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The Truth about Bitcoin and Alternative Currencies

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The truth about Bitcoin and Alternative Currencies, the US dollar has been the world’s most popular currency for over half a century. But that is starting to change, our central banks been meddling that the value with dollar in people are looking to replace it with something better. One currency has been making news lately, Bitcoin a new digital currency. Lots of things have been used as currency throughout history. Gold and silver, wheat, seashells, tobacco, salt, paper and numerous other things, some currencies are stuck around massive died of. But why? What makes some currencies better than others? It is not any government decree. It is their properties, certain properties are essential to a healthy currency and if we keep score. The US dollar does not look so great, especially in comparison to historical favorites like gold and silver, or tube it going.

A sound currency stays valuable overturn. Has a limited supply and is easily divisible and portable. If you want to compare currencies head to head, we need to understand the importance of these qualities. Imagine that a currency does not stay valuable overtime. For example let’s say we use bananas as a currency, well bananas have a life span. Eventually rot large stores savings in bananas would eventually turned to mush. And nobody wants to trade rotten fruit with each other. The US dollar does not run, but thanks to the central bank. It is lost about 95 percent of its purchasing power in the last 100 years. Gold and silver do not drive either. They are durable and have a long history of being valuable, that coin also does not degrade over time. Ones and zeros will be the exact same fifty years from now, it is a decentralized currency. Not issued by any one institution which means its value is independent of government or central bank. As long as people find it valuable it will stick around.

Next, imagine a currency without a limited supply. But say we use wooden nickels as a currency plan. What happens when people start carving their own? If people can be easily create more currency for themselves. Economic prices become meaningless, since the 1970’s, the US dollar is anything but a limited supply. The central bank has created trillions of dollars and fin in air, the valuing everybody else’s dollars in the process. In contrast the supply of gold and silver has been relatively constant for the last few millennia. Bit calling also has a stable supply. In fact in any given time, we know almost exactly how many exist and at what rate they will be produced in the future. No more than, 21 million bitcoins will ever be created. It is written straight into the code, counterfeiting mine also increase the supply of currency, by defrauding people. The only difference between money printings in counterfeiting is who is behind.

The result is the same; fortunately it is difficult for citizens to counterfeit US dollars gold or silver. But what about something digital, like bitcoin it uses mathematical cryptography. And a public ledger called the Black chain to make it impossible to counterfeit. Picture a currency which does not divide easily, what if cows were used as a currency. I would you pay for something like a loaf of bread. A cow was worth much more than one loaf of bread. And it would be very difficult to divine account to smaller communities to make a fair trade. The dollar divides very easily down to the penny, gold and silver or a little bit more difficult to divide into small quantities. Bitcoins easily divide down to one hundred million on a bitcoin. To sound currency must also be portable. Imagine in the difficulty of using cinder blocks as currency, the dollar is easily portable gold and silver for less portable. Go on the gold standard people usually carry around paper, which is redeemable in the medals.

Bitcoins can be sent anywhere in the world with internet access instantly. Regardless of the size and the transaction ended almost no cost. So how do these currencies matchup against each other? You decide for yourself, we cannot know what the best currency is. We discover in overtime, but the central banks keep inflating the money supply. And people free to choose the US dollar likely cannot stand toe to toe with its competition. To learn more about sound economics, visit fee.org and to donate bitcoins scan this QR code.

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