You cant simply print money like governments do today, unless you have gold to back it with. That is a pretty much the reason why we have bitcoin today. Look, we have been using paper money for centuries. But it was different then, because it was backed by gold. That means that, every dollar use to represent a certain amount of gold in the bank. So instead of carrying a pack of gold with you every time, you could simply carry papers and get your gold anytime you want.
That’s where the problem started. Right after the second world war, United States dollar became an international currency because United States had 70% of all the gold, so they could print more money than anyone else. But Unfortunately United states printed more money than the amount of gold they had, so when other countries requested US to exchange their dollars with gold. US simply replied, oops sorry, we no longer exchange dollars for gold because we have printed more than we have, and that’s what happened in 1971.
And since then, our money is simple a piece of paper that doesn’t have real value and the people in power can print as much as they want. and That’s why prices increase every year. But it didn’t stop there, it crushed the whole economy in 2008, and guess what did the governments do to save economy!? Yes, exactly they printed more money, United States alone printed almost 4 trillion dollars.
That’s the basic problem with paper money we use right now. Its centralized, controlled by a small group of people and it can be easily created out of thin air So a guy named Satoshi Nakamoto came out with a new currency that is decentralized because its controlled by everyone who is in the network, not even the government and it cannot be created out of thin air, in fact, limited amount of them exists like gold and named it bitcoin So lets find out how exactly it works. Bitcoin woks on a technology that’s called blockchain, its pretty complicated to understand but here is a simplified version. Everything on internet is a copy of the original.
And that’s what blockchain is for. Everyone in the network can see how every bitcoin moves from one persons to another. In fact you can see the entire history of each coin once you join the network. So if anyone tries to corrupt the system, the entire network will find that out immediately and reject it.
Therefore its almost impossible to cheat. All the new transactions are collected into a block and a new block is created every 10 minutes and all of these blocks are connected to each other and that’s why its called blockchain. But no matter how advanced is this technology, it still can be hacked, right? Not exactly, Every new block besides recording new transactions, also includes all the transactions that has ever been in the history of the network and for the system to recognize a block, it must match all the other blocks that has ever been created in the network, in fact it also has to match the next block that will be created in the next 10 minutes and all the future blocks. On the top of that, every single block and every single transaction has an advanced cryptography and if a new block will be added that doesn’t match all the other blocks that has been created previously and will be created in the future, the cryptography in every single of them changes, which makes it even easier to recognize the corrupted block.
And this makes it almost impossible to hack, not because no one knows how to do it, but rather the computer power that’s needed to do that should be bigger than the entire network which consists of million of users. And the bigger the system grows, the more secure it gets. So if you want to send money, you don’t have to go to a bank or any third party but rather you can do it at your fingertips. Especially when it comes to sending money to another country, you don’t have to wait for days for the bank to do, but rather wait for 10 minutes once a new block is created.
But the main question is, should you invest in bitcoin?! The answer is yes and no! Yes because, Obviously, it seems like that’s the future of our money, but bitcoin isn’t the only cryptocurrency out there, there are also Ethereum, litecoin and others. But bitcoin is the one that’s growing the fastest. And that’s the problem, just since January of this year, it has grown from less than a thousand dollars to over 18K and anything that’s growing too fast will eventually collapse and come back to its real value. But we don’t know how far it will go, it might go to 20, 25 or 100 thousand before it collapses so you have to make your own research before you invest in bitcoin. And now its your turn, what do you think? is bitcoin is going to be the future currency of the world or its just a hype that’s going to disappear after a while.