Welcome to my first article ever. I am Hamza. I will become your author through this series of articles. We will continue to discuss many issues, such as Bitcoin mining, Bitcoin wallet, how to trade Bitcoin, today There is more to start from scratch, answering the third most popular term on Google, what is Bitcoin?
If you are worried that we will become too technical and use a lot of complex words, please relax. So, before talking about Bitcoin, let's get started, I need to take a moment to discuss the meaning of money. If I do some work for you, then money symbolizes value at its core, and you will give me money with the value exchanged for me.
Then, I can use the money to get something valuable. Throughout history, value has taken many ways, and people have used many different materials to represent money. Salt wheat, nuts, and obviously gold. They are all used as a means of exchange. However, in order to represent a certain value, people must believe in something that is truly valuable and must maintain the value long enough so that they can recover that value in the future until a hundred years ago, so we always trust what represents money. And whether it represents something along the way, we have changed the trust model from trusting something to someone.
Let me explain that over time, people find it annoying to carry gold bars or other forms of currency around the world, so paper money was invented here. This is how the bank or the government provides how to control your gold bars. Let us say it is worth $5,000. In return, the bank will give you a proof of receipt. We say that the total bill is $5,000. Not only are these paper bags easier to carry, but you can also buy a cup of coffee for $1 There is no need to cut the gold bars into thousands. If you want to return the gold, you only need to return the 5,000 USD bill to the bank to exchange it for actual currency. In this case, as long as you want, the gold bars can start Using it as currency is actually a convenient tool, but over time, due to macroeconomic changes, this connection between paper money and the gold it represents has been broken.
Now, it is extremely complicated to explain the path leading us away from the gold standard, enough to say that the government tells their people that the government itself will be responsible for the value of the paper money. Basically we have said: "Let's forget about gold and replace the trade bill." Only the government promises that there is a receipt for trade. Why can't it continue/function normally due to trust? Even if there is no actual product to support banknotes
People trust the government, and this is how to create a fixed currency. Fiat (Fiat) is Latin, meaning "by decree." It means the value of U.S. dollars, euros or any other currency, because the government ordered the implementation, this is the so-called "fiat currency" coin or paper currency, which must accept the payment it provides, so the value of money today actually comes from the law given by the central agency Status, in this case, the government, so the trust model has changed,
From trusting something to trusting someone, Fiat currency has two disadvantages It is centralized You have a central authority that controls and issues the certificate. In this case, the government or the central bank and the two are not subject to quantitative restrictions. The government or central bank can print any number of banknotes when needed, thereby increasing the money supply in the market. The problem with printing money is that because you are flooding the market with more money, the value of each dollar has fallen, so your own money is worthless. When you see prices continue to rise over the years, prices may not necessarily rise, and the purchasing power of currencies is declining.
. You need more money to buy things that were cheaper in the past. Once you have fiat currency, the transfer to digital currency is very simple. We already have a central agency that can issue currency, so why not make money primarily digitally and let the agency track who owns what. Today, we mainly use credit cards, wire transfers, Paypal, and other forms of digital currencies. The actual amount of money in the world is almost negligible.
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