Currency to Cryptocurrency
Bitcoin is a cryptocurrency, a digital currency which uses cryptography to create money and secure transactions. The transactions are processed in a decentralized manner such that the users do not need to trust any single party. The transactions are recorded in a blockchain which is a public ledger and can be cryptographically verified by anyone. This is a fascinating concept and one can find many resources to read about it, starting with Satoshi Nakamoto’s paper.
But before understanding bitcoins, there is one question that needs to be asked. What is money? And where does is come from? In the book Atlas Shrugged, Ayn Rand wrote,
Have you ever asked what is the root of money? Money is a tool of exchange, which can’t exist unless there are goods produced and men able to produce them. Money is the material shape of the principle that men who wish to deal with one another must deal by trade and give value for value. Money is not the tool of the moochers, who claim your product by tears, or of the looters, who take it from you by force. Money is made possible only by the men who produce.
It is a common notion that money is a commodity. But is it? Money can take multiple forms. Money can can take the form of commodity, paper or merely a value. The video below explains the transition from gold standard to fiat currency to bitcoin.
Below is a video [from 1:35 till 2:50] where a person with no prior experience with money finds it hard to grasp why the image in only a particular form (bank note) is of value and not otherwise. [I think the scene conveys the message even if one does not understand the dialogues]
Finally a video on what gives money its value.
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