Bitcoin History of Money Essay 1

After the days of barter, where one good is exchanged for an equal amount in

value of another good, the concept of money became the intermediate

measurement of value for transactions, debts, pricing and purchasing power. (H. et

al., 1931) Since the creation of money as we know it today, the control of it has

always been centralised, controlled mostly by the countries central bank, who are

closely tied to the government. Since the 2008 economic crisis, flaws have been

uncovered in the modern money system. Only a year later, on the 3rd of January

2009, Bitcoin was introduced to the world.

Competing Views On The Nature of Money

the purpose of it ceases to exist. The final view on the nature of money is long

term store of value, this is controversial especially in the current state of the

cryptocurrencies since the condition that money being a long term store of value is

that it does not depreciate over time. There are 2 main views on money, chartalism

and metalism. Chartalism views money simply as a token that has value and that it is

abundant and metalism views money as a medium of exchange where the limitations

of barter are eliminated.

The Emergence of Money

Before the concept of money was introduced, barter was the means of exchange

for goods and services. The Mesopotamian empire created the concept 5000 years

ago with the shekel, a coin usually made from silver. Coins as we know it today date

back to 1000 B.C in China, these coins stamped from bronze or copper, over time,

they would evolve to being made from silver or gold. Coins were the first method of

currency where people would pay by the count instead of the weight. (Ritchie,

2009) The next step was in 800 A.D where China created paper notes as we know

it today. Paper money allowed for international trade but this created problems of

distrust between the trading nations. The gold standard was introduced by England

in 1816, each note was equivalent to an amount of gold and only limited notes were

printed. The US soon followed in 1900 but the gold standard came to an end in the

evolves, for money, the next stage of its evolution has dawned upon us, the rise of

Bitcoin and cryptocurrencies have allowed people to hold a new type of currency

that is no longer controlled by a centralised state.

Bitcoin is a peer to peer digital payment system that does not need a financial

institution. It does not obey the same laws as fiat currency and the value of it is

volatile. The majority of fiat currencies are all subjected to inflation and

ineffective monetary policies that can deter its value, Bitcoin also has these

stable coins. Assuming that one stays within one country, fiat currency will always

be accepted with rare exceptions, the point of a currency is that it is publicly

Comparison of Bitcoin and Other Emerging Forms of Digital Money Today

Central bank digital currency (CBDC) refers to the digital version of a fiat

currency such as GBP or USD. They are the main topic of discussion when it comes

to future methods of payment, instead of current card payments with virtually

stored fiat currency, CBDCs are completely digital.

Bitcoin and CBDCs differ in many ways, starting from the foundation, BTC is a

cryptocurrency and CBDCs are not. Bitcoin and other cryptocurrencies are stored

on blockchain networks that are usually decentralised with a few exceptions whilst

CBDCs are issued and kept centralised, meaning that they are regulated by the

issuing authority. This raises concerns for anonymity and privacy, a problem BTC

the value of one Bitcoin is higher than that of one USDT. It is expected that

CBDCs will start to adopt blockchain technology to assist the distribution and

management of assets but the centralisation aspect of it might still turn people

away, leading to investors opting for a more private and decentralised asset as a

storage of value.(Dickens, 2018)

before a new digitised payment system is adopted across the developed world,

either for security reasons or the ease of use, it is guaranteed to fade out paper

banknotes and coins. Bitcoin is not promised to be the currency of tomorrow due to

uncertainty and non-stop regulations but in the new era of money in the

information age, Satoshi’s bitcoin is the leader of this revolution.