Before We Learn "What" Is Bitcoin, We First Need To Understand "Why" Bitcoin.

When people ask me about Bitcoin I always try to explain why Bitcoin instead of what it is. First we need to understand the flaws that our current financial system has that the people is looking for an alternative such as Bitcoin.

Many people have made statements like “I can’t buy food at Walmart, I can’t buy gas, I can’t pay my bills with bitcoin” but when have you done all of the above using gold? a lot of us has never seen 1oz of gold in our lifetime. Instead, you use Fiat currencies like the Dollars, Euros, Pesos etc...

What Is Fiat Money?

“Fiat money is government-issued currency that is not backed by a physical commodity, such as gold or silver, but rather by the government that issued it. The value of fiat money is derived from the relationship between supply and demand and the stability of the issuing government, rather than the worth of a commodity backing it as is the case for commodity money. Most modern paper-currencies are fiat currencies, including the U.S. dollar, the euro, and other major global currencies.”

The main keywords that I would like to highlight in the above paragraph are “Supply & Demand” —Let’s pretend that I have the last car available in the world for sale and there’s 4 potential buyers who needs this car. The price of the car will be determined by which buyer is willing to pay the most for it. Supply = 1 car | Demand = 4 buyers.

Now lets transition this analogy to our current financial system. As we already know, fiat currencies can be create and is being created at the highest rate ever in history out of thin air. What do I mean by “out of thin air”? just like it sounds. The Federal Reserve have the power and authority to print as many dollars as they wish

Now, what happens to the demand if the supply is infinite? No need to be rocket scientist to get into conclusion that the value of the supply will decrease and keep decreasing overtime as there will be more supplies than demand.

Another example —When you go to the supermarket and buy a gallon of milk at $3 and then you go next week and buy the same gallon of milk for $5. Is not that the milk got more expensive, is not that the milk is getting harder to get. Is that your paper money is losing value as they keep printing more. Therefore you need more paper to buy the gallon of milk.

We can see the what’s going on in Venezuela, Argentina, Dominican Republic, Turkey, Zimbabwe and dozens of more countries were a toilet paper is worth more than a bag full of their currencies.

(The price of a toilet paper in Venezuela)

I could keep going on with everything that’s wrong with our current financial system, but this is not a TedTalk lol. I just wanted to highlight one of the most popular misconception that people has about money and what it actually means when things get “expensive” and your gov doesn’t want you to know these things. They like it exactly where you at.