Money has evolved from shells and stones to precious metals, paper, and now digital currencies, reflecting societal values and technological progress. However, unsound money has repeatedly led to economic collapse.
As fiat currencies lose purchasing power, Bitcoin emerges as a new form of money. This report explores money’s history and its connection to Bitcoin.
The earliest forms of money
The first forms were seashells, used for decoration and trade. As metallurgy advanced, Gold and Silver’s properties made them ideal mediums of exchange, leading to the first Gold coins around 550 BC, a leap forward from barter.
Later, the Roman empire’s coins became an international currency. However, continuous debasement to fund wars and monuments led to runaway inflation and economic collapse by 270 AD, a pattern repeated throughout history.
Paper money emerged in China around 1000 AD, with merchants exchanging receipts for Gold and Silver deposits, enabling fractional reserve banking and new paper money creation.
As paper currencies spread, convertibility to Gold and Silver limited money production and maintained currency value through controlled inflation. However, it constrained economic growth.
Ending the Gold standard
In 1913, the Federal Reserve took control of the US money supply. By 1971, the US abandoned the Gold standard, allowing unchecked money printing.
Freed from Gold backing, the US printed dollars abundantly, leading to a 90% decline in the dollar’s purchasing power compared to Gold over the past 50 years.
While the global economy grew, inflation eroded currency value and consumer purchasing power. The wealthy protected wealth through hard assets, while others’ savings melted away.
The birth of Bitcoin
In 2009, following the 2008 crisis, Satoshi Nakamoto launched Bitcoin – a form of sound money with a verifiably limited and capped supply, derived through cryptography.
Like Gold, Bitcoin’s supply will taper off to a fixed limit of 21 million coins. As a digital asset, Bitcoin offers unprecedented security through encryption and global distribution.
As national currencies falter under debt burdens, Bitcoin allows citizens to opt-out of unstable monetary policies and protect savings from devaluation, offering economic autonomy.
Throughout history, unsound money has led to currency collapse, inflation, wealth inequality, and social unrest. As national currencies devalue at unprecedented scales, Bitcoin has arrived as an alternative, granting a new economic choice in the digital age.
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This post was authored by an external contributor and does not represent Benzinga’s opinions and has not been edited for content. The information contained above is provided for informational and educational purposes only, and nothing contained herein should be construed as investment advice. Benzinga does not make any recommendation to buy or sell any security or any representation about the financial condition of any company. Cryptocurrency is a volatile market; do your independent research and only invest what you can afford to lose. New token launches and small market capitalization coins are inherently more risky than large cap cryptocurrencies. These tokens are subject to larger liquidity and market risks.
