What Bitcoin Means for Society

What Bitcoin Means for Society

By bit.team

We know that Bitcoin is a technology that makes it possible to decentralize money. This is a very important quality that distinguishes it from other forms of money.

The main thing is that Bitcoin is a social idea. He comes to try to reinvent the financial system as we know it, and together with it to rebuild the ways of exchanging values around the world.

Inflation is an extremely important problem for many countries whose citizens see their monetary incomes depreciate significantly. This is where Bitcoin offers a solution that allows any savers who need it to take shelter from this problem.

And the best thing is that this happens without a central authority, without a central bank, which can change the rules of the game depending on the needs of the one who controls it.

The decision of some governments to print more money negatively affects the purchasing power of citizens. This also entails another problem related to the powers of governments to decide who receives funds, control transactions and determine the value of the currency. That is why the interest in Bitcoin in many of these countries is only growing.

But Bitcoin has also become attractive to those who believe that the most powerful countries in the world have the right to impose sanctions on anything they deem unnecessary. And it doesn’t matter if it goes against people’s rights.

And therefore, more and more people are interested in Bitcoin and other cryptocurrencies as a means of payment and investment. You may ask, are cryptocurrencies also ethically better than the euro and the dollar?

It depends on the circumstances.

The dollar and the euro are under the control of central banks and governments and are therefore exposed to the risks coming from these institutions, while Bitcoin is almost not. Therefore, blockchain technology is good for people who no longer want to rely on established authorities. It makes it possible to make financial networks less hierarchical, for example, by using blockchain to create new cryptocurrencies and thereby supporting the economy.

For example, the blockchain project Decimal Chain, which according to Coinmarketrate.com, created the DEL token, which is an excellent means of payment, with enormous potential. In this ecosystem, instead of a bank, cryptocurrency users trust each other and the technology on which the network is based. Many believe in a project in which financial transactions are possible exclusively on a peer-to-peer basis. And such networks are, after all, a good idea.

Bitcoin Community

In society, especially among the first followers of Bitcoin, there is an opinion that governments do not use monetary policy to ensure the welfare of citizens. These communities emerged as the first step in an attempt to take this power away from politicians and return it to the people.

The idea of a censorship-resistant currency with no permits is most attractive to members of these communities. People all over the world feel that they have been let down by the central authorities.

People who can now regulate the value of the currency at their discretion and control transactions. They can now make decisions, make them, or not make them.

It is from them that the Bitcoin community consists:

  • Developers
  • Institutions
  • Individual users

These are all those who support and promote the expansion of Bitcoin and the development of the technology necessary for its further growth as an investment, a haven of value and a medium of exchange.

The Social and Economic Impact of Bitcoin

We can observe this in countries where poorly conducted monetary policy has led to the formation of a culture in which excessive consumption is seen as a benefit. This is what people do who believe that inflation is useful for maintaining the functioning of the economy.

Other consequences of uncontrolled money printing are poor investments of easy money and high time preferences that force people to make wrong decisions.

If money is constantly depreciating, people have a strong incentive to spend it immediately when they have just received it, or after they have earned it. Saving is almost impossible unless they buy goods that protect them from this inflation. Not everyone wants or knows how to do it.

This also leads to artificially low interest rates, which contributes to an increase in borrowing and investment. But although this may be perceived as a benefit, the consequence is overproduction, excessive debt and investment in enterprises with little value to society.

The result is an incredible increase in debt both at the individual and national level, which makes savings an endangered animal for both countries and families in most countries of the world.

This makes the economy more fragile and vulnerable, which we can observe today, during the crisis, when maximum strength is needed.

The Cantillon Effect

Rising asset prices create even greater inequality between people. While ordinary people are forced to consume, the rich have access to assets that rise in price faster than inflation and make them even richer.

When central banks print more money, they are used to buy various types of assets, such as government bonds, corporate bonds or stocks. This leads to a sharp increase in asset prices, which benefits everyone who invested money in them.

However, for the rest of the economy, the money it held is depreciating because there is now more of it on the market, which makes it less scarce. Those who own assets will benefit, and those who own money will lose purchasing power if nothing is done with them.

First, investment recommendations often consist of buying assets that can provide protection against inflation. In an inflationary economy, people with assets tend to get richer and those with money get poorer, which creates an inequality known as the Cantillon effect.

This effect damages society, which is why Bitcoin can play such an important role in mitigating and reversing this kind of society’s problems.

It offers individuals a means to save and invest, being a scarce commodity, limiting government control and allowing anyone to participate in this market.

Summing up

Bitcoin has the potential to become a project that will change the dynamics of the global economy. He has a community that is growing exponentially, and promotes the adoption of this cryptocurrency.

Bitcoin can struggle with current financial problems, such as the uncontrolled issuance of new fiat money and a significant increase in consumer and government debt.