We are witnessing an economic dispute concerning the issue of inflation. While many economists, including Nobel Prize winners, promote its positive aspects, numerous groups such as hackers, cyberpunks, crypto-anarchists, and libertarians view it as a form of theft.
Bitcoin’s inception in 2009 was a response to the 2008 financial crisis, which challenged the monetary policies of central banks. However, Bitcoin surpassed its initial intent, becoming not only a means of payment but also a revolutionary tool in the online world. The first block in the Bitcoin blockchain, known as the Genesis Block, contains a reference to an article from “The Times” newspaper dated January 3, 2009, discussing the bailout of banks with taxpayer money. This reference was deliberate, reflecting Bitcoin creator Satoshi Nakamoto’s frustration with the prevailing financial system.
Inflation and centralized control over money by central banks have been significant issues in the global economy for decades. Many notable figures, like Thomas Jefferson and Alan Greenspan, warned against the negative impacts of such control. A debt-based economy, where central banks control money issuance, has led to increasing inequalities and the concentration of wealth in few hands.
1971 was a pivotal moment in global finance history when the US dollar’s convertibility into gold was suspended, leading to a departure from the system based on the precious metal. This move had profound implications for the global economy, leading to rising inflation and financial disturbances in subsequent years.
Hence, faced with these challenges, Bitcoin was designed as an alternative to the centrally controlled financial system, offering decentralization, limited supply, and protection against inflation. Ultimately, the combination of inflation, financial crises, and the pursuit of financial freedom led to the emergence and growing popularity of Bitcoin.
Mass money printing policies, or Quantitative Easing (QE), were implemented by many central banks, including the Federal Reserve in the USA, the European Central Bank, and the Bank of Japan, to increase the money supply, lower interest rates, and stimulate the economy. As a result of this policy, governments of the United States, China, and European countries decided to increase spending, basing on the ideas of economist John Maynard Keynes. On the other hand, the application of this policy also resulted in growing debt, burdening subsequent generations, leading to rising inflation and social inequalities.
Money printing, especially in response to the COVID-19 crisis, led to historical inflation levels. The National Bank of Poland, reacting to the crisis, lowered interest rates and also applied asset purchase, leading to record inflation in Poland. In an international context, global debt reached a record level of nearly 300 trillion USD.
In this economic landscape, cryptocurrencies like Bitcoin have become popular as an alternative to traditional monetary systems. Bitcoin, promoted as a tool for freedom, offers an alternative to currency systems controlled by governments and central banks, giving people more control over their finances and protecting them from the inflationary influences of traditional currencies.
Want to learn more? Read the full analysis prepared by the Quark exchange network.
