Saturday, July 27, 2024
In my article “What Every Veteran Should Know About Money and Cryptocurrency,” I explained the history of money and the seven characteristics that are needed to establish what qualifies as a sustainable currency. For those who missed out, not to worry, because I’ve listed them below for you. Then, we’ll discus how this pertains to Bitcoin.
In my article “What Every Veteran Should Know About Money and Cryptocurrency,”
The Seven Characteristics Needed For a Usable Currency Are…
Before I explain how and why Bitcoin fits each of these categories much better than the U.S. Dollar, I’d like explain why Bitcoin is known as “Digital Gold”, and why it’s called “The People’s Money.”
The main reason Bitcoin is referred to as “Digital Gold”, is because of characteristic number one, it’s scarcity.
Think about gold, diamonds, and other metals. The reason they have more value than say a rock or seashell, is because of the millions of dollars it costs to dig into the earth, and physically mine them. We put the health of workers at risk, and even damage our planet in the process. We know there is only so much gold in existence, which is why we go to the trouble to dig for it.
The same goes for Bitcoin. We know there are only 21 million Bitcoins in existence, and we have to mine it to get them. The difference between mining Bitcoin versus mining gold is instead of blowing up holes in the earth, and hiring workers to labor all day, it uses energy and time.
All it takes is one person to set up a Bitcoin mine, and the worst damage that is done is your energy consumption. Even then, new alt coins and sustainable products are being produced to help lower these energy costs. So really, Bitcoin does minimal damage to our planet compared to physically mining gold, and the best part is you can do it from the comfort of your own home.
How is a Bitcoin mined? Think of it like video game where you have to solve a Rubik’s Cube. It takes a lot of time and energy to get all the colors on the same side. Once you’ve solved your first Rubik’s Cube, a gold coin pops up that says “Congratulations! You Have Earned a Gold Coin!” Then you graduate to Level 2. You are given another Rubik’s cube, but this time instead 3 rows, this Rubik’s Cube has 4 rows.
It’s a vastly more complicated equation to solve, and as you pass each level, more and more rows are added to this cube. It would take you twice as long to solve each level, thus making the reward more valuable. Bitcoin is a Digital Rubik’s Cube Video Game with 21 Million Levels. That is why it is called “Digital Gold.”
The U.S. Dollar, on the other hand, doesn’t require any mining. In fact, it’s simply printed. How are we placing value on something that is as easy to do as print, takes minimal time to produce, and has no limit? If that were the case, there are so many other items out there that we could use as a better alternative to paper. It is worth noting that 40% of the total U.S. Dollars in existence were made in the last 12 months. This up from the 20% made in 2019.
Most people don’t really understand the term inflation on a financial scale. So a simple example is to visualize is a balloon. You have to inflate the balloon by blowing air into it to get it to float. However, if you blow too much air, it pops. If you blow too little air, it falls. Our economy is the ballon. We want it to stay afloat, so we have to manage how much air we put in and how much air take out.
This is a perfect example of how our Economy ballon is getting ready to pop. What we need to do is deflate it. But how do we do that with the Dollar? Unfortunately, we can’t, because we have already printed too much of this currency into physical existence. What we have to do instead, is transition to a completely different currency. One that has scarcity, so we don’t over produce it. Bitcoin is becoming the fastest solution to deflating our Economy’s balloon. It is also quickly becoming known as “The People’s Money.”
The main reason Bitcoin is referred to as “The People’s Money,” is because it’s the first currency that has been decided from bottom to the top.
Usually when a currency is decided, the decision goes from the top to the bottom. The country’s leaders, (in our case, the government) would announce how our country was going to function, and what currency to use for exchange. The people and businesses merely trusted that our government was making the right decision.
The Government would say to the businesses… “The U.S. Dollar is America’s currency.”
U.S. businesses would say to the people…. “The U.S. Dollar is the currency we accept.”
The people would say to themselves… “I guess we have to use is the U.S. Dollar.”
As time went by, the Gold Standard was taken off the U.S. Dollar by President Richard Nixon. Thus, the people started to notice this inconvenient thing called inflation.
The people then said to the businesses… “What the hell? Why is shit so expensive?”
The businesses then said to the government… “Business is down and we’re going into debt.”
The government then said to the businesses… “It’s fine, we will print more dollars and bail you out. Just keep selling.”
As time progressed, the process repeated and repeated. The Dollar no longer could retain its value. In fact today, it’s lost 97% of its value. It’s gotten to the point that the people started asking questions.
Thanks to Google, Youtube, and social media, word is spreading like wildfire about financial education. More and more folks are realizing our Government has none. So we, the people, decided to take things into our own hands.
We invented an entire new currency, aka “Cryptocurrency.” Bitcoin being the poster child, because it was thought as the main E-coin used by the people as a form of exchange since 2009. As more and more folks learned about this currency, and how well it checks off the seven characteristics listed above, more and more folks began to use it as an alternative to the U.S. Dollar.
The people are now saying to the businesses… “Screw the Dollar! We’re using Bitcoin!”
The businesses are now saying to the people… “Okay Okay, we will accept your Bitcoin. Just please keep buying our products.”
The Government is now saying… “Shoot everyone lost their jobs in 2020, Tax season is here, and everyone is broke. Who has all the money? Bitcoin Investors! Yes, let’s collect taxes off this Bitcoin stuff.”
Today, 46 million Americans (or 17% of the US Population) now own and use Bitcoin for goods and services. American businesses and corporations are just now realizing that it would be in their best interests to also accept Bitcoin as an alternative to the dollar. Major companies including PayPal, Amazon, Chase Bank, Microsoft, Whole Foods, Etsy, Starbucks, and more have added Bitcoin to their balance sheets, (or are offering apps that allow their customers to pay using Bitcoin).
Bitcoin’s popularity is growing so fast, that is has now forced the Government, and the IRS to legally add it as an Asset on your tax forms. Thus, reversing the direction of who dictates what currency is.
Lately word is going around about how the government wants to regulate Bitcoin. However, it is my hope the people are smart enough to not let that happen. Just as there is a separation of Church and State, there should also be separation of State and Finance. Bitcoin is the people’s money, because it is controlled by the people, and not the government. The good news for us, is that Bitcoin is an international currency. So no matter how much the American government tries to regulate it, they are still facing the major obstacle of 196 other countries using it as well. Good luck!