The total circulation of dollars is represented below. As more money gets printed so it decreases the value. The more supply the less the demand. This leads to depreciation and hence inflation. But what really separates the dollar from Bitcoin? It is the Banking System! If Bob deposits $100 in the bank, the bank only physically holds 3% of Bob’s money, but Bob’s account still shows his balance at $100.
The banks then lend $97 to a debtor who pays the bank interest. Therefore there is now $100 in your account and $97 dollars in new virtual money in the debtor’s account. This money is simply digits on a computer screen. There is no cash or any physical commodity that backs the value of the digits. This is new money created as debt.
If the debtor purchases something of value for $97 the shopkeeper will deposit the money in his/her bank account and hence the bank creates new money and lends that again.
The vicious cycle of new virtual money continues. Each of these people has numbers in their accounts that show that they own this money. Now there is upwards of $3000 in the system of virtual money. This process of loaning out more money than the bank actually has is called Fractional Reserve Banking. Banks make billions every year through interest on virtual money. This cycle devalues money as no one has substance for their digits on a computer screen.
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“The only useful thing the banks have invented in the past 20 years was the ATM”. Paul Volcker, former chairman of the Federal Reserve.
The graph above shows the total supply of Bitcoins. The demand and supply factor has been dealt with and any flaws with fiat currency have been resolved.
Bitcoin’s transactions are all based on a ledger that always balances. When a bitcoin is sent to an address, it is received by another address on the other side. This positive and negative transaction always balances. There is no virtual loaning of Bitcoins and therefore no inflation or depreciation. Bitcoin’s value will continue to rise as supply is slowly siphoned off. Now money can be distributed worldwide and be recognized in every country. No more counterfeit notes, stolen cash, or interest.
“Bitcoin is a technological Tour de Force”- Bill Gates
No one can stop Bitcoin or regulate it. Bitcoin’s code is all based on mathematical calculations and therefore will always be logical. No one can interfere with the calculations as they are decentralized. The calculations ensure that there is never an error.
There are no charge backs that could render the sale of an item and everyone is in control of their finances. This is how money should be. The complete freedom to send money everywhere; having only yourself liable and no middle man.