Every day we come across many things that changes our behavior, but once a while we come across something that changes very fabric of the society. Today’s article is dedicated to such mega change that is looming around the corner. the change in about our money!!
Why do we need money?
We need money to solve the problem of barter, Money is technological solution to solve the problem of exchanging the value of goods & services.
What thing we use for money?
Initially, humans started using community like Grain, Cattles; But, Commodity has major issue of divisibility and durability.
Some 5000 Years Ago, People started using precious metal as form of Money. Precious metals solved the problem of durability and divisibility; however, Precious metal were prone to theft.So around 1000 Years back, Paper money was born, People use deposit the precious metal in exchange of paper money and new type of bank was born. People were exchanging the paper receipt for transaction; but still this form of money was prone to fraud.Till 1918, There were 5000 different type of notes were in circulation in united states and all these notes were backed by gold standards.
Fast forward, country after country existed this kind of issuing the gold standard currency and started issued paper notes based on the monetary policy of central bank.This type of paper notes is called fiat notes and does not have any value except confidence given by central authority of country.In Digital age, this fiat notes started getting exchanged in electronic form but in order to validate the transaction, central authority created clearing house.Over the period, these central institutions have accumulated extreme power and can mandate the who can use their network to do the transaction.
This centralized control has caused hyperinflation 55 types in last 100 years. Problem is that people loose purchasing power in this situation without any fault.In Zimbabwe, during inflation time you can buy 100 Billion can buy you 3 eggs; in another situation, Asian countries lost the value of this currency without any specific fault of their people.
All this points to ability of person to use his right to use the money and do not lose its value over time.
In this internet age, more and more people are global citizen; but, our currency are local in nature.
Someone have to pay between 3% to 15 % as transaction fee in order to transfer funds from one country to another country. Last year total 6 trillion dollar crossed countries borders.
Bit Coin evolution!!
Bitcoin solves the problem faced by the current paper currency. It is backed by Brilliant distributed technology.
Bit coin is global currency so you do not need to exchange the currency when you travel abroad.
It is safe as it is distributed and backed by validation of millions of people in the network. Bitcoin is
is not controlled or monitored by any government or central authority; instead, it is monitored by every system in the network.Bitcoin does not require any bank or any third-party validation of transaction; Bitcoin can be used for banking the unbanked.