debeersgroup.com/the-group/about-debeers-group/brands/a-diamond-is-forever) a mining company that controlled 90% of the world's rough-diamond production and distribution at that time hired the advertising Agency N.W. AYER to craft a campaign to boast its sales. What resulted was nothing less then a stroke of genius, A concept to create an emotional link between diamonds and love. The three words since then have been itched in the memory of a whole generation that has mindlessly taken this shiny piece of rock as a symbol of love because they have been told to do so through endless celebrity endorsements, popular songs or James Bond movies. Diamonds are not rare, infact, it is the most common gem in the world. Yet its one of the most expensive commodity on earth. This strange paradox, that has always fascinated me as a student of economics and philosophy, is most commonly known as the Diamond Water paradox or Paradox of value. It was first written about by Adam Smith in the famous book An Inquiry into the Nature and Causes of the Wealth of Nations
"The word VALUE, it is to be observed, has two different meanings, and sometimes expresses the utility of some particular object, and sometimes the power of purchasing other goods which the possession of that object conveys. The one may be called "value in use;" the other, "value in exchange." The things which have the greatest value in use have frequently little or no value in exchange; on the contrary, those which have the greatest value in exchange have frequently little or no value in use. Nothing is more useful than water: but it will purchase scarcely anything; scarcely anything can be had in exchange for it. A diamond, on the contrary, has scarcely any use-value; but a very great quantity of other goods may frequently be had in exchange for it."
This Labor theory of value, has been a justification for corporate greed, and monopolization of industries through questionable ethics manipulation of the supply of the commodity, to ensure inflated price. This is necessary to recover the high cost of mining. According to this theory, the cost of the commodity is not justified from the function of its utility, but the function of the labor that has been utilized to recover it. It's like me spending 1 Million dollars to excavate molten lava from the core of the earth, and insisting that everyone pay $1.5 Million, to recover the excavations cost. The natural question would be why would anyone buy it? (What is the utility?). This theory has compelled the centralization of power into the hands of the few who are powerful enough to manipulate the price and fleece the consumers. These deceitful organizations feel challenged if when presented with a better utility and will go to any length to silence the idea. The rich get richer and the poor get poorer.
This power struggle between centralization and decentralization of power has been been a constant struggle since time immemorial. Time has been dancing to the sound of the war cry while historians have stood in awe and watched the spectacle unfold.
This tug of war has been going on since the day Cain killed Abel and will probably go on forever. What has changed; however, is the form of this powerful struggle; between Right and Left, Capitalism and Socialism, Copyright and open source, iPhone
and Android, and now perhaps between Bitcoin and XRP. The idea remains the same, however, the idea that anyone can stand in the way of this power stronghold and redistribute the wealth where it actually belongs. The idea has transcended time and has been romanticized by poets and writers alike through out history .
Sir Muhammad Allama Iqbal(1877-1938)
Find the field whose harvest is no peasant’s daily bread—
Garner in the furnace every ripening ear of wheat!
Every so often there is an event that adds a new dimension to this struggle and gives it a new meaning. One such day was November 5, 1605
"Remember, remember, the fifth of November,
The Gunpowder Treason and plot.
I know of no reason why the Gunpowder Treason
Should ever be forgot."
A day when Guy Fawkes a member of a group of Roman Catholic conspirators attempted to carry out the Gunpowder Plot to assassinate King James I of England (James VI of Scotland) and the members of both houses of the Parliament of England with a huge explosion. The parliament at the time represented the central control of the power over England and was seen as an oppressor. While the plot was a failure, its remake in the famous movie V for Vendetta in 2005 as a nail biting struggle of one individual against the tyranny and oppression of the government has been epitomized by the Guy Fawkes Mask as the a symbol for fight against injustice and centralization of Power.
Perhaps it comes as no surprise that when it came to publishing his article, the famous cryptographer used his nickname Satoshi Nakamoto to promote his idea of a decentralization form of economy, not controlled by any world government.
He wanted his Bitcoin network to help common people break away from the monopolized Federal Reserve. A privately-owned company that can print money from thin air and fleece the consumers by its control over supply and demand, like De Beers had done with diamond mining industry. If the Diamond mining industry and greedy corporates were the face of centralization, then Guy Fawkes Mask and Bitcoin became the new face of the struggle against centralization of power. David Schwartz (Current CTO of Ripple) quickly jumped on this bandwagon and became one of the earliest contributors to the Bitcoin code.
David Schwartz however, soon realized that Bitcoin network had an inherent flaw, in that they it was based on the model of Labor theory of value, which eventually leads to centralization. The Proof of work (POW) algorithm in Bitcoin seeks to reward
miners who pay a hefty amount of money to set up mining rigs and can control the supply of Bitcoin to manipulate market prices in their favor, like De Beers did. In his recent blog he wrote
"Bitcoin and Ethereum use proof-of-work algorithms. This system rewards individuals, known as "miners," for validating transactions by paying a fee for their work. This was a great starting point for a decentralized system that incentivizes complete strangers to contribute to the greater good of a network and make forward progress. But as time has gone on, clear limitations have manifested. Blockchains that use proof-of-work can be subject to centralized control, where a few miners have significant control over the system."
The labor theory of value is nonsense. That bitcoin uses energy to solve the double spend problem doesn't make it any more valuable. Scarcity is always per-coin because new ones can always be created.— David Schwartz (@JoelKatz) January 6, 2018
He eventually left Bitcoin and moved on to create a network that uses Consensus which unlike POW does not require mining fees that leads to centralization. His effort has resulted in the creation of Inter Ledger Protocol which is inherently decentralized and David talked about in much details in his latest blog.
Consensus protocol means that as more and more validators are setup the network becomes more decentralized and a real time data visualization of the network
going decentralized is now possible
This inherent centralized nature of the Bitcoin may prove to be its Achilles Heels and may eventually lead to its downfall like the De Beers which was eventually forced to sell majority shares to Anglo American plc.
A new study shows China controls 74% of bitcoin. Does that sound decentralized to you? https://t.co/4Oa68QlHLu— David Schwartz (@JoelKatz) October 9, 2018
Whether that happens or not, no one really knows. But, what we do know is that this never-ending struggle will go on forever, and people like Guy Fawkes, Satoshi Nakamoto, and David Schwartz will become the new faces of the idea. The idea of
decentralization of power and equal distribution of wealth will live on forever. Because Diamonds may be forever, but ideas are bullet proof.