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People buy Bitcoin out of value and values.
People buy bitcoin because it is a monetary system that equals the exchange of human value for most of our history. Technologically, this system is based on mathematical formulas and a simple verification and recording system. The implications are spectacular: you can now trust that you are exchanging values directly with another person or institution, even if you do not know them.
- Based only on PV money (ie value that exists today, not tied to a required future value added).
- Enables the exchange of a value directly between two parties without middlemen immediately and at extremely low cost
A better description than the term crypto currencies is honest money. This money system is about more than just value sharing. It's also about our values. The cryptosystem is digital technology for the analogue technology of bank and paper money. The potential, the combination of values and values that this new (old) system brings to humanity is hard to overestimate.
The fractional reserve banking system is inherently dishonest: bankers will tell you that your money is safe and at the same time give it to others. They will tell you that it is your money while legally belonging to the bank and they can do whatever they want.
The core philosophy of fractional reserve banking is based on dishonesty. The bank tells the depositors that it's their money in their account and they can have it back anytime. At the same time, the bank lends most of the money to borrowers or uses it itself, inter alia, as input for their own credit money creation. The basic requirement of the fractional reserve bank is based on a lie. This lie is then propagated by the social advocates of the banks and enforced by the state.
These banks today create their own "money" that has the current purchasing power and is made available to the borrowers. The value of this money, however, depends on future cash flows. If these future cash flows do not materialize, recursive credit destruction leads to economic crises and means that the bank may not have enough reserves to cover the lie they told depositors: that they could get their money back.
The Reserve Breakdown Risk Structure:
A Reversed House of Cards
Even a small change in "g," the growth figure used in the valuation formula for future cash flows, has a significant impact on the calculation of the asset the banks. That's why most banks no longer lend much during or after a recession, regardless of the monetary price set by the central bank. The cash price (part of the cost of capital) is a component of the asset, but is far less important than the estimate of g.
Why is Bitcoin superior to other currencies?
Bitcoin is a superior product to national currency and the fractional reserve banking system for two simple reasons:
- Fixed offer
- Greater compliance with our better human values
The cryptosystem is digital technology. Traditional banking / payments are analog technologies that can not be upgraded. The entire architecture is outdated from the 70s, assembled in a fit of absentees.
Why is a limited quote for a currency important?
A currency that has no limited supply is subject to inflation. Inflation is simply a way to measure a reduction in your purchasing power. It is better known as theft index and is essentially a value transfer from holders of national currencies to debtors. Usually this happens just a little bit after the other, so you do not notice the missing money and do not freak out. Debtors benefit from inflation because they are forced to repay less in real terms.
Here is a graph of the purchasing power of the US dollar since the inception of the Federal Reserve until the end of 2017.
If you have a national currency that has no fixed reserves, the depreciation is guaranteed. The US dollar has lost 95% of its value since the creation of the Federal Reserve System in the US (regardless of whether or not the country had the gold standard).
What can Bitcoin do for society?
Cryptocurrencies provide low-income people access to a financial system.
In the future, low-income people will be banking anywhere with the cryptosystem.
The fractional reserve banking system has completely failed income people. Of course, most of the poor are not accepted by these banks. The cryptosystem has significantly lower fixed costs than the traditional banking system, allowing everyone to benefit from financial inclusion. The poor will be able to carry out transfers at extremely low cost. Emerging crypto banks will offer them the benefits of saving and giving them the first opportunity to overcome poverty. The impact on poor communities around the world will be transformative.
A typical example of how banks deal with the poor who are fortunate enough to even have bank accounts.
Bank of America charges $ 12 a month for its current accounts to low-income customers, unless they have a $ 1,500 balance. @laura_nelson, Twitter, 2018
Finally a bank with new ideas on how to make the poorer poorer. @kashanacauley, Twitter, 2018
How Blockchain Helps Refugees
The United Nations World Food Program uses blockchain technology to provide identity and distribute millions of dollars in food coupons to tens of thousands several thousand Syrian refugees in Jordan since May 2017.
"The main benefit of the food program is a sharp decline in payments to financial services companies, the usual transaction intermediaries. According to Houman Haddad, these fees have "dropped significantly," says the WFP Executive Director, who led the project.
Note the big advantage: "The main benefit of the food program so far has been a sharp decline in payments to financial services providers. "And what do the banks think about Bitcoin? A scam that buys drugs.
Imagine they are telling the truth: Well, people are using it to improve the lives of refugees. Worse, it It reduces the profits we make with these refugee camps, so it's really terrible.
If you ask a banker or a central banker or his staff what they think of Bitcoin, it's like asking a taxi driver what he thinks about Uberp (19659040) as Jamie Dimon or Warren Buffett the largest shareholders of Bank of America mentioned above.
Maybe you do not like the show d he greed and all the dodgy characters who tried to use cryptocurrencies in 2018 to raise money, mostly for stupid projects. Nobody knows. But you also have to look at what Bitcoin and Blockchain can do for society.
In the future you have to decide: do I stand with a community of people who want to create a better world, right? stand with the 1% and their money and banking system?
Robert is a partial Canadian, part British, somewhat autistic and lives in Geneva. He will connect the cryptosystem with the real economy and create or die for a better banking model. His interests include mountaineering, chess, piano, programming and suspicious authority. In his early career, he was an M & A investment banker in London, then private equity and then moved to Switzerland to invest his own money. He holds a Master of Science in Finance from the London Business School.
Disclaimer: The opinions expressed in The Daily Hodl are not investment advice. Investors should conduct their due diligence before making any risky investments in bitcoin, cryptocurrency or digital assets. Please note that your transfers and trades are at your own risk. You are responsible for any losses. The Daily Hodl does not recommend buying or selling cryptocurrencies or digital assets nor The Daily Hodl is an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.