Author: misamaliraza94
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Importance of money holding value
Money is a metre/yardstick for measuring value. This aspect of money is taken for granted by everyone who participates in the economy by using it as a medium of exchange. All trade and economic activity relies on it – it’s like a universal language. And just like when we speak our own language, we don’t…
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Bitcoin, scarcity and trust in money
In the previous article, you learned the definition and basic characteristics of a cryptocurrency – including the distinction between the money and the money system, and the role of cryptography. You also had a brief intro to the history and evolution of money up until Bitcoin. This should have given you a grasp on how…
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What you`ll learn
What you’ll learn Why scarcity matters so much for sound money How the existing money system works Fiat money isn’t scarce & why that is a problem Why achieving digital scarcity is such a big deal
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Two for one – Internet money and investment
When the Bitcoin system launched, its currency, bitcoin, was pretty much worthless. It wasn’t until 2010, when someone paid 10,000 BTC for a couple of pizzas, that bitcoin began to give signs that it could be used as money. As of April 2021, that would amount to US$ 600,000,000 – easily the most expensive dinner…
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Bitcoin – Ultimate Sound Money
Before we jump down the Bitcoin rabbit hole, let’s make a distinction: Bitcoin (with capital B) refers to its money system – whereas bitcoin (lowercase b) refers to its units – the money itself. Bitcoin was the first cryptocurrency to find a successful solution that ticks all the boxes of sound money with none of…
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How cryptocurrency can return us to sound money
To get back to sound money we could return to the gold standard, but heavy metals aren’t exactly ideal for a digital world; the answer comes from cryptocurrency. Cryptocurrency is specifically designed to include all the characteristics we’ve discovered about sound money; be convenient for the digital age but with no one point of failure.…
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The Gold Standard
This was the beginning of what we call the “gold standard” – paper money, backed by gold. This continued until 1971, when US President Richard Nixon changed the rules, allowing governments to create money without any mechanism for converting it into an equivalent amount of gold. The Gold Standard Refers to the backing of notes…
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Characteristics of sound money
A key property of gold is that it is almost impossible to destroy (durable) but can be melted down into smaller units (divisible), which are relatively easy to transport (portable) and when divided, each unit has identical properties (fungible). It is also very recognisable, which isn’t surprising as it has intrinsic value due to its colour and shine.…
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Into The Time Tunnel
Archaeologists have found evidence of collectible items going back 75,000 years, such as beads and pierced animal teeth. Their choice wasn’t random; they were durable, not particularly abundant and clearly had special value (often used as jewellery) and we know they took a lot of effort to make at a time when life was short…
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How does cryptocurrency have value?
To answer that question we need to take a short trip back in time and trace the evolution of money. The characteristics of sound money give us a template against which to measure the money we use right now, and the improvements cryptocurrency promises to deliver.