By now we’ve all heard about Bitcoin, and how it’s the best thing since sliced bread (or sliced coin?).
Before you can appreciate the potential of Bitcoin (or any virtual money for that matter) you need to understand what traditional money is, and isn’t.
It’s a given that money is power.
- But what is money?
- Who owns it?
- Why was money created?
- What gives money value?
- Who benefits from the creation of money?
- Does it add value to your life, or does it control you?
Banks control the creation and flow of money.
It’s reasonable to believe that banks are a safe place to put your money, so we all just put all our money in a bank. We even get some interest for doing so, which makes us very happy.
But banks actually use your funds to “create” more money, which causes inflation. Inflation is a term that refers to the fact that the value of your money is always dropping, because money is created out of nothing. Banks are stealing the value of your money.
Here is how they do it.
Money is “created out of nothing” by a bank, when a customer, e.g. a person or the government, creates a new loan. For example, a customer borrows $10,000, and they must pay back $15,000 in total. Hence, the bank has created $5,000, out of nothing (well, except for shuffling a few papers around and clicking a few buttons on a computer), but as mentioned, you now see where the value of money comes from, or in other words, what money is.
So what this means is, the value of money is actually defined in terms of itself. The current value of money is the future value of itself, after the loan that the money is based on, is repaid to the bank.
A country’s government outsources the creation of money to banks, and because banks create money out of nothing, money’s “value” decreases over time, which is called inflation, to make up for the new money that was created. The new money’s value comes from the decrease in value of previous money, which is called inflation.
The process above, is the reason why banks control you.
Banks do still have a complete grip on your money, but this situation will soon be a relic of the past.
What can you do to take back your freedom?
The answer is virtual money.
Virtual money, on its own, has no value itself, just like traditional money has no value. If all life were to disappear from the planet, money would have no more value. The only difference between virtual and traditional money, is that nobody can control virtual money.
The best known virtual money is Bitcoin, but there are different types. It’s the same with the US Dollar – it’s probably the most well-known paper currency, but of course there are many different types of currency all over the world.
Bitcoin does not use inflation (like banks do) to create more Bitcoin. Bitcoin uses mining, which is just a fancy word for verifying previous transactions. So, the value of Bitcoin does not depend on the future value of Bitcoin. The value of Bitcoin is based only on people using it, unlike traditional money, whose value is based on liability to sustain its own future value.
Virtual money is for everyone, and it is easy and fun to use.
However, for Bitcoin money to flow freely within a market, it still has to somehow be injected into, and ejected from, the network. The most common name for this network is just “the blockchain”. The Bitcoin blockchain is a public record so that everyone can see from who, to whom, when and how much Bitcoin was transferred, so that everyone can agree that a transaction has taken place, and so that the Bitcoin transferred in the transaction cannot be spent again in another transaction (something called double-spend).
To overthrow the control of banks, the public at large needs a way to freely do transactions with each other, without the need for a middle man.