I've been involved in cryptocurrency for 6 years on and off and during this time I have learned many things. I have made some astonishing discoveries that in time will go down in history and I have made some, not so cool discoveries.
One common factor though is either people don’t quite understand how money works, fiat I mean, how it is created and the impact it has on our economy.
Or you have some of the largest and wealthiest people and companies/banks fighting against cryptocurrecny for the obvious fact that they just have the most to lose in the event this all succeeds.
So lets clear some things up that I touched on in my other post.
This one is easy right? The Federal Reserve Bank issues our money, adjusts inflation, determines interest rates etc. through the monetary policies they develop. But lets not be fooled by the name. They have nothing to do with the Federal government, at all. This needs to be clear and understood. The Federal Reserve Bank is nothing more than a private corporation that is controlled by its share holders. These share holders receive a yearly dividend paid out to around 6%. This system is setup under the impression it is a third party and thus is not and cannot be manipulated and controlled exclusive by the government. And for the most part this is true. This also opens the door for corruption and greed due to the lack of complete oversight.
The shareholders that invest into the Fed are not released to the public, this is private information. This also is to ensure that no government entity or private citizen can exclusively lean on or control any of the shareholders.Seems OK right? We have a third party "unbiased" consensus as to how Americas money is handled. Very neutral. And on paper and in idea this is true. But you have to assume that these shareholders are nothing nothing more than large banks that are in the business of making money, large amounts of money. Nothing is done for free. Every company has an agenda, that is to survive and grow. But these same entities are also the incompetent ones that led the huge 2008 debacle, that the tax payers had to end up bailing out to the tune of billions of dollars loaned. Houses lost, lives changed forever, families destroyed. And these banks and large lenders got off without as much as a slap on the wrist.
The federal reserve tries to keep a consistent inflation rate. This drives spending and fuels our economy. To high of an inflation rate and your money is that much more useless. To low of one and people tend to hang on to the money longer and not spend. So there is a fine line that is walked, consistently adjusting to keep it around 2%. As the Fed puts it:
"Reserve's mandate for price stability and maximum employment. Over time, a higher inflation rate would reduce the public's ability to make accurate longer-term economic and financial decisions. On the other hand, a lower inflation rate would be associated with an elevated probability of falling into deflation, which means prices and perhaps wages, on average, are falling--a phenomenon associated with very weak economic conditions."
To make this even more simple, at 2% a dollar in your savings account becomes 2% less valuable than the previous year. This is how the poor stay poor and the rich stay rich. If you live paycheck to paycheck and can only put in very little into a savings account, each year that value drops by 2%. Now if you can invest some money that makes 2% returns every year then you just break even. But if you invest and make 3% returns then you are just breaking ahead. The rich can easily afford to invest and combat inflation. It does not affect them nearly as much as the poor. This is why every financial adviser will always tell you to invest, something, somewhere. This is why 401Ks are important because you are saving for your retirement, combating inflation and making a little extra on top, hopefully.
Example, in 1913, when the Federal Reserve Bank came into existence $1 could get you around 13 loafs of bread, give or take. Now, how much bread can you get today for $1?
Unfortunately though what ends up happening is hyperinflation, exactly what we see in Venezuela today. It is inevitable in my view. I will not go over details of hyperinflation, causes and effects, in this post as I believe it breaches the line of simplicity I am trying to draw, but it will eventually happen because the current system is broken.
Lets say you deposit $100 in your account for mathematical simplicity. The bank the turns around and lends out around $95 from your deposit to someone else who needs some money. Now that person then will take the money and put it into the bank so they can use it for whatever reason. The bank then lends out $88 of that money to another person. Sounds sort of like a twisted ponzi scheme doesn't it? Look into fractional reserve banking and get blown away. Once the money you earned gets put into a bank it is no longer "your" money. It is the banks and they will lend it out while still charging you monthly fees, overdrafts and interest. Banks are for profit, do not be confused. They are "holding" your money so they can make more money off of you in the process. Its a rigged game that until recently, we had no control over.
New York State, the financial hub of the world is the only state in America currently that makes people apply for a "Bit-license". This licenses is needed to operate any cryptocurrency related business, any. Because of NY's massive ties to the financial sector I believe they are obviously trying to make it difficult in that state to operate against the grain. They have no desire to see this new market thrive and succeed.
There is an ever increasing target on cryptocurrency. This battle is being fought over news outlets, social media etc. One side is linking horrible criminal activities to Bitcoin. Things like, money laundering, selling drugs, child trafficking, illegal arms sales, funding terrorism and much more. Basically if it is illegal then Bitcoin is contributing to it. Lets be honest though, what is the real means to most of this activity? Yep, FIAT. Fiat in whatever country has been the means for decades and any means to transact, be it fiat, gold, beans or sea shells, criminal activity will always be involved.
There is a negative side to anything. Email, the internet, social media such as Facebook which was used by Russians, and craigslist. It doesn't mean we should shun it. Ignore its potential? Of course not and these false narratives should be ignored. Bitcoin though has something fiat does not, the blockchain.
It is decentralized. There is not one company or person or entity that owns or controls it. It was developed as a peer-to-peer electronic cash system. Meaning everything is done between you, and me. It is then locked in time, forever on the blockchain. Making transactions transparent. The ability to hide becomes a lot harder. As the system grows it will also make conducting illegal or fraudulent activities much harder to get away with. Leaving fiat in the dust in comparison. With Bitcoin, you can not just stop a transaction from happening like you currently can with fiat. There is no one there to stop it. The exclusion of a middle man eliminates so many hurdles that were previously trapped by banks. You would have to flip the internet off switch to stop a transaction. And even that will soon not be able to stop it with the introduction of bitcoin transactions over radio waves.
Governments will and have tried to stop it, slow its progress and growth but you can't. Banks have prevented people from using their money to purchase Bitcoin (seems wrong doesn't it?). Thank goodness its's open source and not controlled. There is no one to take to court, no one for congress to say stop or we fine you. There is just you and me. Bitcoin is free from any type of monetary policy or political influence. Bitcoin is a perfect candidate for universal currency or a reserve currency. With very single transaction that happens showing on the blockchain for people around the world to see governments couldn't hide behind obscurity and unfair laws. Donations and governemt sponsored contributions would be observed in real time. So many valuable benefits to this technology and we, today, are living in its infancy.
Bitcoin in its nature is a deflationary asset. So instead of losing money every year due to irresponsible monetary policies and political bias budgets, your money actually gains value every year. Since Bitcoin is limited to only 21 million to ever be created as demand increases, value increases. The money you put into Bitcoin will be safe, secure, not able to be seized, stopped or censored. You will be able to go anywhere in the world and spend without the need to convert. Immigrants can easily move to another country without fear of their wealth being confiscated, without worrying about its value. People without access to banks will have a way to store their money, even make money. Funds can jump across the oceans almost instantly with very little cost.
Cryptocurrencies like Bitcoin can be used just like gold or cash. Companies like western union will no longer be needed. Payment networks like Visa and MasterCard who charge outrageous fees for use will go away. Bitcoin has all the positives with none of the negatives. Bitcoin can settle all transactions, hold and transfer value and send or receive money anywhere in the world. And lets not forget about the fundamental feature that Bitcoin brings, the blockchain. Blockchain is one of the most groundbreaking technologies that can span its reach across virtually any industry.
The future is exciting and it will only be held back by those who refuse to accept it. You either learn to adapt or die with the dinosaurs. Its getting to the point that very soon you will need to pick your side. Good luck, have fun and be safe. As always DYOR!