In South Africa our currency is called the Rand(ZAR).
At time of writing this post, 1 USD will get you 16.18 ZAR. And as someone who transacts in USD, ZAR and has an interest in BTC hodling, I always wonder which of these forms of money is the best.
During the late 90’s I remember that I could buy a pack of cigarettes for about R4 ($0.25). These days if you want to buy a pack of cigarettes you’ll fork out around R50 ($3.12).
That’s a 1148% increase in price over 20 years! Thank goodness I quit smoking a long time ago.
It’s not like cigarettes have significantly improved or become 1148% better. So why the 1148% increase in price. And this is true for all goods – they’ve all going up in price incredibly over the past few decades.
Much of this has to do with the reserve bank printing more money. Banks themselves can magically create new money. Both of these factors increase the supply of money and that devalues the currency.
Bad performance of a countries economy can also devalue it’s money – this is because no foreign country typically wants to do business with another country that is doing badly.
All of this is out of the control of the regular citizen. After all you and I don’t ask for more money to be printed – governments and corporations decide that. If a government decides to borrow more cash from the International Monetary Fund, we the citizens are stuck with that bill. If corporations collude or entice governments officials into bribery, we the citizens bear the costs. And if the government doesn’t meet its economic goals our currency devalues.
Together all of these things can be considered inflation and it devalues money. That is why you end up paying more for the exact same stuff.
That is why you end up paying 1148% more for a packet of cigarettes.
Perhaps the most interesting books I’ve read on South African economics is The Assault on the Rand: Kevin Wakeford and the Battle to Save a Currency by Barry Sargent.
In the book we learn how UK banksters colluded with the South African Reserve bank to remove gold from South Africas reserves during the late 1990s. This resulted in South Africas balance sheet reducing which in turn devalued our currency. These banksters also made a killing with the devaluing of the Rand by short selling it.
It’s fascinating to learn how foreign interests can interfere with a soveriegn nations economy.
The exact same thing happened during the Asian crisis during the late 90’s.
What does this mean?
This is a horrifying realisation that the value of your money is not stable and it’s dependent on factors outside of your control.
You can work as hard as you want only to see that you’ve got to pay more for the same amount of goods. Our wealth is being eroded.
Bitcoin as a Solution
The Five Pillars of Open Blockchains
Andreas Antonopoulos perhaps has the best criteria as to what makes Bitcoin phenomenal.
The Bitcoin Blockchain is:
- Open : Anyone can participate in it inclusive of citizens, governments, corporations, etc
- Borderless : Anyone across the world can make use of it.
- Neutral : It has no political stance and isn’t biased.
- Censorship-Resistant : No one can prevent you from performing a transaction
- Public : Anyone can inspect all transactions that have occurred and it’s transparent.
These criteria are important because it means if you hold Bitcoin as your money, that means no one can stop you from using it, you can use it anywhere in the world, it does not impose any ideology on you to use it, and you can always audit and verify transactions if you need.
Bitcoin Monetary System
There are only 21 million Bitcoin that can ever be created, that means it is scarce. Hence it will never devalue through inflation.
It is programmaticly fixed so the is no central authority that can interfere with its operation. This means that there is certainty around how it will function in the future. No more bitcoin will be created and no one can manipulate the supply.
Now I do see two minor problems with Bitcoin, but the above mentioned characteristics put it into a position where it is the hardest, most secure, most reliable form of money that exists today.
Bitcoin is the most evolved form of money mankind has ever created.
Its functions and features put it head and shoulders above any fiat currency including the Rand.
I expect the Rand to devalue more and more. I expect that I’ll be able to buy with it less and less it over time.
On the flip side I expect Bitcoin to increase in value and to become more secure.
When you consider the question of Bitcoin vs the Rand currency, it’s obvious that the clear winner will be Bitcoin.