A HI S TORY OF B I TCOI N I N 1 0 M I N UT E S
To truly know an asset, you need to understand where it came from.
Evaluating the history of an asset is critical if you want to understand
how it works and why it behaves the way it does. It also makes deciding
whether you want to invest in it simple. Understanding the history of
Bitcoin simplifies how the cryptocurrency behaves and teaches you to use
this knowledge to make better investment decisions.
ORIGIN
Bitcoin first appeared in 2009 as many parts of the world were still
recovering from the 2008 financial crisis. While many crises in the past had
exposed faults in the financial system, the 2008 crisis was unique in that it
highlighted the divisions between the wealthy and the underprivileged in a
stark manner. “Occupy” protests soon erupted, targeting corrupt bankers
and the lawmakers who assisted them in designing an unequal financial
system.
The average consumer realized, perhaps for the first time, that the deck was
stacked against them unless they were in a position of privilege.
Government programs weren’t amounting to much and all public discourse
was directed at how America wasn’t about providing equal opportunity
anymore. The subsequent bailouts that investment banks received only
heightened the perception that the poor were being robbed to pay the rich.
The U.S. Government was the first to enact quantitative easing (QE)
policies, which was a fancy term for printing money. While governments in
the past had printed money with varying degrees of success, the world had
never witnessed printing on the scale that began in 2008. Successive
Western governments followed suit, and the money they printed was used to
once again buy the toxic assets that banks had originally bought.
The effect of printing money en masse took a while to come to the surface.
The most obvious effect was inflation. Inflation is an economic
phenomenon where the prices of goods in an economy gradually increase.
Inflation by itself isn’t bad; it is the rate of inflation that matters. In a
developed economy like the United States, a low rate of inflation (around
one to two percent) is normal and wages can keep pace with it. Therefore,
even as things get costlier, people don’t suffer from reduced buying power
because their wages increase at the same rate.
Growing economies, such as those of India and China in 2008, experience
higher rates of inflation, but this is also normal. For example, India’s
inflation rate has routinely hovered around seven to eight percent since its
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