Bitcoin is a digital currency which was invented by a person called Satoshi Nakamoto in 2008. The currency officially started being used on 3 January 2009.
Some of the things which make Bitcoin different from the US Dollar, British Pound, Japanese Yen, Euro, South African Rand and other national currencies are the following:-
- Bitcoin is not issued by any government or central bank.
- There is a limit on the amount of Bitcoins which can be produced.
- Bitcoin payments can freely cross international boarders.
- Anyone can have a Bitcoin wallet regardless of nationality.
- No one can close your Bitcoin wallet or stop a payment which you want to make.
Between 1 January 2020 and 1 March 2021 the price of Bitcoin went up by over 530%. As of right now while I’m writing this article 1 Bitcoin = US$ 57 274.00
To get a full understanding of what makes Bitcoin so interesting let’s have a look at the history of money and how we got here.
Ready? Let’s go!
Since the beginning of time people have always needed a way to exchange goods and services. Understanding the history of money is quite easy because there have only been 4 types of economic system.
1. Barter trade
Barter is a system where people exchange goods or services for other goods or services without using a medium of exchange, such as money.
The limitation of barter trade comes up when let’s say person A has oranges and person B has bread. Person A wants bread but person B does not want oranges, he wants apples instead. This type of limitation is what leads us to the next type of system.
2. Gold and silver coins
Trading with gold and silver coins was the next stage after barter trade. In this system person A would keep the oranges which he needs and exchange the rest for gold coins. He would then use the gold coins to buy bread from person B. Person B could then take the gold coins and buy apples. Problem solved!
The limitation with gold and silver coins is that they became bulky and hard to carry especially when trying to make large transactions like buying a house.
No one wanted to be pushing around a wheel barrow full of gold coins.
3. Paper money backed by gold
In 1944 the countries which had won World War 2 had a meeting where they decided to fix their currencies to the US Dollar. The US Dollar was backed by gold and countries could convert their currencies to gold at any time.
Under this system the amount of money in circulation was limited by the amount of gold which was available.
4. Paper money backed by nothing
As time went by countries such as France stopped trusting the US Dollar and started converting more and more of their currency to gold.
Seeing that United States gold reserves were declining rapidly on 15 August 1971 President Richard Nixon ended the gold standard.
From this point on the US Dollar could no longer be converted to gold.
Paper money which is not backed by anything is called fiat currency, this is when the world’s financial problems started.
When a currency is not backed by anything then governments can print as much of the currency as they want. As they print more money the currency becomes worth less.
5. Digital currency
Digital currencies like Bitcoin were created to establish an independent financial system which does not depend on banks and governments to issue money and process transactions.
It’s not that the price of Bitcoin keeps going up it’s actually the value of government issued currency which keeps going down as they print more and more money.
Because of Covid-19 bailouts and struggling economies all over the world governments will continue to print more money so the price of Bitcoin will most likely keep going up.
You can easily and safely buy Bitcoin on Rock Wallet.