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WhyBtc |
"The Times 03/Jan/2009 Chancellor on brink of second bailout for banks" -- Satoshi Nakamoto, Genesis Block Do you ever purchase a house in a city? There are reports like this or this. What in common is, it is goddamn expansive. In fact, we are not buying the house but buying the land below. The house itself is quite cheap. I think 99% people's experience in housing may be like this: you plan to buy a house, it is priced at 1M (just an arbitrary number in the argument) and you start saving your money to a point where you think you can afford 1M with some help of loan after some years, then this house is priced at 2M. The reason for this is basically that the land resource is limited but the printing of fiat currency is unlimited and the distribution of the newly printed money is not proportional to people's original money. Let's say the printing speed is 5% annually. If your deposit does not increase at the speed of 5% but there are indeed that many 5% newly printed money circulating so there must be someone whose deposit increases at a much higher speed of the printing (the so-called 1% people) whose deposit number is even high enough to buy the house land in cash and therefore you can not compete the bidding. Nothing special, simply a math of elementary school and acknowledge that the money number of the deposit account is never the real wealth. Here in this story, your nominal wealth is increasing but your real wealth is decreasing and in fact it is stolen and moved to someone else by the "system". To have a glance, you may see the fiat currency growth here or http://www.tradingeconomics.com/blabblah/money-supply-m2 where blahblah is your country and draw a graph of your deposit over time as well. To be precise, you can even adjust the money volume by population number over time to per-capita money volume increase. The society's money volume increase 5%, and too bad, you may have only 1% increase annually in your saving account due to the saving interest rate is set to 1% only, and bad enough, your money in saving account may not be withdrawn because the bankers tell that you need to have a balance at least above some level otherwise there will be a fee penalty so that you can not even enjoy the 1% increase. While the truth behind the bullshit is the banks don't have enough reserve to allow you to withdraw, how come the banks can lend or invest your money in the saving account to others and you don't authorize the banks to do this lending or investment. In current banking, there is no way to save-only the money because banks always lend most of the deposit to others. When shit happens that the bank can not return the deposit back to you, the government prints some new money papers to entertain you; totally a childish game. There are also books talking about this, for example this one or this one or this one. The saddest part is that people may not come to think about this elementary-school-math symptom due to a work life hardship and this symptom is almost global for all countries. You'd better measure your life in term of real scarce resource, after all, we need air water food and land only, and these are limited by the law of physics. If a land is currently fairly priced at 1M and immune to natural disaster and you can afford, take the land, not the money paper. Also if you like to challenge and to know more in detail theory, you can visit here or see the truth of money and interest rate. So when would the BTC enter the show? The value of a piece of money paper comes from the trust of the public. People has no doubt about the trust of a real scarce resource and this is why real scarce resource became the first generation of money by history textbook. The second generation of currency is the piece of tokens (may be coin or paper) that is pegged with the volume of real scarce resource. The third generation of currency which I don't consider it as money and does not appear in human history until very recently is the modern fiat currency. People shall come together to force a change to this injustice of the third generation of currency by simply withdraw all their saving money back from the banks (then they will realize their money is gone) or raise suit against the country. But it might be a little bit late now because currently 99% people only have a small percentage of the total wealth. If people understand the nature of trust and the proof-of-work, then there is no reason why bitcoin can not be the fourth generation currency. The blockchain technology is simply a way to establish the trust without the government or any authority. After all, absolute power absolute corruption and we know it by the starting story of the page. If you don't understand blockchain, then my advice to you is you shall get to know more about it or can stop reading the following. Either way, the most important message is as above and delivered. Always remember: measure value in real scarce resource and use the real scarce resource as the numéraire. Now you are here so I assume you know how the trust is established by the bitcoin blockchain. Some notes about BTC need to remind:
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