Bitcoin priced at its peak $69,000. In 2009, it was worth less than a penny. What drives bitcoin’s price?

“Crypto it’s a bubble; bitcoin’s going to crash to $0!”

“Oh Yeah? Certainly there are stupid people trading crypto - just like stocks. But do you think Warren Buffet is crazy? Will you call Bill Gates stupid? What about Elon Musk? Did you know that Facebook re-branded to Meta, & Square to Block? Have you heard about Michael Saylor from MicroStrategy? Even JPMorgan & Citibank invested in the blockchain industry! Are you smarter than them all?”

“Are you serious?? The truth is I never looked into it. Guess I gotta do some research.”

I have this conversation at least once a week. So let’s start from the beginning.

Isn’t it senseless that something that is not backed by anything is worth money?

On the other hand, why is cash worth? The dollar is completely not backed by gold for the past 50 years! Furthermore, on second thought, what is gold backed by...?

In other words, what is value?

We have to back up in history and learn a crash course in human economy [don’t worry, nothing scary, just simple life]. [Note: we are discussing today crypto as a currency –there is a world of advantages & innovation to examine in the upcoming letters.]

People need supplies to live, and people want to enjoy life. But it’s impossible for one person to do all the field work, breed cattle, educate, chop wood, cut stone, build, sew, wash, pave, etc.. So john has an apple orchard, and he needs a cow, because a cow works, gives milk, and produces meat & leather. He goes to jack and trades apples with cows, because jack wants apples. How much apples for a cow? Depends how important john needs a cow & how interested jack is in apples. That is raw economy: the Value of Life based on the supply & demand, and the time & effort.

However, as this way is not so practical, people looked for convenient commodity that is portable, dividable, limited, durable, & demands labor to acquire, that societies will recognize as a token of their valuable objects & skills. We started using things like precious stones, rare materials, scarce metals etc. So that when jack works 8 hours at john’s farm, he doesn’t get eight boxes potatoes, he gets 8 coins, with one he buys eggs, with the second he pays the mailman etc..

But that’s for sure: money must be Decentralized. Humankind decides what is valuable. For instance in the Arctic Circle, wax would’ve been the currency, due to its distinct value and divisibility. Bottom line: money is supposed to represent real life value and trace its current owner until we need it. “Store of Value”.

Eventually most countries established metal currencies [where the corruption started; what does money have with state?]. As time went on, we invented bank notes & checks so that instead of dragging around expensive articles, we’ll just promise that you’ll get it on demand.

What happened next was that the government decided to divorce the dollar from gold & the pound from silver. That’s called “fiat” = decree. The government is making a decree that this fiat currency will always be redeemable for goods and services. Now, it could’ve maybe worked, but there are a few problems:

1.     Not every government or currency lasts forever, and you never know who’ll be next…

2.     If they can print more whenever they want, it’s like a game of hot-potato. Get rid of it as quick as possible, since a dollar today is worth more than a dollar tomorrow! Because adding money does not create new value of life, it just takes away a share from the existing bucks! They cannot dictate that with every dollar printed should grow more apples!

3.     There’s another way inflation grows. The law is that a bank is permitted to use 90% of checking accounts for their finances. Let’s say you see $10,000 in your account, $9,000 is a duplicate. Somebody else uses the money with his credit card.

-Hey! The bank gets rich on my money?! I should earn this interest!

Right, that will be discussed in the future. But a bigger problem is the inflation. They show the same money at two places. Its legal counterfeit dollars… which causes financial crashed every decade or two --don’t worry, we will bail out the banks with our taxes!

4.     Moreover, what if one government sanctions another, and the innocent citizens find themselves without the reward of their toil?

All that is possible because our currencies are Centralized. There are high-class central groups dominating the world’s value. Can you force public to value something...?

That is where we stand today.

Therefore, we’re looking for something that is easy to carry, does not multiply, can’t be discriminated, and is globally accepted.

Do you think what I think?

Civilization decides what has value, and they determined that bitcoin has value for eternal reasons. It’s weightless, independent, limited to 21,000,000, dividable, and everlasting.

And not only for these characteristics.

Current cash has some flaws & is missing some abilities.

·       Money should be a store of value for the long run, and there’s several issues with today’s possibilities, even omitting the inflation and currency uncertainty.

o   Safety. Where should I store my money?

Cash at home? Can be stolen, ruined, burned, or lost.

-In the bank, of course!

Do you really think banks and card companies do not have hacks, frauds, and scams? It happens every day.

o   Centralized. In the bank the money is not yours. They lock accounts for every slight suspicion or concern. My checking account was locked for 10 days when someone deposited a larger-than-usual check! My online account access is blocked for life due to a wrong QuickPay I personally sent out! That means that our money is prone to other’s human mistakes and irrationality.

Not everyone in the world is privileged to use the current banking system. What if they don’t possess the minimum? What if they don’t fit the restrictions and regulations? You think you’re OK? You don’t grasp how many financial opportunities you’re held back from, till you see blockchain - to be discussed.

o   Privacy. Your financial and lifestyle record is exposed to the corporations. If their system gets hacked, your credit score, wealth, tax info etc. is in the hackers hands to do whatever he pleases. And it happens, not always does the media manage to report it due to the centralized powers [yes, the media is also centralized…].

·       Another issue plaguing currencies ever since is forgeries.

·       Every government recognizes different currencies, which makes traveling a nuisance, and it costs heavy fees to send money for business or individual purposes internationally.

·       Transactions.

o   It takes to much time and struggle to move money. Of course, because humans must approve & record every transaction, if not how will it be confirmed? Also because the money isn’t necessarily ready in your account… as discussed before.

o   They cost fees. Nobody works free of charge!

o   Limitations. Not everything works with everything, and there is always our beloved restrictions & security measures. Was your card never declined using it in a new state…? They don’t even mean bad, there was simply no method to be protected and quick and interconnected.

o   Centralized again. Even if you don’t care, the unfortunate are a larger percentage of the population then you imagine, and they’ll make a difference. –and, you never know who is next. Did the Canadians, Russians, and Ukrainians dream they‘d be blocked?

Bitcoin solves everything. That is why one Bitcoin is now ~$45,000, it's worth [much more than] that figure.

How does it solve these problems?

Bitcoin priced at its peak $69,000. In 2009, it was worth less than a penny. What drives bitcoin’s price?

“Crypto it’s a bubble; bitcoin’s going to crash to $0!”

“Oh Yeah? Certainly there are stupid people trading crypto - just like stocks. But do you think Warren Buffet is crazy? Will you call Bill Gates stupid? What about Elon Musk? Did you know that Facebook re-branded to Meta, & Square to Block? Have you heard about Michael Saylor from MicroStrategy? Even JPMorgan & Citibank invested in the blockchain industry! Are you smarter than them all?”

“Are you serious?? The truth is I never looked into it. Guess I gotta do some research.”

I have this conversation at least once a week. So let’s start from the beginning.

Isn’t it senseless that something that is not backed by anything is worth money?

On the other hand, why is cash worth? The dollar is completely not backed by gold for the past 50 years! Furthermore, on second thought, what is gold backed by...?

In other words, what is value?

We have to back up in history and learn a crash course in human economy [don’t worry, nothing scary, just simple life]. [Note: we are discussing today crypto as a currency –there is a world of advantages & innovation to examine in the upcoming letters.]

People need supplies to live, and people want to enjoy life. But it’s impossible for one person to do all the field work, breed cattle, educate, chop wood, cut stone, build, sew, wash, pave, etc.. So john has an apple orchard, and he needs a cow, because a cow works, gives milk, and produces meat & leather. He goes to jack and trades apples with cows, because jack wants apples. How much apples for a cow? Depends how important john needs a cow & how interested jack is in apples. That is raw economy: the Value of Life based on the supply & demand, and the time & effort.

However, as this way is not so practical, people looked for convenient commodity that is portable, dividable, limited, durable, & demands labor to acquire, that societies will recognize as a token of their valuable objects & skills. We started using things like precious stones, rare materials, scarce metals etc. So that when jack works 8 hours at john’s farm, he doesn’t get eight boxes potatoes, he gets 8 coins, with one he buys eggs, with the second he pays the mailman etc..

But that’s for sure: money must be Decentralized. Humankind decides what is valuable. For instance in the Arctic Circle, wax would’ve been the currency, due to its distinct value and divisibility. Bottom line: money is supposed to represent real life value and trace its current owner until we need it. “Store of Value”.

Eventually most countries established metal currencies [where the corruption started; what does money have with state?]. As time went on, we invented bank notes & checks so that instead of dragging around expensive articles, we’ll just promise that you’ll get it on demand.

What happened next was that the government decided to divorce the dollar from gold & the pound from silver. That’s called “fiat” = decree. The government is making a decree that this fiat currency will always be redeemable for goods and services. Now, it could’ve maybe worked, but there are a few problems:

1.     Not every government or currency lasts forever, and you never know who’ll be next…

2.     If they can print more whenever they want, it’s like a game of hot-potato. Get rid of it as quick as possible, since a dollar today is worth more than a dollar tomorrow! Because adding money does not create new value of life, it just takes away a share from the existing bucks! They cannot dictate that with every dollar printed should grow more apples!

3.     There’s another way inflation grows. The law is that a bank is permitted to use 90% of checking accounts for their finances. Let’s say you see $10,000 in your account, $9,000 is a duplicate. Somebody else uses the money with his credit card.

-Hey! The bank gets rich on my money?! I should earn this interest!

Right, that will be discussed in the future. But a bigger problem is the inflation. They show the same money at two places. Its legal counterfeit dollars… which causes financial crashed every decade or two --don’t worry, we will bail out the banks with our taxes!

4.     Moreover, what if one government sanctions another, and the innocent citizens find themselves without the reward of their toil?

All that is possible because our currencies are Centralized. There are high-class central groups dominating the world’s value. Can you force public to value something...?

That is where we stand today.

Therefore, we’re looking for something that is easy to carry, does not multiply, can’t be discriminated, and is globally accepted.

Do you think what I think?

Civilization decides what has value, and they determined that bitcoin has value for eternal reasons. It’s weightless, independent, limited to 21,000,000, dividable, and everlasting.

And not only for these characteristics.

Current cash has some flaws & is missing some abilities.

·       Money should be a store of value for the long run, and there’s several issues with today’s possibilities, even omitting the inflation and currency uncertainty.

o   Safety. Where should I store my money?

Cash at home? Can be stolen, ruined, burned, or lost.

-In the bank, of course!

Do you really think banks and card companies do not have hacks, frauds, and scams? It happens every day.

o   Centralized. In the bank the money is not yours. They lock accounts for every slight suspicion or concern. My checking account was locked for 10 days when someone deposited a larger-than-usual check! My online account access is blocked for life due to a wrong QuickPay I personally sent out! That means that our money is prone to other’s human mistakes and irrationality.

Not everyone in the world is privileged to use the current banking system. What if they don’t possess the minimum? What if they don’t fit the restrictions and regulations? You think you’re OK? You don’t grasp how many financial opportunities you’re held back from, till you see blockchain - to be discussed.

o   Privacy. Your financial and lifestyle record is exposed to the corporations. If their system gets hacked, your credit score, wealth, tax info etc. is in the hackers hands to do whatever he pleases. And it happens, not always does the media manage to report it due to the centralized powers [yes, the media is also centralized…].

·       Another issue plaguing currencies ever since is forgeries.

·       Every government recognizes different currencies, which makes traveling a nuisance, and it costs heavy fees to send money for business or individual purposes internationally.

·       Transactions.

o   It takes to much time and struggle to move money. Of course, because humans must approve & record every transaction, if not how will it be confirmed? Also because the money isn’t necessarily ready in your account… as discussed before.

o   They cost fees. Nobody works free of charge!

o   Limitations. Not everything works with everything, and there is always our beloved restrictions & security measures. Was your card never declined using it in a new state…? They don’t even mean bad, there was simply no method to be protected and quick and interconnected.

o   Centralized again. Even if you don’t care, the unfortunate are a larger percentage of the population then you imagine, and they’ll make a difference. –and, you never know who is next. Did the Canadians, Russians, and Ukrainians dream they‘d be blocked?

Bitcoin solves everything. That is why one Bitcoin is now ~$45,000, it's worth [much more than] that figure.

How does it solve these problems?