Let’s be genuine!
Do you understand what Blockchain, or Cryptocurrencies, or Bitcoin is?
I’m not belittling your intelligence-even the professionals hardly understand these concepts. But what you do understand is that real money-and bitcoin, including other cryptos, is undoubtedly worth a lot of it.
For example, if you exchanged real dollars for some of this virtual cash just last year, that amount of dollars would be worth almost ten times as many real dollars now.
So, What Don’t You Understand?
Bitcoin is just figures in cyberspace, a mirage, and flimsy as beer bubbles. Bitcoin isn’t supported by anything instead of trusting the traders who purchase it and the experienced traders who purchase it from less-experienced traders.
And you know what?
All this is true.
What may be simpler to understand is that United States dollars also consist primarily of figures out there in cyberspace. They’re stored in coins or papers at times, but while the coins and papers are materials, the dollars they portray aren’t.
U.S dollars aren’t supported by anything other than the trust of the users who adopt it as payment and other users who in turn accept it as payment from them. The primary distinction is that the usage of dollars is widespread and more fiercely believed at the moment.
Surprisingly, almost all of the current U.S dollars; approximately 90% are purely abstract-they only exist in virtual nature.
“Just about 10% of the U.S money supply roughly $1.5 trillion of approximately $13.7 trillion total is available in the nature of coins and paper cash,” James Surowiecki said in 2012, “nothing is hindering the banking system from printing more dollars when triggered by circumstances.”
Out of the $13.7 trillion in the M2 cash supply (classification of money supply that includes checking deposits, cash, and easily convertible near money) as of October 2017, $13.5 trillion was printed after 1959-that’s a 50 times expansion by M2.
The U.S money is commonly known as “fiat” currency. Fiat means “let there be” in Latin.
For example, let there be light, fiat lux; hence fiat denarii, let there be rubles, dollars, bolivars, and lire. The attempt by national leaders to print money has traditionally been practically compelling. One consequence of this wantonness is inflation. The buying power of $1 in 1959 is currently as low as 12 cents.
So, What Happens To Bitcoin After 2140?
The Bitcoin blockchain was designed, in part, to solve this traditional pitfall. After the 21 millionth Bitcoin is mined in 2140, the system will seize to produce.
Thieves and quacks will forever attempt to experiment with numerous systems to control and account for any monetary platform and any store of value. All valuable stores are targets. Using any exchange system via foul or fair means- fortunes can or will either be lost or made. And yet, surprising as it may appear, enough individuals act in good faith to block secure monetary structures from tragic downfall.
There’re slight radical distinctions between U.S dollars and cryptocurrencies.
For instance, the transactions performed in the bitcoin platform are recorded in an unfalsifiable ledger that does not depend on the governments or banks’ authority but on the power of a public computer system that any individual is free to join. Moreover, the supply of bitcoin is fundamentally fixed. The anonymity of cryptocurrency isn’t, perhaps, quite as bulletproof as the anonymity of unmarked cash.
On the other hand, while many people work so hard to make money, grow it, and keep it, the only real thing concerning it is its symbolic power, which is indeed impressive, considered from a particular angle.
Our collective understanding of the value of that printed piece of paper is all that counts. And that common understanding lacks fixed meaning. It’s in eternal flux. The “value” of all stores of exchange, all money, is abstract and unstable, even in the presence of all attempts to protect it mainly to control its flow by adjusting interests’ rates. Cash is only changing system of agreements created in and on behalf of the hive, and that’s all it has ever been- a weak thread in a collection of human trust.
All the hitting debates against cryptos like bitcoin, and the blockchain technology that secure them, often fail to accept this reality — the fragile and provisional nature of the usual dollar into account.
Cryptos can’t be understood even by a small fraction by any individual who imagines money is real, solid, or supported anything apart from human trust in organizations whose stability is invariably uncertain. U.S dollar is backed by “the undisputable trust and credit of the U.S.” But what exactly does this entail?
It entails that if you request the U.S Treasury to redeem for you one dollar, they’ll offer you one dollar. Or probably four quarters if you so wish.
When the Cypriot Government Sought To Clean the Country’s Banking Crisis
The unfortunate reality is that monetary calamity in unstable governments such as Spain, Venezuela, and Greece has already taken part in numerous spikes in the crypto ecosystem.
When the Cypriot government opts to settle the nation’s 2013 banking menace by subjecting its population’s bank deposits to almost a 7% reduction, bitcoin’s price boomed. Since that point, numerous southern European holders of euros with debt-ridden government suppose that bitcoin might represent a more reliable home for their cash than Cypriot banks could offer.
Therefore, Spanish bank depositors must question: Would their banks be next?
The existing financial organizations are genuinely faulty and permanently inclined to corruption, and this was long before bitcoin becoming a goldmine in its peculiar investor’s eye. Satoshi Nakamoto committed beginning it plain as day in what is considered genesis block that launch bitcoin rolling.
Bitcoin was a political influence project from the initial, a new system explicitly designed to offer a tamperproof digital exchange option. A better opportunity to present banking systems might be situated.
The Theoretical Tamperproof
The theory behind all cryptos such as Bitcoin is that the record generated by a distributed computer network can be designed tamperproof, thus theoretically assuring currency’s stability much better than the government. Besides some substantial difficulties, the blockchain platform on which bitcoin is designed has partially confirmed this theory. Surprisingly, since 2019, more bitcoins have gone missing, but the accounting system on which bitcoin is situated has so far remained incorruptible and stable.
The numerous ripoffs and thefts in bitcoin’s early days demonstrate how greed and corrupt humans are. There is no doubt that the anticipation of immediate wealth can push people insane. Unfortunately, the tendency of greed to generate crime and insanity didn’t trigger the value of gold to evaporate.
The actual caution here is that the bitcoin ledger’s integrity succeeded, not only due to the system’s distribution or because of its brilliant cryptographic protection, but due to the good sense and good faith of personal developers who conducted the project via the infancy stage.
Bitcoin is successful today due to the relentless nature of the sangfroid of Gavin Andresen. Without it, the project might have easily collapsed. Even today, the numerous forks and developing pains still tormenting the bitcoin network are issuing a stress test type.
On the contrary, crypto investors ran the danger of getting ignored early on due to hurdles in designing secure storage and building systems for earning ordinary cash safely from cryptocurrency. Due to issues such as the crime of approximately 800,000 bitcoins, the entire system of Mt. Gox exchange got somehow a poor rap.
As a result, the public was convinced that bitcoin was, to some extent, hacked when, in a real sense, it was Mt. Gox exchange that got hacked. Just like Bangladesh’s Central Bank was short of a whopping $63 million in its Federal Reserve Bank’s account in 2018.
So, If Bitcoin Isn’t A Scam, Then What Is It?
Claiming that “bitcoin is a scam” because ill-hearted people have ripped others off is precisely like claiming “the financial services sector is a scam” because of corrupt commercial banks.
Bitcoin was utilized on dark sites to trade drugs! Now, by the virtue that’s, it’s used in illegal transactions delegitimize money?
The fact is that cash is tarnished in its general nature.
Very soon, the blockchain network now in utilization to authenticate bitcoin payments will morph and blend with other networks since its value isn’t calculable. Speculators from Sand Hill Road to Wall Street have so far invested vast amounts of cash, time, and energy in blockchain-niched businesses. Every individual needs to be certain whether or not something occurred.
Blockchain technology can be coded to offers us trustworthy information concerning it. No matter the fault in the network introduced in 2009 by Satoshi Nakamoto, and they’re still essential-he confirmed that there is a means for individuals to design foolproof, assured records of the human undertaking, totally without dependence on external authorities like government or banks.
And there’s no turning back from that!
The Bottom Line
Now, up to this point, do you understand how money is different from bitcoin?
Well, the struggle for solidity in any currency is often at the level of being defeated because wherever there’s an opportunity to build a transaction, it’s human nature that some will attempt to gain the advantage of the others.
However, even the little and uncertain solidity we have in advanced nations needs attentiveness and operate on the side of innumerable conscientious individuals, and there’s never a conviction. The battle to conserve the confusion that cash is real is never-ending, and it never can be.
Verolian Opiyo is a former teacher of English turned content strategist. He specialises in writing about FinTech and Next-generation technology.