6 Reasons Why Bitcoin is Better than Gold
Bitcoin is a new digital currency and, perhaps, it is the best form of money in our history. But the problem is that most of us do not understand the essence of money. The most difficult for perception property of money is that they have always been and remain an accounting tool.
What is money and what are they provided with?
People are often interested in how the money is backed up. The truth is that the money is not backed by anything, and has never been backed up. The Euro is not specifically supported, like all other currencies in the world. And gold, for that matter, is also not backed up. Some believe that gold is valuable because we make jewelry out of it, but in fact it’s the opposite. Gold is valuable because it is small, and since it is small, it has become the best accounting tool for the last 5000 years.
Bitcoin is not at all a worse accounting tool than gold: its quantity is also limited, there will be a maximum of 21 million bitcoins on the network, it is even more limited than gold.
But historically, a compromise has arisen between things that effectively store capital (for example, gold), and things that are convenient to pay off (for example, the Portuguese escudo, the US dollar, American mile air miles, facebook loans).
They are convenient to pay off, but as a depository of capital they do not work. And effective storage of capital – the same gold – is inconvenient to pay off. In this situation, bitcoin is the first in the history of a universal depository of capital and payment instrument, which is more convenient than all predecessors.
Few facts from the history of money
It is difficult to conduct a discussion about bitkoin without understanding the concept of money. And the easiest way to understand money is to learn the history of money. Anthropologists agree that there was not a single tribe, let alone civilizations, which relied on natural exchange, it is also barter. There is no reliable evidence of this barter. For us it’s a paradox: after all, at school it was said that at first there was barter, and then we came up with money, because barter became too complicated. So, there was no barter – this is one of the myths about money.
Suppose this is so. Then the question of anthropologists: how did people trade before the appearance of money, if there was no barter? It turns out that there was no trade? No, there was trade, and she was active. How it was? Well, let’s say a hunter from our tribe killed a buffalo, I come up to him and say: “Can I have a piece of meat?”. And he says “No”, or “Well, take it, here’s a piece of meat.”
Then you will approach him and ask “Can I have a piece of meat!”, He says “Well, take it.” In fact, it was necessary to remember what we owe to other people and what they owe you. Then someone will approach me and ask “Wences, listen, give me firewood?” I say “Of course, here’s the wood for you.” And I need to remember what I owe to this man and what he owes me. We had to walk with an account book in memory, who owes us and to whom we owe. This is a very subjective system. Often debts did not return – or returned, but with it not both sides were happy.
Approximately 25,000 years ago, a very intelligent man came up with a new technology that became very popular. A man approaches and speaks to me; “Listen, will you give me some wood?” I say: “Well, here’s the wood for you.” And he suggests: “Let’s try something new, here are a few beads for you.” I answered: “Why do I need these beads? I do not need beads, I do not want them. ” He says “It’s not that, we’ll use beads as an objective tribal account book. Instead of everyone remembering what they owe to him, beads will remember it for us. ”
An objective account book of debts. It was so convenient technology that it was fixed, and after a couple of thousand years there were almost no tribes and civilizations without their own objective accounting tool. Some have had shells, others have salt, others have stones or beads, but the main thing is that this form of objective recording of debts has become the norm.
6 mandatory properties of money as a form of accounting
Anthropologists also came to the conclusion that in detail describing the tribal habitat, one can guess what will become objective money for these people, because it is always a material with six properties.
- The most important property is scarcity. And this is logical: if the material is not limited, (if we, for example, used leaves of trees), then it would be possible to create debts on a flat place. This would be bad – therefore, leaves are not suitable as an accounting tool.
- Another requirement is wear resistance. If the material breaks up or deteriorates, it will not be able to store information.
- The accounting instrument should be divided into small parts to account for small exchange transactions.
- This material should not take up too much space.
- Everyone should recognize him at first sight.
- The accounting tool must be clearly measurable so that errors and errors in calculations do not arise.
This system worked until about 5000 years ago, when the geography of trade began to expand, and commerce between the tribes began. Different tribes had different accounting tools, which meant the impossibility of trading. Therefore, approximately 5000 years ago, gold was the first universal instrument for recording debts. And it was gold, because it was not enough for everyone – it was the main quality. But in addition, it was very wear-resistant, relatively divisible, mobile, recognizable and measurable. That is why the last 5000 years gold was for us the best repository of capital.
What is the value of bitcoin
It’s amazing: today, if we want to leave 5000 dollars for our daughter, not even our daughter or granddaughter, our great-great-great-great-granddaughter in 40 generations, in 900 years – we can not do it. If you leave in dollars – they will eat inflation. And there are no such long-lived securities. The only known way to save capital for so long is to buy gold for $ 5,000, lock it in a vault, and leave the key to that person after 900 years. I’m amazed that in the twenty-first century this is the best answer.
That’s why bitcoin is so important. For the first time in 5,000 years, we found an instrument that excels gold in all six characteristics.
It is much less than gold (there will not be more than 21 million bitcoins in the world)
Bitcoin is much more divisible than gold: each bitcoin consists of one hundred million units, which are called Satoshi.
Bitcoin is eternal – nothing threatens his existence.
Bitcoin is recognizable – it can not be faked.
Measuring the number of bitcoins or satoshs is easy.
Bitcoin is much more mobile. I can call Skype from here, from New York to a friend in Jakarta. I will see him in real time and hear, and he will also see and hear me – this is an amazing technological achievement. But if after the call I want to send him to Jakarta 1 cent, which I have in my pocket, and which I would easily give personally – we will not be able to do this. In the 21st century it is impossible to send 1 cent to Jakarta. First, sending will cost 50 cents, secondly, the operation will take a week and thirdly – there is no suitable system.
Bitcoin solves this problem: with him you can easily send to Jakarta 1 cent or $ 1 million. Bitcoins can be attached to sms or to an email, and then send them in real time to the other end of the world. And the payment is very easy to verify. Upon receipt of bitcoin, you will immediately know that it is real. That is, it has all the features of an excellent digital accounting tool. And so it is perhaps the best form of money in history.