Why We Need Bitcoin

Updated on March 1, 2019
Tommy Limpitlaw profile image

I've been interested in politics and economics since a long time back and I have known about and researched Bitcoin for over two years.

Sound Money vs Debt money
Sound Money vs Debt money | Source

Control the Supply of Money, Control the People

Throughout history, governments have taken liberties with the very people they’re supposed to represent. Whether it’s to fund wars, bail banks, or line their own pockets, control of the money supply has armed governments with the power to do whatever they like. Whether it’s quantitative easing or tightening, controlling the supply of money allows them to exert their control of the people.

With cashless societies now becoming a reality, we're at a critical stage in monetary history. Paper and metal money will soon be a thing of the past and if things remain as they are, governments will have even more control over how we live our lives. When it comes to money centralised systems are dangerously powerful. It is no secret that they already control and manipulate society. If our financial systems become completely digital however, they will have the power to scrutinise every single aspect of our financial lives, and have the means to seize or even delete our wealth at will.

Look at China, for example. The new social credit system there has society policing itself. If a Chinese citizen behaves in a way the government deems unfit, such as criticising any government policy or even crossing the road in the wrong place, their social scores are automatically adjusted. This affects their social standing and also whether they can get access to local goods and services, such as a loan, a job or even a passport. Sounds awful? Imagine if they get absolute control of the money.

A Brief Look Through History

You would think governments would have learned from their predecessors. However, almost every government in history that has introduced a printing press, fiat system has fallen victim to hyperinflation and the collapse of its economy.

Coin Clipping led to Hyperinflation in Roman Times
Coin Clipping led to Hyperinflation in Roman Times | Source

Look at the Roman Republic, for example. After the invention of advanced infrastructure like aqueducts and highways Rome became world leaders in technological innovation and enjoyed a period of prosperity like no other civilisation before them. However, as their quest for more societal control and world dominance became more expensive, they sought a new method for upping their cashflow.

Easy: they just diluted the bronze coins with cheaper metals and expected their money to retain its worth. However, this form of quantitative easing eventually led to hyperinflation, and the Republic ultimately falling into the hands of a dictatorship.

Julius Caesar introduced gold and silver coinage, but after the Empire’s growth began to slow, the rulers introduced a new system of taxation: coin clipping. This involved snipping a bit of precious metal from each coin and then smelting it back into the creation of newer coins, mixed with cheaper metals of course. This didn’t end well, either. After a procession of catastrophic economic crashes, the Roman Empire finally fell.

The Rise and Fall of the Gold Standard

The European Empires of the mid to late twentieth century met pretty much the same end. The British led the way and they introduced the ‘gold standard’ in 1717. Instead of issuing gold coins, the government decided to print paper money, which was backed by gold stored in vaults. This saw prosperity and confidence in Britain like never before, and their Empire grew from strength to strength.

Other European countries followed suit, and in their quest for world dominance, they began to print more notes than the gold they had stored. After a couple more centuries of printing as much as they needed without taking their gold standard into consideration, they finally ran out of luck. During, the First World War, the European nations had printed so much money into circulation, unless they hyperinflated their currencies, it would be impossible for them to go back to the gold standard.

Gold was the Standard Until 1971
Gold was the Standard Until 1971 | Source

This ultimately led to America becoming the global superpower. It took a couple of decades to transition but just after World War Two it was agreed at Bretton Woods that all currencies would be valued against the world’s new reserve-currency: the US Dollar. The idea was that the dollar would be tied to the gold the government had in its vault, and that all participating countries were required to send all their gold reserves to America.

It didn’t work out. The US government’s costly quest for control of its population and world dominance brought inflation to the dollar against its gold and so they began to print more money than they had gold and all currencies began to lose value. Sound familiar?

Welcome the Petrodollar

With governments around the world realising their currencies were decomposing against the price of gold, they started requesting their gold back from the US vaults. Then, feeling the pressure, in 1971, President Nixon made the astonishing announcement that America was temporarily taking the US Dollar off the gold standard and tying it solely to oil, paving the way for what is known as the petrodollar.

The world was in uproar and the markets were supposed to crumble, but the opposite happened. Since then America and many other countries have had more prosperity than ever before, but the reality is that it has all been paid for by the printing press at the central banks. They have printed their way in and out of every crisis since. The result: the dollar has fallen about 80% in value since 1971.

'The Printing Press' has been Abused by All Governments
'The Printing Press' has been Abused by All Governments | Source

In the 1980s, America was the richest country with the biggest bank balance in the history of the world. Since then, however, with its government’s quest for power and greed it has become the most indebted nation in the history of the world. Today, America’s debt stands at over $22 Trillion. In numbers that looks like $22,000,000,000,000. And the truth is that it can never be paid off. Actually, it isn’t even meant to be paid off.

Smaller economies like Zimbabwe, Venezuela and Argentina have started hyperinflating already. It’s only a matter of time before bigger economies follow suit and the dominoes will start to fall. Already, governments are preparing for this and trying to create the next type of money, whatever that may be. The question must be asked, however: How can we maintain trust in our governments when they repeat the same catastrophic failures over and over?

Time for a Change: Time for Bitcoin

We’ve always had to rely on governments and banks to issue money, but now, arguably at the most critical stage in monetary history, we have another option: Bitcoin. It’s a new form of money that no central authority controls. It doesn’t need to be trusted because the code and maths secure any transaction on the network. It is censorship resistant and is cryptographically secured on thousands of participating computers around the world.

Bitcoin was born on 3rd January 2009 in the wake of the 2008 economic crash and it is the first truly global, decntralised currency. It first came to prominence during the European debt crisis in 2013/14. Coincidence? I think not. And once people start realising their government-backed paper isn't worth the paper it's printed on, like always they will turn to the next best thing. It’s already happening in places where the financial system is broken. In these countries, people are fed up of their currencies collapsing and the uptake in the usage of Bitcoin and other cryptocurrencies has risen dramatically.

This will only continue and as more people begin to move their wealth into Bitcoin, it will slowly but surely take money out of the fiat system. And as each economy hyperinflates, it will inevitably lead to people choosing to adopt the next best thing: A ‘Bitcoin Standard’.

Bitcoin is the Future of Money
Bitcoin is the Future of Money | Source

Because there is a fixed supply of 21 million bitcoins, the scarcity of it will make it improbable for any centralised entity to inflate their currency against it. It would mean governments wouldn’t be able to print their way through any war, there will be no government-controlled inflation, and because the ledger is public, it would expose corrupt politicians.

Can't Governments Switch It Off?

They could turn the electricity or even the Internet off, but what would that do to the world economy? Besides, if they did turn it off, after turning it back on, it would simply start working from the exact block and transaction it was stopped at.

Won't Governments Make It Illegal?

Of course, they could. But, let’s say the US outlaws Bitcoin but Switzerland doesn’t. Where do you think all that innovation is going to move to? Innovation stimulates wealth creation and that is what governments crave most. If they were to outlaw Bitcoin, they would be handing wealth to a rival state.

Cashless societies are on their way, so it's imperative that the money supply doesn't come from any one centralised entity. Bitcoin is in its infancy, it isn’t ready for anything like a reserve currency status, and people aren't ready for the Bitcoin Standard, yet. The technology is slow, clunky and rather awkward for the average person. However, as each economy goes the way of their ancestors and the technology evolves, Bitcoin will absorb the failing fiat currencies, and society will naturally upload itself to Bitcoin.



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