The People, The Power, The Money And Bitcoin
Early on money was created by The People. Early man was agrarian and used the food they grew, and things they made as mediums of exchange, aka money. These transactions were between individuals, and it was up to the individual to determine what was fair barter.
Over time coinage became the efficient form of exchange. Mostly Gold, Silver, Bronze and some Copper was hammered into coins by individuals. The coins had specific weights for each denomination, but the problem was the variations of the Gold and Silver content.
The problem was solved when the Lydians pioneered a method of refining electrum (the Gold, Silver, base metal material, into pure Gold. With the purity and the weight known, the exact value of the coin could be then be determined.
But the majority of The People could not afford to own their own refineries, and they did not have the manufacturing capacity to produce the volume of coins needed for a growing economy.
Then government stepped in, and then the government’s coins could be trusted among individuals who did not know each other.
The government became the Middleman in economic transactions.
Middlemen take a cut.
The government now had a mechanism to tax economic transactions and a practical medium of exchange to tax personal income.
The lack of technological innovation has helped protect government’s monopoly on the creation of money for 2,700 years.
That is until now, enter Bitcoin.
Bitcoin and other crypto currencies are the technological leap that puts the creation of money and the determination of its value back in to the hands of The People
Bitcoin is mined” by the private sector not minted by a government.
The free market determines the value of a Bitcoin through competition not by government fiat (inconvertible paper money made legal tender by a government decree).
And verification and trust comes from Bitcoin’s public and unchangeable ledger of all transactions, not in confidence in a government’s ability to pay its debts.
Economic transactions by definition are decentralized transactions which originally used decentralized money. Money only became centralized because of the need for verification and trust.
The new technologies can now provide verification and trust, opening up the possibility that money can be decentralized again.
As one analyst that I read puts it, “Bitcoin puts the power to create money back into The People’s hands.”
Have a terrific weekend.
HeffX-LTN
Paul Ebeling
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