By Ishnaa Goenka
Money is a system that has been evolving since the beginning. From commodity money to gold (precious metal), cash, credit cards and cryptocurrencies. Important features of money today are scarcity, easily divisibility, durability, and portability. Our system of money changes when we find something better. Before 1970, Money that we used, was ‘backed by gold’. Money that we currently use is ‘backed by government’ and this money is called fiat money. The problem with our current money system, fiat money is that it is not scarce, so inflation can take place. Inflation is when the government makes or creates more money than a certain amount which reduces the value or purchasing power of our money.
Things we need to fix with our current money system is inflation, by making what we use as money scarce like gold. Portability, cash is not the most portable or durable. And instead of our money’s value growing like gold, our money is losing its purchasing value day by day. Gold’s value increases as it as a precious metal and is scarce. But as it is not easily portable or divisible, it is not good as money, but rather as an investment. Another problem with fiat money is that it is backed by the government and if the country’s economy collapses, your money will have no value.
Bitcoin fixes the problems with our current money system. It is scarce as only 21 million bitcoins will ever be made. Bitcoin is portable and durable because it is a digital password and you can access it on your laptops and smartphones. Bitcoins are divisible into 8 decimal places. Bitcoin was created in 2009 by an anonymous person by the name Satoshi Nakamoto. Bitcoins prices started from less than a few cents (USD) to $ 6,391.06 (as on 23 October 2018). Bitcoin prices are volatile as its a relatively new technology.
“Money is one of the most important things in our life. However, we don’t really study about money in school. To understand bitcoin, it’s important to understand how our current money system works. I encourage everyone to learn about money and its possible future as it can possibly be one of the most important journeys you take.”
I live in a household where Bitcoin is constantly being talked about. I’ve heard about Bitcoin since it was a few thousand rupees to few lakh rupees it is today. My father also the co-founder of a bitcoin exchange, Zebpay. He has shared a quote about money and Bitcoins from an experts point of view. “Money is one of the most important things in our life. However, we don’t really study about money in school. To understand bitcoin, it’s important to understand how our current money system works. I encourage everyone to learn about money and its possible future as it can possibly be one of the most important journeys you take.”
I believe Bitcoin is a revolutionary technology and to learn more about Bitcoins, some resources that I would recommend are – https://lopp.net/bitcoin.html. This link has some of the best educational sources to learn more on bitcoins.