With the launch of the bitcoin network 12 years ago a new era of financial technology started. But what makes Bitcoin so special?
First, we need to understand the phenomenon of money. The current object, which we call money, in the form of banknotes issued and declared under the law.
Cashless money doesn't belong to us. Access to them can be blocked at any time. The money in the bank account can be confiscated or frozen.
But the fact that your money is not yours is the lesser of the troubles. The bigger problem is that even if you don't trust banks and keep your money in cash in a glass jar, it still won't save your savings, since the government can print more money at any time, and then inflation will devalue your savings. The banknotes that you consider to be your own are depreciated every second, since you do not decide how many more of these banknotes will be printed in the next second. I'm not even talking about the fact that a monetary reform can be announced, canceling all old banknotes and changing them to new ones. Then there is a chance to get useless paper for the furnace instead of something that previously cost money.
If we go further into economic theory, then we see that gold is considered absolutely correct money from a canonical point of view.
There are two reasons for this. Gold does not deteriorate, does not rust, and can sit and retain its value for hundreds of years. And the second reason is that gold cannot be printed like paper money, and its reserves on earth are limited. Gold cannot be abolished by law, like printed banknotes, it can only be taken away by force, coming to your house. So, to get the ideal money, we need to have a clear and limited supply of them, which is associated with the impossibility of uncontrolled printing of new money by any of the participants in the monetary system, and it is necessary to create a system in which it is impossible to withdraw money from you in any way without your will.
The third condition is freedom of handling money. You and only you decide who, when and how much money to send.
And the fourth quality of ideal money is that it does not deteriorate over time and can be stored for 10, 100, or 1000 years in an unchanged form. Everything else is secondary and less significant.
Let's go through all four points of our definition of ideal money and check if Bitcoin is actually the case:
Limited supply. The number of bitcoins is strictly limited to 21 million coins, and no force other than the one hundred percent agreement of several thousand holders of nodes or nodes of the bitcoin network can change this.
The impossibility of blocking money by a third party. If you want to spend your bitcoins, then you will spend them, and no external force can prevent this, except for the lack of access to the Internet.
There are no restrictions on the amount and recipients of transfers. You can send any amount to any recipient.
Safety over time. Since bitcoin has no physical form, it cannot deteriorate. It will exist as long as computers and the global Internet exist.
In order to use bitcoin, you need access to the global internet. In a sense, bitcoin, as a network of several thousand nodes scattered around the world, is the Internet. Bitcoin can be destroyed only by completely disconnecting the Internet, there is no other way.
The most interesting question is what is the fair value of bitcoin? In my opinion, you can put an equal sign between bitcoin and the Internet. What is the fair value or how much can the usefulness of the Internet for humanity be estimated? In a pandemic, this cost has increased many times, which is reflected in the rise in the price of bitcoin. Why is the bitcoin rate growing? Perhaps it is not growing, it is fiat government money that is depreciating. The question is what to take as a starting point.
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