By Charley George
So here is the 50 million dollar question: what the hell is Bitcoin really? I ask you the same question about the money we use, which is actually called Fiat currency.
The money in the US used to be backed by precious metals like gold and silver. It was switched to the petrol or oil dollar in the early 70’s thanks to President Nixon. So now the US fiat currency is backed by literally nothing but our good economy because oil is irrelevant. Stew on that thought for a minute.
If you do not believe this, then think about the reason why we were told to get off the gold standard in the first place. The US Dollar’s value is only based upon the good graces of the rest of the world and their feelings about our country. This is the true fares because we do not have trillions in gold anywhere nor do we have trillions in oil either.
We were told to get off the gold standard because our money is too strong. This makes our goods too expensive for the rest of the world. This ends up putting our laborers out of work because our goods cost too much for the rest of the world to buy so business’s must cut back on production which means laying off workers.
Well, we were dooped shnookered to move into the petrol dollar. The reason is, oil is tied to the dollar because our fiat currency is based upon petrol and overall health of our economy. The awesome economy we used to have carried our dollar to great heights but when our economy is terrible the dollar falls. That is how it works.
So now you have a little history of the dollar and fiat currencies and how they work. Now here is a tidbit of info on crypto currencies, specifically Bitcoin, it was created because the creators were tired of banks taking all their money and getting literally nothing in return except tons of headaches and fee after fee after fee after fee.
So, what the hell is Bitcoin and why does it have an evaluation so high? Well first off the big difference between Fiat currency and Bitcoin is that Bitcoin is limited to 21 million coins. So when the last coin is mined there can no longer be another coin mined not like the fiat currencies where they print them any time they want.
The reason people like Bitcoin over the dollar is that very fact, you just can’t mint another Bitcoin once that 21 million are in circulation. Coins are won via mining, which is calculating a Sha-256 hash to be added to the block chain. (I’ll be going into the detail of Bitcoin and other crypto currencies in another article and how they work and what mining is. Meanwhile here is a brief explanation of Sha-256 algorithms.)
Another reason for the attraction to Bitcoin is that it has developers who work hard to make sure the coin is secure, strong, and has everything it needs in order to continue to thrive.
People have faith in the developers, the ecosystem of the coin, and the ease of use and saving, no one can rob you unless you give away your virtual wallet, which is an application where your crypto currency is stored. The last thing you need to keep in mind is that since Bitcoin was the very first crypto currency all other coins are bought and sold using Bitcoin.
Sound familiar? Kind of like the price of oil is pegged to the US dollar and much of the worlds currencies are compared to the US dollar.
And because people are attracted to this coin because the people in the know, the developers, have faith in the coin and therefore in its value, all the other coins prices are pegged to it. This isn’t at all different from the Fiat currency. The Fiat currency has value based on our faith in the economy, the capabilities of this country to always recover from anything and creating anything.
But the biggest problem with the Fiat currency is that it’s based upon the Central Bank. The Central Bank has total control over the money. You don’t, they do, period. As they print more money we need to borrow on that money from day one in the Central Bank system. Where Bitcoin is created by mining transactions and placed onto the blockchain. This is how screwed up our currency system it is.
I’ll be writing further on this topic, so stay tuned to this site for some juicy updates.