Bitcoin and the history of currency development

June 20, 2021

This is a rather complicated topic with many changes over the past 400 years, along with a length of more than 3000 years of history. First we have to understand the history of money, then talk about Bitcoin. Basically we have to understand the 2 main features of money which are:

Means of payment

Store of value

These two features are very important and we must understand what each one does. This section we will cover when talking about the intrinsic value of Bitcoin and using Bitcoin as a commodity currency.

Bitcoin – in everyone's imagination would be a threat to stores of value like gold or silver. In addition, it is a threat to a means of payment like a normal currency. Bitcoin has both the features of a precious metal and a currency. To understand why Bitcoin can become a currency, let's learn the history of currency development.

Why Bank?

To begin with this question, we must understand what an exchange is, how it happens, and why storing value is needed.

Barter is a form of exchange of one commodity for another. Before money appeared, people could exchange anything that could be exchanged, the value of the item was understood by everyone. Including shells, rice, tobacco or land... as long as both parties understand the value of what they are exchanging and accept it for the mode of exchange.

And when it did man found gold. It became a standard thing in the era of commercialization. With that comes the risks of owning a large amount of gold. And so the Bank was born, instead of carrying around a block of gold, the bank helped people convert gold into a piece of paper – called a debenture, certifying the bank owed a block of gold. This can be considered the first form of paper money as it can be used to exchange for a commodity as standard as gold.

It is important to understand that cash represents a form of store of value for payment purposes. The only reason cash came into existence was because it was a technological innovation. From there it was possible to store the value of gold in the form of paper and completely change the previous method of exchanging goods. This allows people to transact with each other but avoid the risk of theft.

Ironically, the creation of these promissory notes built the framework for the entire banking system to this day. That creates a banking system that doesn't work on how much money they have available but on a fraction of what they must have. This system maintains by calculating the profit offset against the loss. Their losses can disrupt entire banking systems and economies. That's what happened during the Great Recession, and most recently, the 2008 world economic crisis.

Bretton Woods' monetary regime

At the end of World War II, the Allies secretly held a meeting at Bretton Woods with the aim of rebuilding a new economy for the world. Keynes – a British economist who came up with the idea for the International Clearinghouse Union (ICU) to use an international currency used to settle national debts called Bancor. But Keynes's idea was rejected and instead the US dollar became the international currency - which today gives the US a financial power on the world stage. To be able to do that, $35 will be converted to an ounce of gold, and at the same time the International Monetary Fund (IMF) and the World Bank (World Bank) will be established. Keynes warned against this monetary regime and offered a perspective 20 years later.

This system will work stably if the US does not find a way to cheat. In the period 1945 - 1971, the US dollar began to circulate around the world due to the policy of importing more than exporting. That creates a negative in the budget. The fact that so many US dollars exist abroad makes the US unable to convert from gold. France began to suspect this in 1960 and demanded its gold back. The Nixon shock begins here. In 1969, Nixon unilaterally declared the US dollar no longer convertible to gold and levied a 10% tax to protect his industries from the shock. $35 will no longer redeem an ounce of gold from there.

Nixon shock

To rescue the dollar from the spiral of hyperinflation, Nixon did everything from imposing taxes, to putting a cap on wages, to changing exchange rates, all the while thinking it up. a value protection solution for US dollars. In 1973, US Secretary of State - Henry Kissinger signed a contract to finance arms to Saudi Arabia, on the condition that they only need to sell oil to the United States with only dollars. The concept of "petroleum dollar" was born from there. Since 1973, the dollar is no longer redeemable for gold, but instead for oil.

Thirty years later, we gradually see evidence of a split between the gold and the US dollar that has disrupted confidence in the global monetary system, as well as confidence in the US dollar. That has very serious consequences for the purchasing power of the dollar and the people who use it.

International Thief

Since then, money is no longer attached to value as a commodity but becomes a thief - silently stealing people's productive capacity - through inflation. Over the decades, inflation has taken away not only the purchasing power of the U.S. dollar but also all of the world's cash. This came very slowly and few could understand what Keynes had warned many years before.

The failure of gold

Gold was used thousands of years ago for its store of value properties. However, what happened in the 20th century until the end of World War 2 shows the combination of gold in the hands of the Government through legal confiscation. Statistics until 1973 all gold was confiscated by the Government by force.

This is done in 2 ways:

Confiscation of gold and precious metals as reparations for World War 1 and imperialism.

Through Government-initiated wars over private property.

This can be verified around the world by global restrictions such as: Ordinance 6102, Australian Banking Act 1959, India's Gold Act 1968… Thereby allowing Governments and allies monopolization of gold manipulation. To this day no one can hold gold or silver as a means of payment, despite knowing it is more valuable than paper money.

The need to be protected

The greatest threat to the property of the people is not from the invasion of war, but from within their government. For the Government is the owner of the medium of exchange, the arbiter of all solutions. Through it it is possible to control and manipulate cash on a large scale, while they are also the custodians of the financial system. The biggest problem right now is that even if you find an alternative medium of exchange (like Bitcoin) the Government still considers it illegal and threatens you if you don't comply.

And when Bitcoin comes, we have the right to reject the Government currency and even their Central Bank, the value of their fiat currency will collapse. The government can't afford the wars, the salaries are too big to feed a machine, the fear of terrorism… It will be a great moment when no one uses paper money anymore.

Bitcoin is a global payment system and also a store of assets based on mathematical principles and security. A system where we are not persecuted for saving and protecting assets. A system that understands, respects and protects the privacy of all citizens. A change is coming and it will make the world a better place.

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