Bitcoin – the next Buddha of the money
Every day I’m being asked what is Bitcoin. It’s not an easy question and I always start my answer with the history of money.
First people considered beautiful shells, wool or salt, then precious stones and metals as money. Precious metals have been considered as money for a very long period of time, but this resource is impractical and limited in quantity.
This is how banks and paper money were established. Gold and silver were kept in banks, and they were given papers specifying the amount of metal kept in the banks in exchange.But when the states refused to return gold to European countries after Second World War, fiat and unsecured money were created.
Finally, the world departed from the gold standard in 1971. Yes, USD is unsecured since 1971!
But this is not the end of the history of money.
According to various estimates, there are only from 3% to 10% of dollars (cash) in the world, everything else is a non-cash dollar, just numbers in the banking system, algorithms that are transferred from one account to another. If everyone decided to withdraw USD from ATMs on the same day, there would be a collapse of the banking system. There is simply not enough cash. But is it really necessary?
Cash-less money is so convenient! You just need to carry a small piece of plastic, called a credit card. If you want to do some more complicated financial operations, you can use the application on your phone, even a password does not need to be remembered, just a fingerprint.
It is also convenient for states – is easier to count taxes, it is more difficult to “muddle”, you can always trace the transaction.
But the evolution of money does not stop. At some point, a certain number of people decided that they want to have freedom and not report their financial transactions to the state.
What is more, many people are tired of the regular failures of the electronic banking system and state monopoly. This is how blockchain and Bitcoin were created.
Blockchain-money (I intend to leave here from the concept of crypto-money or crypto-currency), is just a next step in the evolution of money, the next incarnation of financial resources, the next Buddha in the money!