As #Bitcoin nears $10,000, treat yourself to a deep dive into some of the further reaching implications of BTC.
Friday Thread 🚀
You could go to a bank and exchange your notes for their equivalent in gold.
Since then, governments have had complete control of the money supply.
Now our currencies float freely in value, fluctuating against one another.
This is called fiat money.
They’re now guaranteed by ‘national decree’.
This essentially means our currencies are guaranteed by things like the government’s reputation and the strength of the national economy.
Fiat money therefore allows governments to run large deficits, helping them to spend more on social programs, hospitals, wars etc.
Printing money destroys the value of salaries and savings, while driving up the price of assets.
1. Spend their money
2. Take on risk by investing
3. Watch the value of their savings diminish
Therein lies the character of fiat money, and a lot of the weirdness we see in the world today.
Let’s pick them apart.
The era of fiat has been one of mass consumption, increasing carbon emissions and environmental degradation.
You cannot separate climate change from fiat money.
If people had a simple, reliable savings vehicle they would not consume as much.
Leave your money in a savings account for more than a few years and watch its value disappear.
To even keep up with inflation you need to take on risk, often via the stock or housing market.
This means taking on risk with our hard-earned cash - the money we’d like to start a business with, put away for retirement or pass onto our kids.
If we’re going to take on such risk, we’d prefer to pay a professional.
But wait a minute, that industry now has power over the money we need to start a business with, put away for retirement or pass onto our kids!
It wields supreme power over our lives and the economy.
When govt cannot allow a sector to be punished by natural market forces when it behaves like the banks did.
Something is very wrong.
Therefore it influences EVERYTHING in our society, from the bottom up.
But Bitcoin will disrupt fiat money, restoring individuals’ incentive to save and limiting the excesses of financial institutions.
12.5 new bitcoins are released every 10 minutes. This number will halve every 4 years, until 21M have been released. After that there will be no new bitcoins.
No third party or government can change this.
Bitcoin’s deflationary supply schedule creates upward price pressure.
As Bitcoin becomes increasingly accepted and adopted it will change people’s behaviour, since they’ll finally have access to a safe place for their savings.
With fiat money, governments have power via control of inflation.
Banks have power because we’re forced to seek their products and expertise.
Bitcoin will move power from governments and banks to individuals.
It could change humans’ relationship with money, discourage overconsumption and shift where power resides in our society.
Money is being reinvented before our eyes.