Fiat money or crypto — what is the future?

The global economic crises are becoming more and more common. And economics once designed to create a stability are failing to make us feel sure about our future.

Cryptocurrency is a great chance to solve these problems, but in order to understand what is wrong and how it came to be this way, we need to know how it was initially supposed to work. So let’s find out…

What is money and how it works?

Putting it simple, the economy is the system that allows transferring value between members of the society. It was developing from Gift Economy (an altruistic form of economy that first developed around 12 000 BC) to Barter Economy (the first value-based form of economy) and to Monetary Economy (the one we are using now).

So as we all know, the main characteristic of our economy is… money — an item that has a universally recognised value and can be exchanged for the products of equal value. With coming of the Gold Standart, banknotes became documents promising that the bank will issue the owner of the document a certain amount of gold. In course of time, banks gathered enough gold to make their banknotes stable enough to be considered money. So instead of being useless papers, banknotes became representations of actual value. And here comes the main problem — they aren’t anymore.

The reason is that by XX century Britain, Germany and Austria cancelled the gold standard, US followed, and soon enough (in response to a financial threat) US dollar’s value was measured in relation to other currencies.

Other countries followed soon, and since then money only had relative value. Today the actual cost of dollar is 3 times higher than it should be. So what we have is the economy that is isolated from the physical values, beause current money is not backed up by any physical object, controlled by governments and can be devalued due to their incompetence.

And here comes Bitcoin…

It does not have any centre or authority, it is trustworthy and open, and there is a limited supply of Bitcoin (there will only ever be 21 000 000 coins).

All transactions for a certain period are compressed into a single block. Here’s how it looks on the sheme:

So why Bitcoin is better than fiat?

First of all, for now Bitcoin is not ready to replace fiat (and won’t be in the nearest future). However, even now you can feel the benefits it provides :

Future of Bitcoin

Nowadays, there are more and more businesses that are supporting Bitcoin, and even governments are beginning to embrace it. So it’s either you will start using Bitcoin along with the word, or the world will go on without you.

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