Fiat currencies and Bitcoin
By August 2021, it marks the 50th anniversary of the creation of the fiat currency system. The fiat currency system was founded in 1971 under the administration of the 37th US President, President Richard Nixon. Prior to the existence of the fiat currency system, the system used was the Bretton Wood and Gold Standard systems where the currency was pegged to the amount of gold commodity. Read here to find out about the bretton wood and gold standard systems.
Richard Nixon - Wikipedia
After 1971 the fiat currency system especially the US Dollar was no longer dependent on gold reserves. So this currency can be printed indefinitely according to market needs by the respective central banks, such as the US dollar (FED), Pound Sterling (BOE), Euro (ECB), Malaysian Ringgit (BNM), Rupiah (BI) and others .
This leads to the devaluation of each currency because every year the currency is always printed and channeled into the country. This situation causes the value of the currency to depreciate or inflation. That is why the value of goods seems to be getting more expensive year by year. The more paper currency is printed the lower the value of the currency. This is in line with the concept of ‘supply and demand’.
So because of this fund managers or institutions will invest their funds or assets in the form of inflation -proof assets. Examples are real estate, gold commodities, stock equity, bonds and others. This is because these assets are limited and their value does not fall like fiat currencies. Yet at this point, there is one asset that is stealing the attention of many, which is Bitcoin. Bitcoin has currently been a very lucrative asset for this 10 -year investment period.
Many leading financial personalities who invest in bitcoin and are confident in its potential include such as Bill Miller, Ray Dalio, Paul Tudor John, Robert Kiyosaki, Michael Saylor, Larry Finck, Jim Cramer, Elon Musk and many more.
Bitcoin started stealing the spotlight in 2017 when it soared to nearly $ 20,000 before falling to $ 3,800. But now after 3 years bitcoin is once again stealing the spotlight when it soars making a new ATH at $ 61,000. Terrible. An increase of 1,505% in just one year.
What is bitcoin.
Because of the surge that is so high right now, then the name of bitcoin began to be mentioned either through word of mouth or in the media. However, many still do not know what bitcoin is and why the demand for bitcoin is increasing. Bitcoin was the first cryptocurrency. The bitcoin white paper and this project has been started since 2008 and launched in 2009. Bitcoin was created by a person or group using the title Satoshi Nakamoto. These are unknown and remain a mystery until now.
Satoshi Nakamoto.
Bitcoin was founded by Satoshi Nakamoto in 2009 through the bitcoin.org portal. Then he opened the forum site bitcointalk.org. It is on this site that he communicates and shares the bitcoin technology of his creation. His last post was on December 12, 2010 and continues to disappear to this day. Although its creator disappeared but his bitcoin creation continues to grow and continues to be a concern to this day.
Bitcoin and Blockchain
Cryptocurrencies like bitcoin are created through secure cryptographic and encryption technologies. Bitcoin works through computers and internet connections. The bitcoin ecosystem is supported by bitcoin miners around the world. These miners are remunerated through mining activities. Mining occurs when there is a transaction. Transactions are always happening all the time around the world. Every transaction that occurs will be recorded in the block. When the block is full, the blocks will be arranged next to each other in a chain. So this block arrangement is called blockchain (Block + Chain).
Millions of computers owned by miners around the world keep the same blockchain record. This is what is said to be a decentralized system. This information cannot be falsified or misrepresented because the computers are too many and they do not know each other.
This blockchain technology is also used by other cryptocurrencies through varying encryption. Because that’s why blockchain technology is getting hotter and getting good response. It is decentralized, secure and privacy. We can see the wallet address and the transaction amount, but we don’t know who the owner is. This technology works community -based.
Why Bitcoin Is Getting More Expensive and In Demand.
Here are the reasons why bitcoin is in high demand.
Bitcoin is inflation proof and a good value storage asset. This is due to its limited amount unlike fiat currency. The amount of bitcoin is limited to 21 million units only. The last mining was in 2140 to cover a total of 21 million. Currently the amount of bitcoin in the market amounts to 18.7 million. Due to the limited quantity, so the growing demand caused the price to go up as well.
Cryptocurrencies like bitcoin work through third -party independent blockchain technology. Unlike the fiat currency system managed by banks. So it is free from the risk of deviation or error. If two or three computers catch fire, there are still millions of other computers in the world that have the same record and work for the stability of the blockchain ecosystem.
Bitcoin transactions are very fast compared to fiat currencies when crossing borders. It only takes between 10 minutes to 20 minutes. Compared to fiat currencies between banks across the country, it sometimes takes up to a few days to arrive.
However, because bitcoin takes more than 10 minutes to confirm a transaction, it is less relevant as a currency for daily use. That is why there is the creation of other cryptocurrencies to solve this problem and other problems. Examples are Litecoin, Ethereum, Cardano, Ripple, Polkadot and others.
