Why Bitcoin?
To answer why Bitcoin only and not other forms of currency, we must first understand the problem Bitcoin fixes.
(10 min read)
Enter Fiat
Fiat money is any currency issued by a government or bank that is not backed by a physical commodity like gold or silver. Instead, its value comes from the trust that people place in the government or bank issuing it. Unlike gold or silver, fiat is entirely based on the public's faith in the issuer.
The school of thought advocating for this particular economic and monetary policy is known as Keynesian economics. It promotes government intervention as a means to stabilise the economy. Keynesian economics suggests that in times of economic crisis, measures such as increased government spending through money printing can stimulate demand and aid in helping the economy. It also advocates the regulation of the money supply as a tool for controlling economic activity. However, there is another economic school of thought, known as Austrian economics, which advocates for a sound and limited deflationary monetary system. This approach has been effective in the past, but it has often been compromised by those in power succumbing to the temptation to manipulate the monetary system for their own benefit. We will delve further into Austrian economics below.
Today's money: In God (or Government) We Trust
When the dollar was pegged to gold this used to say “In gold payable to the bearer on demand”
The extraordinary power involved in the capability to generate money from nowhere is remarkable. To be able to effortlessly create currency and use it for activities such as war, effectively constitutes a form of theft against the native users of that currency, or any nation linked to that currency. It essentially amounts to plundering the future of those who are obligated to utilise this currency. The central control of money issuance leads to a phenomena called the Cantillon Effect. This is the idea that the injection of new money into an economy has a ripple effect, impacting countries, corporations, small business, groups and individuals unevenly. When new money is created, it is not spread evenly throughout the economy all at once. Instead, it enters at specific points. The first recipients of this new money benefit because they can spend it before prices have risen in response to the increased money supply. As the money begins to trickle down the economy, prices start to rise, and late recipients of the new money, often the general public, experience its decreased purchasing power. This effect creates economic inequality, benefiting those closer to the money printer while disadvantaging those further away. For this reason, people close to the issuance of money are often referred to as cantillionaires.
To illustrate this point further, let's use a short analogy. Imagine you're on an island where smooth stones are used as currency, and everyone has a limited number of these stones, which they use to trade for goods and services. The value of these stones is based on their scarcity and the agreement among islanders that they hold value. Now, imagine a person discovers a hidden part of the island with an abundant supply of similar stones. They start bringing these new stones into the economy, using them to buy goods and services. Initially, they have an advantage because they have more stones than anyone else. However, as they continue to introduce more and more stones into the system, the other islanders start to realise that stones are no longer scarce and as a result, the value of each stone diminishes. Now what used to cost one stone might now cost five, 40 or even 100! So for all those hard workers who had saved their stones, all of their savings would suddenly buy much less than before. The person who found the new supply of stones altered the economy's balance, disadvantaged those who had been saving and trading based on the original scarcity of the stones.
If you know, you know. If not, read the Bitcoin Standard by Saifedean Ammous
This scenario is what is happening now when money is created from nothing, leading to rising prices and the erosion of the purchasing power of people's savings and wages. It's a theft of our time. As prices escalate, wages always fail to keep pace, this makes people poorer. While the value of scarce assets increases, those that do choose to store their wealth in these assets still lose a significant portion to another theft: capital gains tax.
Hyperinflation in Germany 1923
German children had a lot of fun with cash! Here are a few kids building a pyramid with banknotes.
It got so bad that it was easier to round up the cash and burn it in bulk and use it to keep warm.
As hyperinflation spun out of control, the government responded by just printing larger denominations of cash.
This has happened in many countries throughout the world, to list a few: Hungary in the 1940s, Yugoslavia in the 1990s, Argentina in the 1980s, Venezuela from the 2010s to the present, Greece in the 1940s, Nicaragua in the 1980s, Zaire (Democratic Republic of the Congo) in the 1990s, and Bolivia in the 1980s. Government funded bureaucrats will present convoluted explanations of these “phenomena” that come as a consequence of central banking, making it harder to grasp. However, if you look at the bigger picture, the situation becomes extremely clear. This fraudulent monetary system is specifically designed to exploit and rob us of our time and efforts, benefiting the wealthy elite and cantillionaires.
Austrian economics
Austrian economics teaches that free markets, individual choice, and minimal state intervention foster a healthy society and economy (what a radical thought!). It criticises government interventions for causing more economic problems than it solves and pushes for a scarce hard form of deflationary money such as gold (Bitcoin is better). Austrian economics favour a system where economic and individual freedom and choices take priority, teaching that this approach leads to a more sustainable and stable economy.
Austrian economics has often failed due to monetary manipulation. During the Gold Standard, governments turned towards fiat paper money because gold presented issues as it was challenging to secure and transport for international trade. This shift ultimately led banks to print more paper money than they had in gold reserves, decoupling the currency from the gold standard. This provided a significant advantage. It allowed the banking and governmental establishment to infinitely fund various endeavors (WAR!) without having to increase direct taxation on the populace.
In1933 Gold was made illegal for private ownership. Under Executive Order 6102, which made gold ownership both in coins and in bars illegal for all Americans and punishable by up to ten years in prison! Anyone caught with gold would also have to pay a fine of twice the amount of gold that was not turned over to the Federal Reserve in exchange for paper money. (Ruling by fear)
The government ran into trouble backing the currency with gold in the late 1960s with the Vietnam war and other programs and this was the rationale for destroying the system on August 15, 1971 when President Richard Nixon announced that the U.S. would no longer exchange gold for U.S. currency.
https://wtfhappenedin1971.com/
The prohibition against owning gold wasn't uplifted until 1974 But gold was never reestablished as a back up to government fiat. Afterall, FIAT WAS FREE and easy to make!!
Free Market
In a truly free market, where people are not compelled by their governments by coercion, they will naturally gravitate towards the most widely accepted and sound form of money that displays the best functioning characteristics (why dose BTC hold value). The existence of multiple currencies today is largely due to the lack of freedom in choosing money. Communities/countries that opt for a weaker form of currency that is easily produced will see their wealth dwindle away, those who choose a hard currency will protect their wealth and experience growth.
Bitcoin surpasses all other forms of currency globally. The reason is simple. Bitcoin is immeasurably better at solving all the problems of money from the past. Bitcoin stands out as the only option for those seeking a currency that is impervious to government shutdowns and immune to savings erosion by centralised bank money printing and governmental policies.
Bitcoin Seperates money from State
Bitcoin is comparable to groundbreaking inventions like the internet, email, telecommunications, or electricity. However, I would argue that it is exponentially more impactful than all of these. This is because bitcoin enables the honest transfer and projection of value instantly across time and space, from one person to another globally. It easily circumnavigates corrupt and broken traditional financial systems. Consequently, Bitcoin has the potential to evolve the very system that nurtures these groundbreaking inventions, supercharging it to become 1000 times more efficient. Not to mention the psychological effects that sound money has on a populace, steering people toward a mindset focused on a positive future, as opposed to the scarcity based, nihilistic mindset prevalent in much of the Western world today.
Bitcoin is far more than just a savings vehicle or a "number go up" technology designed to make you rich, even though it has the capability to do so. Bitcoin is a tool to emancipate oneself from mental and physical slavery. You are not too late. Where gold failed for 5000 years, Bitcoin will, and already is succeeding. Bitcoin is not a revolution of money but rather, an evolution of money. The currency humanity has been waiting for, ready to release us from financial bondage.
Once you have the knowledge it's up to you to act accordingly.
