Laptop with graph currency money
Posted: Wed Dec 18, 2024 4:16 am
Column – Bitcoin is in my opinion the most misunderstood and undervalued phenomenon of our time. The digital currency is often dismissed as a means of payment for criminals, a toy for nerds and disastrous for the environment. With this article I want to give you a different view on bitcoin and substantiate why I think it is the most valuable form of money we have ever had.
Bitcoin is mainly a new form of money. When explaining bitcoin, you probably expect a technical story, but in my opinion, the technical side of bitcoin is a lot less exciting than the monetary side. So we are mainly going to talk about money.
How does money work?
What is money anyway? We use it every day and it plays an important role in our lives, but we never really think about it. Money is an indirect means of exchange in which we store our wealth for a later moment. When we work, we invest our time and get paid in money. With that money, you don't just want to buy things you need now, but also pay for groceries or next month's rent. In order to fulfill this function, money must be stable in value. The problem with our money is that it is anything but stable in value.
Since 2000, the purchasing power of the euro and the dollar has decreased by about 33 percent. With every euro you have in your account since then, you can buy fewer things today. But the euro is still relatively stable when you compare it to the South African rand, the Argentine peso or the Turkish lira, which have lost more than 50 percent of their purchasing power since 2000. Is saving really that smart? And how is it that our money is becoming less valuable?
Beads
To answer these questions, let's go back a few hundred years. A few centuries ago, glass beads were the most important means of payment in West Africa . Just like the euro is for us today. At that time, the production of glass was still a true art for West Africans, which is why glass beads remained relatively rare. They could not simply be produced and therefore retained their value.
The problems started when European hong kong telegram data explorers set foot on the continent. They discovered that glass beads represented an enormous value and the production of them was already much more advanced in Europe. It did not take long before the first ships, loaded with glass beads, sailed from Europe to the African continent. With the glass beads they bought up all the wealth of the Africans who, before they knew it, were sitting on a mountain of glass beads. They had exchanged all their valuable possessions for a mountain of glass. Glass beads were suddenly in abundance, nobody wanted them anymore and you could no longer buy anything with them. Society was suddenly awash with money.
Also read: Cryptocurrency: the 5 most important developments for 2020
Woman wearing traditional clothing.
Inflation
The example with the glass beads is an extreme example, but it is important to understand the core of the problem. If one party is able to produce a current means of payment infinitely and cheaply, then this will always happen and at the expense of the rest of the population. For the West Africans, this was the European explorers and for us it is the central banks. The danger in our time is that central banks have become very good at gradually making our money less valuable. It often involves a few percent per year, so that most people do not really notice it. It is, as it were, a silent killer that makes groceries a little more expensive every year and reduces the purchasing power of our savings.
Bitcoin is mainly a new form of money. When explaining bitcoin, you probably expect a technical story, but in my opinion, the technical side of bitcoin is a lot less exciting than the monetary side. So we are mainly going to talk about money.
How does money work?
What is money anyway? We use it every day and it plays an important role in our lives, but we never really think about it. Money is an indirect means of exchange in which we store our wealth for a later moment. When we work, we invest our time and get paid in money. With that money, you don't just want to buy things you need now, but also pay for groceries or next month's rent. In order to fulfill this function, money must be stable in value. The problem with our money is that it is anything but stable in value.
Since 2000, the purchasing power of the euro and the dollar has decreased by about 33 percent. With every euro you have in your account since then, you can buy fewer things today. But the euro is still relatively stable when you compare it to the South African rand, the Argentine peso or the Turkish lira, which have lost more than 50 percent of their purchasing power since 2000. Is saving really that smart? And how is it that our money is becoming less valuable?
Beads
To answer these questions, let's go back a few hundred years. A few centuries ago, glass beads were the most important means of payment in West Africa . Just like the euro is for us today. At that time, the production of glass was still a true art for West Africans, which is why glass beads remained relatively rare. They could not simply be produced and therefore retained their value.
The problems started when European hong kong telegram data explorers set foot on the continent. They discovered that glass beads represented an enormous value and the production of them was already much more advanced in Europe. It did not take long before the first ships, loaded with glass beads, sailed from Europe to the African continent. With the glass beads they bought up all the wealth of the Africans who, before they knew it, were sitting on a mountain of glass beads. They had exchanged all their valuable possessions for a mountain of glass. Glass beads were suddenly in abundance, nobody wanted them anymore and you could no longer buy anything with them. Society was suddenly awash with money.
Also read: Cryptocurrency: the 5 most important developments for 2020
Woman wearing traditional clothing.
Inflation
The example with the glass beads is an extreme example, but it is important to understand the core of the problem. If one party is able to produce a current means of payment infinitely and cheaply, then this will always happen and at the expense of the rest of the population. For the West Africans, this was the European explorers and for us it is the central banks. The danger in our time is that central banks have become very good at gradually making our money less valuable. It often involves a few percent per year, so that most people do not really notice it. It is, as it were, a silent killer that makes groceries a little more expensive every year and reduces the purchasing power of our savings.