WHAT DOES BITCOIN SOLVE?

in #cryptocurrency3 years ago

The ability of Bitcoin to provide financial solutions is not obvious to everyone. Perhaps because there is a deep-rooted idea in culture that each one of us must adapt to the already established models, which in some way suggest the limits of our economic freedoms, which include aspects of the privacy of our actions or the possibility to audit the systems we use to exchange value or communicate.

It is as if someone would have us believe that it is a mistake to think that there is something fundamentally wrong with the way in which procedures are established to know, participate and decide on the political and administrative mechanisms of the financial institutions that safeguard the money that we have been using until now.

Questioning the functioning of the economic models that banks reproduce in the domestic and individual economies is perceived as an act of conscience of the malaise. If we think in global terms, economies are in crisis. But proposing alternatives such as the use of Bitcoin can become suspicious according to the stance of the most stagnant sector of the economy. Above all, if people get carried away by the opinion of experts, authorities and even Nobel prizes.

Most of these people agree that there are numerous problems that have to be solved. But the idea that maybe we missed the road a long time ago can be disturbing for everyone. However, the money remains in the vaults of strangers, our expenses are made with credit notes (bills or coins) that an entity provides to represent a fraction of an impregnable value, which some calculate based on amounts of gold, reserves of oil, shares in stock exchanges, confidence, debt or products that produce value: if that is still possible, and if we include in the equation the central banks and the way in which the fiduciary money is currently issued.

The Bank of England took 300 years to create 1 billion pounds sterling. It took 8 more years to create another trillion pounds sterling, of which only 3% was cash, according to 2014 figures. Is there a limit then? Is it possible to judge or sanction the way in which economies devour more and more money and argue that this growth, and the use of that money, is based on the trust of the people?

A few days ago a reputed economist argued precisely that he does not understand what is the problem that cryptocurrencies solve. He believes that "they have no support or anchoring" to reality and that the transaction costs generate a lot of friction, which means a setback for any monetary system.

But the idea that the transactions that are made through the modern financial system do not generate costs for people is not right. Because who deposits value in a bank, in exchange for reducing friction for trade, for example, gives up control of your money. What does a saver get if he leaves his money in a bank? A negligible interest rate that has no incidence, the payment of small commissions that the bank consumes in massive amounts, debts that come from loans.

Banks have the privilege of deciding on the limits of cash that a person can use in a certain period of time. In fact, banks in the United States must keep 3% of their reserves in their vaults if they maintain transactions of accounts of more than 15.2 million dollars; and 10% of your total reserves if you handle account transactions above 110.2 million dollars. The rest is usually deposited in the local central bank, but it is hard to think that the bonds or the debt that is used to represent that reserve can be called a "backup" or anchoring to reality.

The worrying thing is how many of these federal banks, together with large companies, intend to boost their economies from the almost indiscriminate creation of money that contributed to the crisis of the last 18 years, accumulated in mortgage loans, financial sector businesses, properties commercial, credit cards and personal mortgages, that more than tools seem bondage to the tax system.

The current state regulations of the most influential economies insist on adapting the use of Bitcoin to existing legislation. Without taking into account that the existing laws do not provide clear limits to the system for which they were designed; much less allows to adapt the geometry of Bitcoin to the regulatory molds.

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