Bitcoin: the new paradigm of the economy

in LeoFinance3 years ago (edited)

When we live in a world in which the economy has been characterized for centuries by the ignorance of most people of the economic factors that govern their lives and the dominance of a few with privileges who are those who define the laws, it is easy understand why cryptocurrencies have emerged and why Bitcoin has emerged, and it is easy to understand why cryptocurrencies have been such a disruptive thing.


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The reality of Fiat money

Since the emergence of Fiat money in ancient times, human beings learned that they could do without ordinary barter, and that now they could use money (coins) to obtain goods and services.

At that time money did not need something to back it up, because the coins were initially made of gold, later, and for various reasons, the coins were minted of silver, bronze, copper, etc.

The next evolutionary step of fiat money was when it began to be issued in the form of banknotes, simply now the money was paper issued by governments, and backed by its value in gold.

Then money was now paper, paper that constituted debt, but debt backed by gold, which the owner of the note could claim anytime he wanted.

It could be said that money did not evolve further until the day and time when, centuries later, the US government (chaired by Franklin D. Roosevelt) decided that people should not be possessors of gold, and therefore, decreed through laws that all of those who had gold should sell it to the government, and that there would no longer be so many facilities to obtain the gold value of the banknotes.


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This can be understood as the beginning of the abandonment of the gold standard; But truly, the gold standard was abandoned by the United States in the 70s of the 20th century, when President Richard Nixon, in order to finance the Vietnam War, decided that from then on, dollars would continue to represent debt, but never more the dollars would be backed in the value of gold.

Therefore, since then, no one can claim gold from the US in exchange for dollars.

The Trillion Dollar Question: What's Backing the US Dollar?

The abandonment of the pattern by the United States in the 1970s not only determined the future of the United States, but also the world; because from then on all the countries of the world copied the example and did exactly the same as the United States, that is, they all abandoned the gold standard, until there was not a single country that kept the standard.

So, it is logical to ask what supports the value of the US dollar? And the answer is that it is assumed that it is the goods and services of the strongest economy in the world that give value to the dollar, and that is why the US continues to be the strongest economy in the world; But basically, deep down, the reality is that the value of the US dollar is backed by the trust of the people.


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The weakness of the dollar: The money paradigm begins to change

The fact is that all the aforementioned led to a series of circumstances that made the dollar (and all money that copied its model) began to gradually lose value.

This happened because having no backing in gold, or some other finite and scarce mineral, then governments realized that they could issue money left and right, and this was definitely what they started to do. By issuing money uncontrollably, inflation naturally began to rise, and the purchasing power of citizens began to deteriorate.

But this reality is simply too deep for most people to understand. Most people do not understand, for example, that a 1 US dollar is currently worth much less than 1 US dollar in 1950. If you do not understand, I explain, nominally 1 dollar is 1 dollar, both in 1950, and in 2021, But when I say that $ 1 is worth much less today than it was in 1950, I mean its purchasing power. In 1950, if you had $ 1, you could buy many more things than you can buy with $ 1 today.

So the purchasing power of someone with $ 1 in 1950 was greater than that of someone with $ 1 today.

And in 2009, Bitcoin was born: A paradigm shift

In the midst of these circumstances, banks and interest rates put pressure on people, and governments kept issuing more and more money with no backing, so fiat money had become the biggest bubble that could exist.

This is how in 2009 Bitcoin was born, by the hand of Satoshi Nakamoto, who surely knowing what he was inventing, and knowing how disruptive it was, and the number of enemies he would have for creating something so revolutionary, preferred to remain anonymous , in which it still remains.

The fact is that Satoshi Nakamoto invented Bitcoin, and the world would change forever, because now there would be a form of digital money that governments could not issue or control at will, a means of payment that would allow transparent and secure transactions for goods and services.


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Due to its finite nature, Bitcoin would be (as in fact it is) free of inflation, and all operations are recorded in a ledger called blockchain, which is a distributed and decentralized database in which transactions are recorded in a manner encoded and thoroughly verified minute by minute.

Bitcoin would mark the path to be followed by any project that wanted to replicate its model, and since then thousands of cryptocurrencies (known as altcoins) have emerged and this has given rise to the crypto universe. In fact, day after day many new cryptocurrencies emerge that widen the known crypto universe and make it richer and more complete.

The Bitcoin model makes the purchasing power of the people who use it protected, but not by the governments of their countries, but by the very system that governs Bitcoin.

Governments are not pleased by any means of payment that they cannot control or issue

And with Bitcoin they have tried and continue to try to control it, there are governments that issue laws to regulate it, but there are also other governments that have prohibited the use of Bitcoin.

But at the end of the day, it is the people who decide whether or not to adopt Bitcoin, as well as any altcoin or means of payment. Corrupt rulers and politicians cannot, no matter how much they want, to prohibit or limit a change that is bigger than themselves, especially because it is a reality and innovation that they do not understand at all.


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Bitcoin is a paradigm shift at so many levels that, even we whose still those who are adept at cryptocurrencies, even those of us who believe in Bitcoin and understand it at a general and specific level, we are learning and discovering its potential every day more, and that is truly the change. of paradigm that means Bitcoin!!

Please, comment your opinions on the subject discussed. See you!!

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BTC has come to stay.I don't think government will stop BTC from existing,is people that have right to stop using it when they see the disadvantage but we have checked that there's no different between paper currency and digital currency, that's while we decided to go on digital currency that appreciate with time, the advantage is more than the disadvantages.
While some government don't want to regularise it because they are looking for a means people will be paying them tax from it but is not possible for them, that's while they keep criticizing it.
BTC has come to stay,they should better adjust to leave with it because is not going anywhere.
Thank for the update

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