Bitcoin Exposed: Today's Complete Guide to Tomorrow's Currency Read Free Page A
Author: Daniel Forrester
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Bitcoins can only reach a level of 21 million issued, with about 12 million currently around, the real story is significantly different. About 100 million times different.
Remember the smallest unit of a Bitcoin..the Satoshi? It represents 1/100,000,000 of a Bitcoin.
When we total the available units of Bitcoins relative to other currencies, we see that Bitcoins are not nearly as deflationary as they appear.
The real number of Bitcoin units available now is:
1,200,000,000,000,000 or roughly 1 million billion units.
That is not deflationary number. Still, most calculations are based on the 1 BTC unit, and not the smallest denomination. But there is a possibility, as shown above, for Bitcoin to inflate into numbers most of us cannot pronounce. So far that has not happened.
The key thing is understanding what inflation and deflation mean to us in the real world. We can then understand how Bitcoin - or any currency - will behave over time.
Inflation is the amount of money and debt pumped into a system COMPARED TO THE GROWTH OF PRODUCTS AND SERVICES. Notice what has been emphasized. Many analysts focus on the growth of money and debt and forget about the growth of products and services.
The Bitcoin daily growth rate is roughly 0.46% while it decays at a much lower 0.025%. Decaying refers to Bitcoins being used up or disappearing from the pool of available Bitcoins, somewhat like bad debts cause money in a system to disappear. At a net growth rate of 0.44% per day and slowing down, Bitcoins will generally tend to increase in value compared to the large national currencies such as USD, Euro, or Yen.
Here is a critical comparison:
- Bitcoin growth rate is approximately 1.5-2% per year.
- USD monetary growth rate is approximately 5-8% based on ShadowStats.com using the more accurate 1990 methodology and including estimates of M3, the broadest measure of money.
- Euro monetary growth rate has varied from a rare low of 1%, all the way up to 12%, according to the - European Central Bank (ECB) figures. These official figures are almost always understated. The real growth rate of the currency and debt in circulation could be even higher. Typical growth rates are around 5-8%.
(source: http://sdw.ecb.europa.eu/reports.do?node=100000141 )
By checking with the other side of the world, once can find that the Japanese central bankers have been busy! The JCB (Japans Central Bank) has promised to buy trillions of yen in government bonds. This is almost exactly like printing trillions for eventually pumping into the market place. Prices will rise and potentially explode. The JCB statistics do not show this huge and dangerous monetary growth, with only a 2-5% range of growth rate. The truth will be felt on the street for everyone buying real goods and services in the market place.
This brief currency tour shows that Bitcoins will always be more rare than the competing national and central bank currencies. This fact alone brings value to Bitcoins.
History Of Digital Currencies – And How They Lead To Bitcoin
“Failure is a detour, not a dead-end street.”
Zig Ziglar
Digicash and eCash, YodelBank, 1mdc, e-bullion, ePassport, Liberty Reserve, Liberty Dollar, e-gold, and many others inhabit the museum of former digital currencies. For most of these currencies, they failed from lack of market acceptance. In other cases, such as with e-gold and Liberty Dollar, the banks and governments take them down for being too successful. A charge of money laundering is slapped on the fledgling currency and then the hammer falls.
Understanding the why, who, and what is behind the powerful drive for creating widely accepted digital currencies is the mission of this chapter. Knowing the reasons other currencies went under is critical. If, for example, we know why Digicash disappeared, we can spot the same problem with another currency, such as Bitcoin, long before it loses all
Remember the smallest unit of a Bitcoin..the Satoshi? It represents 1/100,000,000 of a Bitcoin.
When we total the available units of Bitcoins relative to other currencies, we see that Bitcoins are not nearly as deflationary as they appear.
The real number of Bitcoin units available now is:
1,200,000,000,000,000 or roughly 1 million billion units.
That is not deflationary number. Still, most calculations are based on the 1 BTC unit, and not the smallest denomination. But there is a possibility, as shown above, for Bitcoin to inflate into numbers most of us cannot pronounce. So far that has not happened.
The key thing is understanding what inflation and deflation mean to us in the real world. We can then understand how Bitcoin - or any currency - will behave over time.
Inflation is the amount of money and debt pumped into a system COMPARED TO THE GROWTH OF PRODUCTS AND SERVICES. Notice what has been emphasized. Many analysts focus on the growth of money and debt and forget about the growth of products and services.
The Bitcoin daily growth rate is roughly 0.46% while it decays at a much lower 0.025%. Decaying refers to Bitcoins being used up or disappearing from the pool of available Bitcoins, somewhat like bad debts cause money in a system to disappear. At a net growth rate of 0.44% per day and slowing down, Bitcoins will generally tend to increase in value compared to the large national currencies such as USD, Euro, or Yen.
Here is a critical comparison:
- Bitcoin growth rate is approximately 1.5-2% per year.
- USD monetary growth rate is approximately 5-8% based on ShadowStats.com using the more accurate 1990 methodology and including estimates of M3, the broadest measure of money.
- Euro monetary growth rate has varied from a rare low of 1%, all the way up to 12%, according to the - European Central Bank (ECB) figures. These official figures are almost always understated. The real growth rate of the currency and debt in circulation could be even higher. Typical growth rates are around 5-8%.
(source: http://sdw.ecb.europa.eu/reports.do?node=100000141 )
By checking with the other side of the world, once can find that the Japanese central bankers have been busy! The JCB (Japans Central Bank) has promised to buy trillions of yen in government bonds. This is almost exactly like printing trillions for eventually pumping into the market place. Prices will rise and potentially explode. The JCB statistics do not show this huge and dangerous monetary growth, with only a 2-5% range of growth rate. The truth will be felt on the street for everyone buying real goods and services in the market place.
This brief currency tour shows that Bitcoins will always be more rare than the competing national and central bank currencies. This fact alone brings value to Bitcoins.
History Of Digital Currencies – And How They Lead To Bitcoin
“Failure is a detour, not a dead-end street.”
Zig Ziglar
Digicash and eCash, YodelBank, 1mdc, e-bullion, ePassport, Liberty Reserve, Liberty Dollar, e-gold, and many others inhabit the museum of former digital currencies. For most of these currencies, they failed from lack of market acceptance. In other cases, such as with e-gold and Liberty Dollar, the banks and governments take them down for being too successful. A charge of money laundering is slapped on the fledgling currency and then the hammer falls.
Understanding the why, who, and what is behind the powerful drive for creating widely accepted digital currencies is the mission of this chapter. Knowing the reasons other currencies went under is critical. If, for example, we know why Digicash disappeared, we can spot the same problem with another currency, such as Bitcoin, long before it loses all
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