We have all heard about the so-called cryptocurrencies, which especially in recent years have been an increasingly present topic in the media and on social networks. However, very few really understand what is behind this revolutionary new blockchain system and monetary theory.
The global monetary system
The fiat money that we use every day, such as the peso, the dollar or the euro, and the banking system that allows us to carry out digital transactions presents several problems:
1-Inflation: Central banks have the power to print money at will, without any limit. The increase in the amount of money in circulation causes its value to be affected and to lose purchasing power over time; in other words, our money is worth less and less.
2-The monetary system is strongly centralized and requires the intermediation of banks or some financial entity in order to function.
3-Another problem is that governments have the right to audit our accounts and the power to impose restrictions on the free disposition of our cash; in other words, they can withhold our money and prohibit its use or withdrawal in exceptional cases. Such is the case of the famous Corralito, for example.
It is no coincidence that the birth of Bitcoin was in 2008 in the middle of the financial crisis, when several banks went bankrupt leaving savers empty-handed while at the same time many governments put restrictions and froze bank accounts.
A unit of currency is intended to facilitate exchange operations. As with other forms of money, it is also possible to buy whatever you want and use Bitcoin as a means of payment, of course, as long as the other part is willing to accept Bitcoin as a currency.
So… what is Bitcoin?
The first mention of bitcoin was in a 2008 document entitled: «BITCOIN, a user-to-user electronic cash system.» And it is signed by who is considered the creator of Bitcoin, Satoshi Nakamoto, a person or a group of people whose true identity is unknown to this day since it is only a pseudonym used in different forums.
This document proposes the idea of a unit of digital currency that operates thanks to a worldwide network of user-to-user payments, totally decentralized that does not need banks or other financial institutions to play a role as intermediaries to carry out its transactions and verify the veracity of said movements. In short, it raises the monetary freedom of being the authentic owners of our money through a transparent and incorruptible system.
Just as some currencies are backed by precious metals like gold or silver, Bitcoin is backed by technology, by mathematically verifiable encrypted cryptography.
There is only a certain amount of Bitcoins in the world: a total of 21 million, and they are all that will exist. But each of these coins is divisible by «cents» called Satoshis, in honor of its creator, and can reach the figure of up to 8 digits after the comma. This makes it possible to buy and sell small portions of Bitcoins, since in recent times their value has reached high values in the market, making it more difficult to access a whole Bitcoin.
Bitcoins, for their part, are stored in so-called wallets, wallets or virtual wallets, which you can have on your mobile phone, download on your computer or in an external wallet, which belongs to you and only you and nobody can access them, block them or restrict their use. You can access your wallet and make transfers to any wallet in the world without any intermediary, other than an internet connection.
When creating a wallet we do not need to give our real name or address, so the transactions are completely anonymous, there is no way to know the real identities of the people who own Bitcoins in their respective wallets.
Bitcoin in today’s life
The value of Bitcoin on the stock chart is very volatile, so it is very common to see a constant fluctuation, especially while trying to position yourself to establish your identity in this system.
But it is also true that, since its appearance and until today, it shows in its records an upward trend, this means that, although it has suffered its falls, it always goes back in a rise that is increasing and does not stop.
In its early days, Bitcoins were dismissed by large corporations and their respective magnates reluctant to face new «unnecessary challenges», they did not even lay eyes on them, much less consider it a currency as such, and did not see a profitable or promising future for it.
Today, some companies have already begun to adapt to new technologies and generational paradigm shifts, accepting payments with Bitcoins such as Paypal, Microsoft, Tesla, Dell, Shopify, Amazon and Badoo, among others.
In this way and gradually, Bitcoin is positioned as a new emerging market and becomes, for the understanding of a few people, in the largest reserve of long-term economic value of humanity, displacing gold, with all its brightness.