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We all have this feeling that something in our world isn't working properly, but what is it? Everyone has his own opinion, and in this article, I will try to give you my perspective in the simplest way possible.
The first thing I look at is incentives. In fact, I believe that the word incentive is key to understand how the world works, and more specifically, how the economy works. I think that people react to stimuli according to what they think is best for them, even if sometimes we fail to recognize what would be the best for us.
There are a lot of incentives out there, but I think that there is one specific incentive that we have to look at carefully. That is money.
The reason why I am saying this is that all throughout history people have tried to find a means of exchange, people always tried to create economies to give the right incentives to live a better life. In this way, they were trying to find the right way to build a system that could provide a better lifestyle to those who lived in it
Money is key for the prosperity of a country, and this is what central banks want to achieve. They want to give people stability, through the issuance of a currency that will facilitate the exchange of goods and services. Of course, there are a lot of factors that go into a well-established system, money is not the only one, but we can say that is an important one to create what we before mentioned incentives.
In fact, central banks can decide to expand or contract the economy through money, they have different instruments to do that, which are monetary systems or fiscal systems. Simply put, if they decide to print more money, they are trying to stimulate the economy, or if they are raising taxes they are trying to slow down the economy. This is because their decisions will impact the spending behavior of their citizens.
Obviously, banks and governments work together to try to give their people a better lifestyle, but sometimes this results in very bad situations. In fact, we know that sometimes they screw up.
Right now they are talking about CBDCs, which stands for central bank digital currency, when that will happen, no more cash will be available on the street, and every transaction we make, will be recorded and controlled.
Amazing things can happen if this will succeed, in fact, they could give you stimulus during Crysis directly, without all the bureaucracy, without passing through banks, and without being delayed.
They could tax rich people easier than ever. They could create spending incentives for middle-class men to stimulate the economy, or they could give to poor people more advantages.
But of course, all of this comes with a cost. the cost of freedom.
Freedom of spending without being tracked, freedom of privacy. And here it comes. Cryptocurrencies.
A system that cannot be stopped or controlled by anyone. Not even governments can.
In fact, in 2009 when bitcoin is born, a new world came to life. the world of decentralization. An option for all of those that want more privacy and more security, to transact freely with each other.
Cryptocurrencies give back to the people what has been taken from them throughout the years. and here I want to talk specifically about Bitcoin.
Bitcoin is a peer-to-peer network, that uses the power of blockchain technology to run nodes all over the world, that secure transactions and that make them unstoppable. Bitcoin is giving people a choice, to exit the current system ruled and controlled by the hands of few, to enter a world of decentralization, where people have the power.
Obviously, this has costs too, Is a high volatile-non-regulated market, full of scammers. In fact, once you enter the crypto world you will have responsibilities, and those responsibilities could make you a lot of money, as well as making you lose all of your money.
But let's talk about incentives!
BANKS
Central banks try to direct the economy according to different data that they try to retrieve from statistics, this includes, but are not limited to, inflation, employment rate, the velocity of money, demographics, consumer spending, and asset prices.
They basically try to establish an equilibrium between supply and demand, employment rate and inflation, consumer spending and interest rates and so on.
They want the economy to keep growing, but not too fast, to avoid big crashes. In fact, a lot of what happened in 1930 with the great depression is, according to a lot of people, a direct consequence of a lack of interventionism from a central bank.
I am not here to judge their responses, in fact, what I look for in this case are incentives. They try to stimulate the economy, by doing what? Printing money, creating more debt. Devaluing currencies, and stimulate consumption. When the economy is not going too well they push people on taking more debt lowering interest rates, creating more inflation.
This incentive given from central banks is corroding the savings of those people who don't know how fiat works, favoring all of those that do.
Plus, they are incentivizing what I think is the worst thing possible. Consumerism. Consumerism is looking for short-term gratification, consumerism is polluting our world. In fact, the more people are incentivized to spend their money as quickly as they can because of the loss of purchasing power, the more dumb choices we will make. It is better to look for long-term prosperity rather than short-term illusion.
BITCOIN
Bitcoin is different in the sense that it appreciates over time, there is no central authority that can control it, and its supply is fixed. Plus, it's censorship-resistant, private, and fast.
Bitcoin rewards the savers, and every saver is equal. You don't need to invest, you don't need to know how the economy works. Your purchasing power is protected by the characteristics of these assets. Your data is secured by blockchain technology and you are incentivized to think long-term. not short-term.
People are incentivized to save more now, to get more things later. Not the opposite. There is no consumerism with bitcoin.
Of course, we find ourselves in a historic moment where cryptocurrencies are very young, and that is not helping their volatility. This space is not understood by the majority of people. Most people see it as a threat, but it is not.
Cryptocurrencies are the GATE to exit fiat, it's something we all need to prevent interventionism to destroy our capital.
In fact, there will be only 21 million bitcoin all over the world, and no one will change it. Right now there are countries, developers, and a lot of entrepreneurs that are trying to build the financial system of the future.
In fact, it's already possible to send bitcoin for almost free using the lighting network. Doing so people won't have to deal with banks, transfers will work 24/7, no one will stop it, and it doesn't matter where you are, all you need is an internet connection.
CONCLUSIONS
To conclude this little article, I want to make a distinction between capitalism and consumerism. I am a capitalist, but I hate to think about consumerism, in fact, I believe that consumerism is a peculiarity that comes from fiat money more specifically, while capitalism still works in a gold standard society, and even in a bitcoin standard society.
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