Do you think the money is real? Then you do not understand Bitcoin
Often you can hear that bitkoin - an illusion, a massive hallucination. These are just numbers in cyberspace, a mirage as fragile as a soap bubble. The Bitcoins are not provided with anything except the faith of the fools buying them, as well as even more fools who buy from these lesser fools. And you know what? I agree. This is true.
But to understand that American dollars - the same illusion, perhaps, is more difficult. They, too, are mostly numbers in cyberspace. Sometimes they are stored in the form of pieces of paper or coins, but if the pieces of paper and coins are material, the dollars they represent are not. American dollars are not provided with anything other than the faith of fools who recognize them as a means of payment, and other fools who agree to accept the first payment from them. The main difference is that, at least for the time being, in the case of dollars, faith in illusion is more widespread and durable.
In fact, almost all - about 90% - American dollars are purely abstract - they literally do not exist in a tangible form. James Surovetski in 2012 reported that "only about 10% of the American money supply - about $ 1 trillion out of $ 10 trillion - exists in the form of paper cash and notes." (Now, apparently, it's about $ 1.5 trillion from $ 13.7 trillion). Nothing can stop the banking system from creating more dollars when it wants. Out of $ 13.7 trillion of money supply M2 as of October 2017, $ 13.5 trillion was created after 1959 - in other words, M2 increased almost 50 times.
The American dollar is the so-called "fiat" currency. "Fiat" is translated from Latin as "yes be"; for example, "fiat lux" - "let there be light", and "fiat denarii" - yes there will be lyres, bolivars, dollars, and rubles. Historically, the temptation to create money for state leaders was virtually insurmountable. One of the obvious results of such a whim is inflation. The purchasing power of $ 1 in 1959 now corresponds to less than 12 cents.
Bitchein's blockman was created, among other things, to solve this historical weakness. After approximately 21 million bitcoins are produced around 2140, the system will not be able to create more.
Charlatans and thieves will always try to bypass the various mechanisms of control and / or accounting of any monetary system, and any means of accumulation (examples: Panama swindlers and " heavenly file ", Bernie Cornfield and Bernie Madoff, London Keith, LTCM and BCCI, cunning and quiet captors of treasures from the Gardner Museum in Boston, the financial crisis of 2008 and the subsequent sanctions and thefts with Mt. Gox , The DAO and Tether ). Targets are all means of accumulation. And when using any exchange system - in an honest or dishonest way - you can both put together a fortune and go broke. And yet, surprisingly, conscientious people are enough that the monetary systems do not collapse completely.
There are several radical differences between the Crypto-currency and American dollars. For example, in the Bitcoin system, transactions are recorded in a genuine register, relying not on the authority of banks or governments, but on the power of a public computer network to which (at least theoretically) anyone can join. In addition, again, stocks bitcoins are limited. The anonymity of the cryptocurrency is, perhaps, not so bulletproof as the anonymity (unlabeled) of cash.
Money in itself is an illusion, a massive hallucination. You work hard to earn, multiply and save, but only their symbolic power is real. And, from a certain point of view, it's really wonderful.
Value is only our common understanding of the value of this green piece of paper, this Krugerrand, a token of ether or pound coin. And this general understanding has no fixed meaning; it is mobile. The "value" of any money, any means of accumulation, is unstable and abstract, despite all attempts to guarantee it - for example, using a fixed exchange rate for various assets - or regulate its flows by setting interest rates. Money is just a mobile network of agreements concluded in the human anthill and on its behalf, and they have always been just a fragile thread in the web of human trust.
Take, for example, "runaway capital", which has to be exchanged with large losses to refugees to cross the enemy border. It's money, but what do they have in common with invisible money in your check or with a line of numbers on the air or on your bank account? During the time between electronic transfer to your bank account and you're going to the market, the price of avocado or coffee can rise or fall. There are natural disasters when people are suddenly ready to pay insane money for several liters of clean water. So what is the "dollar value" then?
All the common arguments against crypto-currencies, such as bitcoins, and the supporting technology of the detachment, do not take into account this conditional and fragile nature of conventional money. Crypto-currencies cannot even be closely understood by those who consider money real, stable or "secured" by anything other than human trust in institutions whose stability is always uncertain. The US dollar is "provided" with "full confidence in the United States." But what does it mean?
This means that if you carry one dollar to the US Treasury and ask him to pay off, they will give you ... one dollar. Or maybe four 25-cent coins.
Unfortunately, the monetary crises of unstable governments, such as Greek, Venezuelan and Spanish, have already caused a series of jumps in the crypto-currency markets. When the Cypriot government tried to solve the banking crisis in 2013, cutting the bank deposits of its citizens by almost 7%, the price of bitcoins soared, probably because then many southern European holders of the euro, with the governments stuck in debt, assumed that bitcoins represent a more reliable refuge for their money than Cypriot banks. The depositors of Spanish banks were probably asking themselves: will not their banks be next?
Existing financial institutions are profoundly imperfect and invariably prone to corruption, and so it was long before the bitcoins were invented by their mysterious inventor. Satoshi Nakamoto clearly expressed this in the so-called genesis bloc with which Bitcoin began: "The Times on January 3, 2009: The Chancellor is considering the second sanation of banks." Bitcoin was originally a politically motivated project, a new system explicitly designed to provide an interchangeable digital means of exchange on which to build an alternative to existing banking systems.
The theory behind all crypto-currencies, including bitlock, is that the records of a distributed computer network can be protected from interference, which theoretically guarantees the strength of the currency better than the government does. And while, despite some significant obstacles, the block system on which Bitcoin was built at least partially confirmed this theory. Since 2009, a little more than a million bitcoins have been stolen, but the basic distributed register, the accounting system on which Bitcoin is based, so far remains stable and undamaged.
The thefts and frauds that occurred in the early days of bitcoins are reminiscent of the film "Treasures of the Sierra Madre," a beautiful drama about greed and corruption, which takes place in the 1920s. Certainly, the prospect of instant wealth, to which you can almost touch, is capable of driving you crazy. But notice that the ability of greed to breed crime and cause madness did not lead to a depreciation of gold.
The real caveat here is that Bitcoin's registry remained intact not only because of the distribution of the system, not only because of clever cryptographic protections but also due to the conscientiousness and prudence of individual developers who supervised the project during its uncertain first steps. Without the composure of Gavin Andresen, who was, in fact, Bitkoine's only curator in many early crisis periods, the project could easily die. Even today, various forks and difficulties, still tormenting the Bitcoin system, are a kind of test of stress-resistance. Currently (this is just my opinion), the relative unreliability of the Bitcoin Core developers, who are widely believed to be acting in their own interests, can cause permanent damage not only to Bitcoin's idea but also to the prospects for the technology of the blockade as a whole.
In addition, crypto-currency speculators risk to quickly remain without money because of difficulties with:
1. safe storage ;
2. the development of systems for the safe exchange of cryptocurrency for ordinary money.
Because of such disasters as the theft of 800 thousand bitcoins from the Mt. Gox, discovered in 2014, the entire crypto-currency ecosystem has acquired a not very good reputation. The public got the impression that Bitcoin himself was somehow hacked, while in fact the largest stock exchange was hacked, just as last year the central bank of Bangladesh lost $ 63 million from his account with the Federal Reserve Bank of New York.
Saying "bitcoins is a scam" because the various scammers were deceiving people, is like saying "the financial services industry is a scam" because the company of Jamie Dimon is cheating. In darknet for bitkoin sell and buy drugs! But ... on most hundred-dollar bills there are traces of cocaine, so if this is why you have something against hundred-dollar bills, please send them to me. Does use for criminal purposes deprive the cash of legitimacy? No. In fact, money by its very nature is dirty.
Soon enough, the block system, which is now used to guarantee transactions with bitcoins, will be transformed and combined with other systems, because its value is very high. Investors from Wall Street to Sand Hill Road have already invested a considerable amount of money, time and energy into the block business. Wherever it is necessary to know for certain whether something has happened or not, a blockage can be programmed for this. Whatever the shortcomings of the neglected Satoshi Nakamoto in 2009, the systems - and they are still significant - he proved the possibility of creating a reliable, guaranteed register of human transactions without dependence on external authorities such as banks or governments. There is no way back.
The battle for the stability of any currency is constantly losing because where there is a possibility to deceive or forge a transaction, the human nature is such that some will try to cheat. Even the limited and dubious stability that exists in developed countries requires vigilance and the work of countless principled people, and there is never any certainty. The struggle to preserve the illusion of the reality of money is endless.
