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You will agree with me when I tell you that we need money for almost all the transactions we make every day.

From the transport we use, the home where we live to the food we consume.

All these transactions are made through the exchange of money.

In addition to this, we dedicate a large part of our life and our time to take actions to get money and fulfill our dreams.

Money is an integral part of our society and of our daily life. Since we can remember, we started using it.

However, what would you say to me if I tell you that money as you know it is about to cease to exist?

Awesome, right?

And everything is based on Bitcoin and the revolution that the cryptocurrency is causing in the financial world.

But before that...

The beginning

Before we start talking in depth about Bitcoin, we have to understand the history of money as we know it today.

The birth of money is quite simple.

When living in tribes, humans made all their exchanges through barter.

But as societies grew, barter became increasingly complex.

Therefore, certain goods had to be converted into instruments of exchange. These goods had a value that both parties agreed upon.

For example, the Aztecs used cocoa as an exchange currency while in Europe salt was used.

The problem with these goods is that if there was a problem with these products, the market exploded.

If there was a bad harvest of cocoa, then there was nothing to exchange.

From this point the metal coins were created, these coins fulfilled the same role as the exchange goods and were much more durable.

However, the merchants of that time encountered a couple of problems. The coins were difficult to transport and the authorities had to be trusted about the amount of precious metal that each coin had.

It was there that they discovered the solution.

They recognized that a person's debt has value and that it can be transferred.

Through promissory notes (and the confidence that the debt was going to be settled) the first paper money was created.

This paper money was not backed by precious metals or goods, but by the promise of payment and the reputation of those who issued it.

They trusted that the intermediary, who issued the promissory notes, could liquidate the debts of the commercial exchange.

Imagine it this way, the blacksmiths (who created the gold coins) had the coins of many people safe and these coins lasted in their shelter for a long time.

Then they could make loans to others with the currencies they kept and collect interest.

However, the people who requested the loans did not want the gold coins, but the paper that confirmed that the coins were safe.

And this is where the interesting part comes.

You see it?

The exchange

The blacksmiths, who became bankers, understood that while the public trusted that they had the currencies of their clients, they could create paper money, basically having the power to create money at will.

This is how they created the 'money printing machines'.

Creating the structure that banks still follow.

For example, we deposit $ 100 in a debit account. With that $ 100, the bank lends $ 97 to a third party to buy something and saves $ 3.

At the bank's computer, where they keep accounts, we have $ 100 and the third $ 97. This $ 97 is virtual money, only digits in a computer.

There is no gold, or anything to back it up. Only the promise to return it. This is new money created in the form of debt.

When the third party buys what he needed from a seller, the seller deposits the $ 97 and the bank repeats the operation thousands of times.

Each person has numbers in their account that show they have money.

And this does not end here.

Banks do not need our deposits to lend to third parties.

Only with considering someone suitable to pay off their debt, they lend him the money and again create digital money.

Money that is only in numbers in bank computers.

The whole system is based on trust.

Trust in debtors' ability to pay their debts.

Confidence in the solvency of the bank.

However, if today all the users of a bank asked for 3% of their deposits in cash, the system would fall.

Interesting, right?

The Innovation

Innovation is a fundamental part of the growth of the human being.

It is what motivates us to follow and creates new ways of observing the world.

However, whenever there is a revolutionary innovation there are those who try to stop it.

Those who have the power would lose part of their wealth with this innovation.

For example, when the printing press was invented, taxes, laws and even prohibitions were created to stop the creation of mass books.

It is not necessary to mention that these prohibitions did not work and the printing press changed the world as we knew it.

So, what would happen if a technological innovation allowed any person to be their own bank?

Create money free of taxes and bank fees?

Beginning of a New Era

The first thing we must understand about Bitcoin is that it is an open source computer system.

When we say that it is open source, it means that it is a freely developed and distributed code.

It is not controlled by any company or by anyone, since anyone can contribute or use it freely.

This code is based on mathematical truths, truths that do not depend on someone's interpretation or assumptions.

One can read the Bitcoin code and it will always be true, whoever invented it.

Bitcoin is software and digital money at the same time. Bitcoin (with capital B) is the shared code that creates the global payment network using computers connected to the Internet while bitcoin (with lowercase b) is the virtual currency, digital money that is exchanged through that digital network.

But unlike the virtual money that banks create, this digital currency was created with mathematics by an anonymous inventor.

And it is public, open and transparent.

How can we trust?

In our traditional idea, it is very important to know who supports money because their reputation is valuable in order to know that our funds are safe.

We trust banks and their accounting systems to safeguard our money as intermediaries and charge us high commissions for it.

However, a system where these intermediaries are avoided could be faster, more efficient and much safer.

But, how do we trust something digital? Movies and music on the Internet are not at all safe.

The answer is in the base with which the software is created.

A bitcoin is not a file saved on a computer.

It is an entry in the public database known as Blockchain.

This database acts as the accounting systems of the banks, but it is public and for the reachable by the whole world.

The Blockchain has a record of all existing bitcoins and all the bitcoins that have been transferred or exchanged in the history.

It is always in balance because no bitcoin ever comes out of the database.

When someone sends abitcoin to another person from their digital wallet to another, what is really being sent is control over that entry in the database.

And because the Blockchain is public, it cannot be controlled by anyone. Neither bankers, nor politicians, nor anyone can change the mathematics with which it is created.

In other words, much simpler, with the Bitcoin network we supplant the banks, the bankers and all the financial framework that only benefits some.

Only the beginning

This is just the beginning.

Will you look from outside?

Will you see the opportunity passing?

 This is the opportunity for a technological change, change that they do not want us to have, but that you can be part of, the change.

Gutemberg Dos Santos


Gutemberg dos santos en medios