In this article, I will start with the background of BTC's birth. The article will touch upon the evolution of currency and its essence, and will sort out the context from macro to micro. This article does not constitute investment advice. If you have different opinions and analysis, please leave a message to discuss. #BTC
The creation of Bitcoin can be traced back to the 2008 global financial crisis, when Congress and new President Obama issued hundreds of millions of dollars to jump-start the economy, but the Federal Reserve's financial system was broken, and they promoted employment and controlled inflation by raising and lowering short-term interest rates.
In 2008, the Federal Reserve had adjusted the deposit rate to zero. The large-scale interest rate cut did not stimulate the economy. Then it implemented quantitative easing (QE), in which the Federal Reserve injected funds into the financial system to lower long-term interest rates, which were used to increase loan rates, support securities and other banking institutions and government debts, hoping to generate more lending in the entire economy.
Money was created out of thin air, the Federal Reserve's printing machine had no limits, and the financial world often ran counter to the real world. During this period, people's trust in the traditional financial system was severely shaken, and many people began to doubt the monetary policies of central banks and governments.
At the same time, in this context, Satoshi Nakamoto expressed his distrust of traditional currencies and hoped for a form of currency that was not controlled by the government and central bank.
In response to the 2008 financial crisis, he published a paper titled "Bitcoin: A Peer-to-Peer Electronic Cash System" in 2008, proposing the concept and technical principles of Bitcoin.
The total supply of Bitcoin is limited to less than 21 million, which makes it scarce and resistant to inflation. In addition, Bitcoin transactions are anonymous, which provides users with higher privacy protection.
Bitcoin was created to solve the trust problems existing in the traditional financial system and to provide a decentralized, secure, fast and low-cost form of digital currency. This decentralized digital currency system enables people to conduct secure, fast and low-cost transactions without intermediaries. It uses blockchain technology to achieve this goal. Blockchain is a distributed ledger that records the history of all Bitcoin transactions and ensures the reliability and security of transactions through a consensus algorithm.
You can convert Bitcoin into cash by entering the mnemonic phrase in any country. Against the backdrop of geopolitical turmoil, this form of currency is similar to gold, paper money, and silver, and is easier to carry and preserve.
The evolution of human currency is a long historical process that has gone through many stages and forms of change;
First, the barter stage: In the early days of human society, people used physical objects for exchange, that is, barter. This method of exchange was based on the needs of both parties and the value of the items, but it was inconvenient and inflexible.
Second; Primitive Currency Stage: With the development of society, people began to use some specific items as currency, such as shells, animal teeth, stone axes, etc. These items have the characteristics of universal acceptance and exchange and become a widely circulated medium.
Third; Metal Currency Stage: With the advancement of metallurgical technology, metal currency began to appear. The earliest metal currency was coins made of precious metals such as copper and silver, which had higher value and portability.
Fourth; Paper money stage: With the development of the economy and the expansion of trade, paper money gradually emerged as a portable, easy-to-carry and exchange form of currency. The earliest paper money can be traced back to the Song Dynasty in China.
Fifth; Electronic currency stage: With the rapid development of information technology, electronic currency has become an emerging form of currency. Electronic currency is a digital currency that is traded and settled through electronic payment systems, such as credit cards, mobile payments, and cryptocurrencies (Bitcoin, etc.).
Sixth; Virtual currency stage: Virtual currency refers to the digital currency generated and circulated in the virtual world, such as game coins, virtual goods, etc. Virtual currency has certain value and exchange functions in the virtual economy.
So we can clearly see that some of the main stages and characteristics of the evolution of human currency are that with the continuous advancement of science and technology and society, the form of currency may continue to develop and evolve, and it will not be transferred by human will, and it cannot be countered by policies and manpower. Things are not stable and fixed. When you see this, you must continue to open your mind and continue to dig deep into the relationship between currency individuals and the country.
Whether it was the trillion dollars of money printing in the United States in 2008 or the 4 trillion dollars of economic stimulus in China in 2008, both of them made the money in the market become more. When there is more money, it will cause inflation. In essence, the money in your hands will depreciate, and personal wealth will be compressed by the state. It is commonly understood as another form of wealth exploitation, which is another form of taxation in disguise. We need to recognize a truth: excessive money issuance is eternal, inflation is eternal, and the depreciation of the money in your hands is also eternal.
The world revolves around the economy, and the economy revolves around resources and power. Resources include scarce gold, silver, copper mines, as well as land and food. Power revolves around possession, struggle and deprivation. Looking back at Western and Eastern history, history is advanced in the narrative of war, which is essentially for power and resources. Currency is another form of resource. If you want to gain more wealth, you have to start a war. The current Russia, Ukraine, Palestine and Israel are essentially for power and resources.
Next, we understand Bitcoin from the perspective of preventing the deprivation of personal wealth;
Too many people have used extraordinary means to acquire wealth. Under national laws, they are subject to various supervisions. For example, if the income is illegal, the gold will be confiscated, and the house will also be confiscated. Bitcoin has a very good attribute. It is anonymous. You can withdraw it anywhere in the world with the mnemonic. No one can confiscate your Bitcoin assets. As an asset inherited by the rich, Bitcoin has become a very good hidden asset and inheritance asset. When these OLD MONY configure family assets, they not only configure gold, but also some Bitcoin. This is Bitcoin. The real reason why the US Federal Reserve recently approved ETFs.
Why is it rising? It used to cost hundreds of bitcoins to buy a pizza, but now it costs about 40,000 US dollars. In fact, it has no value. Its value lies in protecting personal assets and private wealth. Old monies need it. The scarcity of bitcoins has caused an imbalance between supply and demand, and the price continues to rise.
In "The Sovereign Individual", it is said that in a civilized world, the rich work for the poor because the rich have to pay a lot of taxes to feed the poor. So the rich will organize themselves in another way in the future to establish a virtual country called the lord. This concept of a virtual country means that we don't use legal currency for transactions. If we use virtual currency for transactions, you can't get my money. These rich people will become richer. This is a very important point about cryptocurrency.
The book “Sovereign Individual” talks about another important point, that is, robbery has always been non-violent in human society? That’s why cryptocurrency was born. Cryptocurrency has been around for more than ten years, and it will bring more and more changes to this society.
The Federal Reserve did not accept it at first and kept suppressing it, but the more it suppressed it, the more Bitcoin rose.
Recent news said that B An’s boss would not let him go even after paying more than 4 billion US dollars. The real reason is that Americans want to gain a dominant position in the entire world of Bitcoin, and Bitcoin will continue to grow.
It will become a very important part of the economy in the future. This year in Hong Kong, China has supported some explorations in cryptocurrencies. It is part of capitalism and its purpose is to protect private property.
Before his death, Hayek wrote a book called "Denationalization of Money". Hayek believed that the state should not be a unit that issues currency. Let good money compete, and these money will not dare to cause inflation, making money more efficient. Instead of letting the state monopolize, he believed that state monopoly would inevitably lead to inflation. He had predicted this in the 1970s.
Historical experience seems to confirm the belief that only gold can provide a currency with stable value and all paper currencies will depreciate.
The world will move from barbarism to civilization, and checks and balances are needed on the road to civilization. The form of currency is crucial.
