If you are new to the world of crypto, I’ve put together some information you might find helpful.
Fiat or Crypto?
I heard the term ‘fiat currency’ a while ago and assumed FIAT was an acronym for something or maybe something to do with Italian cars. Fiat is latin for ‘let it be done’ – fiat money is a national currency issued & guaranteed by a government or central bank. It is not like the old days and backed by a commodity such as gold and only has value because the government maintains that value. Fiat is ‘centralised’ i.e. issued and controlled by a government or organisation.
Cryptocurrency is a new form of ‘decentralised’ money i.e. not issued by a government or organisation. The crypto part is because the currency is protected by electronic encryption which makes it impossible to counterfeit or double-spend. Cryptocurrency transactions are entered on a distributed online ledger – a ‘blockchain’ which is accessible to everyone and does not depend on a central authority.
Digital Assets are the future of ownership. They provide a secure and transparent way to prove ownership and transfer value without intermediaries.
Charles Hoskinson
Running out of money? Print some more!
Imagine a new country has issued $1 billion and you have $10 million of it i.e. 1%. The government then issues another $1 billion… your share of the country’s wealth has effectively halved to 0.5%.
That’s the problem with economies around the world… there’s no limit on how much money is in supply. In the old days, currencies like the US Dollar used to be backed by gold or other commodities. Now that there is no requirement for this, Governments get into debt and just print more. The result is inflation.
“Whoever controls the volume of money in our country is absolute master of all
James A. Garfield 1881
industry and commerce… when you realize that the entire system is very easily
controlled, one way or another, by a few powerful men at the top, you will not
have to be told how periods of inflation and depression originate.”
(James Garfield was President of the USA and was assassinated in 1881, not long after saying that.)
Bitcoin – changed the game
Bitcoin is digital money which is not controlled by a central organisation. The ‘ledger’ – which records all the transactions – is transparent for all to see, unlike with a bank. Before a transaction is confirmed it is checked and agreed by multiple computers in the system and added to the ledger which is know as the ‘Blockchain. The supply is limited and can never be increased and is increasingly being recognised as a store of value.
Brilliant though Bitcoin is, there is no practical use for it and probably never will be. That’s the same for the thousands of other crypto ‘tokens’ as they are called. Billions of dollars worth of Bitcoim are held around the world, however all of the holders are speculating that the value will increase (or decrease if they are short-selling). It’s effectively gambling.
Mike Maloney’s Hidden Secrets of Money, Episode 8 does a great job of explaining how Bitcoin and the wider blockchain concept came about, how it works and why it was such an important invention for the world. It’s a long video and well worth watching, however just watch the first 16 minutes or so if you are short on time:
Most crypto coins are about speculation. Vow has utility, for both businesses and for consumers.
Each year retailers lose $7 trillion of revenue by discounting. Vow fixes that. See the Vow Page to see why ‘the future of money is promising’.