Good day everyone, let's talk about Bitcoin again on these occasions. In the banking crisis in America, many banks collapsed due to the continuous increase in interest rates. Inflation is still high, and this is also the situation why Bitcoin was invented to prevent this from happening.
And it's just sad that most people don't know this, because they only look at Bitcoin as a speculative asset that increases in price and many buy when it goes down. But they don't understand the purpose. So in this conversation, we will find out why BITCOIN was invented.
Let's start, in 2008 the world experienced a financial crisis and it started in America. And because the dollar is everyone's reserve currency, our financial system is interconnected. So when there was a crisis in America, everyone was affected. And one of the reasons for this is the housing market bubble where housing prices have increased. Due to the loss of the bank's lending practices. Aside from that, banks issuing subprime mortgages and investing in complex and in financial instruments known as derivatives are also risky practices. So when the banks started to collapse then it created a ripple effect throughout the financial system. This was followed by the collapse of the stock market which led to a global recession and many people lost their jobs and homes. Here many people saw the vulnerabilities of the financial system that is built on trust and it can happen again in the future, which is what America is experiencing now. This is also the time that Bitcoin was created by an unknown individual group or person with the pseudonym "Satoshi Nakamoto". And its whitepaper was published the same year and the very first transaction took place in January 2009.
Bitcoin was created with a vision, that the people of the world have control over their money and their financial lifestyle. With Bitcoin, there are no central authorities or governments that control the money supply. The supply of Bitcoin is fixed and every bitcoin that enters circulation takes place in a process called
BITCOIN MINING.
The main problem that Bitcoin wants to solve here is the
"Issue of Trust" our current financial system now depends only on TRUST. Since gold no longer backs up the dollar, our monetary policy is too reliant on centralized authority like a central bank. This is the one that has control over the money supply and set interest rate and this is where the problem arises. Like Inflation, this is the event that increases the price in the market even services, and the purchasing power of our money weakens. And if we compare with the past times, the price was cheaper before. One of the main reasons inflation occurs is because there is too much money in the economy. When people have a lot of money there is more demand for goods and services, which causes the price to go up.
When the interest rate is low or almost non-existent, it is easier for people to borrow money from banks, businessmen, entrepreneurs, and many others. When people have a lot of money, they want to spend money, spending activity will increase, and the demand for goods and services will increase, causing the price of goods to increase. And that's the problem because prices are increasing, but the value of people's savings is decreasing, and wages are not increasing, so the purchasing power of our money is weakening when the supply of our money is increasing. Because of this, we will not want it to end up in
"Hyper Inflation" which has already happened in other countries. So when the FED notices that inflation is rising, they have to raise the interest rate, so that the demand for people's spending decreases, and they can't simply borrow money from the bank because the interest rate is high. When no one spends much, there is no demand for goods then the price will go down.
Another problem with monetary policies is asset bubbles, when the interest rate is low it can cause more speculations and asset bubbles, the price of real estate or stocks becomes over-inflated and let's include crypto and when the bubble bursts those who bought the market hype are the ones who will lose.
Another problem with the current monetary system is the DEBT CRISIS, when the interest rate is low, individuals or businesses can take on debt, which will cause a debt crisis. Because when the borrowers are unable to pay their loans it could lead to widespread defaults and bankruptcy which in turn will lead to a financial crisis.
So in this system, the control is in the central entity, just one mistake in controlling the decrease and increase of interest rate disaster is the result. If you lower the interest rate you will go to Inflation, if you increase the interest rate you will go to Recession. So there needs to be a balance, which is never done because inflation continues to rise and the time of the financial crisis is still coming.
And Bitcoin fixed this problem because it only has a fixed supply so there is no inflation, it cannot be manipulated by the central government. So many say that Bitcoin is money for people. But they don't see it because they only think of Bitcoin as a speculative asset or risky type of investment. Bitcoin is more than just a currency, it can revolutionize the entire monetary system.
Because with Bitcoin we can take back control of our financial life and it creates a more fair and equitable world. And it is secure to financial institutions because it uses a decentralized ledger called BLOCKCHAIN. A public ledger in that we can see all bitcoin transactions from the very beginning. In traditional finance, we cannot see that perhaps we can see something but this is the only thing they want us to see because they are the ones who have control over it. BTC is constantly being updated and verified by the network of computers all over the world, trustless and permissionless. The Fiat currency is considered an experiment since the 1970s and has not been tampered with by anything.
For thousands of years people are using gold as a form of money, it is a primary form of currency, even during ancient civilizations, such as Egypt and Mesopotamia gold and silver are considered money and it has been proven over time. Gold, because the government has no control there, cannot produce their gold because it still needs to be mined. Unlike Fiat currency, they can print trillions whenever they want it. with Gold, they can't do that, and the same with Bitcoin.
So if the
FIAT currency is a failed experiment why don't we go back to the Gold standard? After all, this is the money we have been using for thousands of years. That means, it's been proven over time, well those in authority will not allow that. Because Fiat currency has another characteristic that Bitcoin and Gold do not have, a system of control. Remember money is power, whoever controls the money controls the world. Gold is a freedom money same as Bitcoin. BTC is only because its an internet money, it is suitable for the digital age, and as long as we have the internet bitcoin will tribe. Cryptocurrency and Bitcoin can be used as alternative money, but the authorities will not allow cryptocurrency to dominate. That's why they created their type of cryptocurrency the
CBDC. The system of control is still the same monetary system, which means that what is happening to the Fiat currency today is the same as the CBDC. Because the system that will be followed is the same, the only difference is that they have upgraded the technology, which means it will still result in the problem that our village's financial system is facing.
[1]
What is Inflation?[2]
what is hyperinflation?[3]
What is Bitcoin?[4]
what is Blockchain?[5]
when does bitcoin start?[6]
what is Fiat currency?[7]
what is CBDC?
