bsv logo

©2019 by 22nd Century Crypto. Proudly created to support you.

Why it started EP. 1 (Bitcoin saga)

This will be a continual series of posts following the very beginnings to today.

First we need to get to some very basics. Throughout history the world has been infatuated with precious metals, the king being gold. Up until August 15, 1971 the U.S. currency was backed by gold, the gold standard - you would have been able to give a dollar to a bank and receive some gold back in return. In 1971 Nixon did away with this standard and the value of currency became based solely on economy. This essentially allows the Fed to "PRINT" money as needed. The issue with this is we are basically betting things in our economy are and will always be good. Along with this is the fact that the US Dollar is the global reserve currency. As long as all these factors are true the perceived value of the dollar is strong.

The issues start to arise when the economy isn't doing so well. The value of the dollar drops and countries start selling off some of their reserves to compensate. The Fed starts quantitative easing to pump more money into the system, lower interest rates etc. While this is OK for short term protection it harms the stance of the dollar and the value of your held value. So people purchase gold in order to hedge against this. So as the value of the dollar drops they can use the gold to store the value and sell it off as needed and thus not be affected by the inflation caused by this careful juggling.

Bitcoin on the other hand isn’t based on silver or gold as a store of value. Bitcoin is based on math. Mathematical problems are solved and then these are validated and added to a public ledger. The machines that are doing these calculations are referred to as the "miners". The ledger is referred to as the blockchain technology. Don't worry as we go on in this series I will break everything down so it is understandable.

Bitcoin is produced through a very complex sequence of mathematical formulas that run on miners, in turn the network shares a public ledger using blockchain technologies that record, and validate every transaction processed through bitcoin.

One of the best aspects of this is a single person or company, such as the government, cannot control the network behind Bitcoin. The whole thought behind Bitcoin has always been to be decentralized. Decentralization is remaining independent of any central authority, such as a bank, the government, or a large corporation. This is accomplished giving anyone access to the open-source software that Bitcoin is developed from, and those that develop on the software are those that maintain it. These people do this for free and anyone can view the changes and see exactly how Bitcoin is working. This makes it impervious to nefarious parties from altering the code.

So to wrap this first part up, Bitcoin was developed as a better way to store value and transact. Bitcoin can transfer across borders virtually friction-less, cheap, almost instant and secure. Making it possible for anyone to travel anywhere without the need to have your currency exchanged. But there is much more to it than that. Bitcoin and the blockchain open up possibilities that in the past were completely hindered. It is now possible to open a company and seek funding through other sources than through banks. This allows a company to open its doors in days versus months. Blockchain allows a complete unalterable report that's can follow every transaction making long cumbersome audits a thing of the past. And this is just a tip of the iceberg. I will get into much more detail in later posts. Stay tuned.

32 views1 comment