The current monetary system is evil. When central banks can manipulate the money supply, the devaluation of money is inevitable. Only those who are close to the artificial source of money being created „out of thin air“ benefit from this, while everyone else's money loses its value.
History has shown that central economic planning never works, yet we still use a system in which interest rates and money supply are centrally planned – with frequently disastrous results. The Austrian School of Economics – spearheaded by great minds like Ludwig von Mises and Friedrich August von Hayek – has taught this lesson for more than a century. Austrian School economists were the only ones who predicted the financial crises of both 1929-1931 and 2007-2008.
Government monopolies on money are a relatively new phenomenon. For thousands of years, naturally scarce metals such as gold and silver were the basis for currencies--banknotes were simply receipts for precious metals. Until 1971, when US President Richard Nixon abolished the gold standard--in part to help fund the Vietnam war--the the world’s most important medium of exchange was backed by gold; other currencies were pegged to it. Since then, central banks have been able print as much money as they like.
Unbacked currencies have allowed skyrocketing government debt and fuelled countless economic bubbles. It is only a matter of time before this system--where debts are paid by new debts and few people make huge profits at the expense of many others--collapses like a house of cards.
Recently a software developer known by the pseudonym Satoshi Nakamoto suggested a solution to this problem: a new currency and payment system called Bitcoin. Bitcoins have the same qualities that made gold and silver the money of choice for thousands of years: they’re scarce, fungible and they don't decay. On top of that, they can be sent through the Internet at the speed and costs of an email. And because Bitcoin works without a central bank, its value cannot be manipulated by politicians.
With these qualities, Bitcoin has more world-changing potential than even the Internet itself. People can now directly transfer money to each other without the need for a third party. You don't need a bank or even Paypal to send money instantly to someone on another continent. You don't have to trust politicians and central bankers that they will „keep inflation rates low“ and „guarantee your savings“. Your bank account can’t be frozen, your savings can’t be confiscated or devalued. When our current monetary system collapses – and I am looking forward to that day – we will thank “Satoshi Nakamoto” for having invented the better one that is already taking its place.
Aaron Koenig put together a global Bitcoin panel for DLD14 including panellists Peter Šurda (Economist), Margaux Avedisian (Bitcoin Capital Partners), Rodolfo Andragnes (Fundación Bitcoin Argentina), and Johann Gevers (Monetas). Tune in on the beat of our community on the DLDpulse and find regular updates on the DLD14 programme and speakers here.