When talking about cryptocurrencies, many people do not even want to start the conversation, because they think it is a very futuristic subject, very unrealistic.
But understanding how cryptocurrencies work is a big step in understanding the very nature of money and thus knowing how to better manage what you earn.
By the way, have you ever wondered what money is? Where does it come from? Where does he go?
In today’s article, we’ll look at this in detail, looking in particular at:
- The origin of money as a private instrument
- When the government seized the money
- How Cryptocurrencies Help Understand Money
- Changing Your Money Mindset
If you want to change your mindset about money, even if you don’t think about buying cryptocurrencies, keep reading this article as there are many interesting ideas to discuss.
The origin of money as a private instrument
Everyone deals with money almost every day, but almost no one pauses to ponder what exactly money is.
If you go researching how money came about, you will probably find a classic explanation like Adam Smith’s in The Wealth of Nations.
This classic explanation says that money emerged as a means to facilitate an exchange.
Before money, if you were a dairy farmer and wanted to get a loaf of bread, you had to produce some surplus milk, find a bread producer who also had excess produce, and negotiate a trade.
As this was not very practical, the story goes that people gradually adopted some good that was accepted by all as a means of exchange.
Due to its durability, portability and practicality, metals such as silver and others have become the most accepted medium.
This source of money is well known and also serves to explain cryptocurrencies a bit.
Suddenly, some people decided that pure digital information could be a medium of exchange for buying and selling anything. Just as it was once made with salt, silver and gold.
When the government seized the money
There are other explanations for the origin of money, but they all point to one common feature: Money has emerged as a private, private instrument created by people to facilitate the exchange of goods.
But soon the government got hold of that idea. Still in ancient Greece the custom of engraving the coins with a mark of who produced them arose, to guarantee their nominal value.
This recording was decentralized until the emergence of countries as we know them today. That was when the money came to be fully controlled by the government.
For a while, money had a physical correspondence to its value, which was the gold reserves a country had. But this gold standard was abandoned in 1973 and there is currently no match between the amount of money a government prints and any wealth it has.
That is, it is the government today that decides when to print more money, devaluing the amounts you have and increasing the prices of products on the market.
This power sometimes leads to some abuses that lead to economic crises, such as the great crisis of 2008. And it was precisely in this crisis that the first and most famous cryptocurrency, Bitcoin, emerged.
How Cryptocurrencies Help Understand Money
Would you take your investments out of your pocket to buy a virtual currency that nobody knows who created it and which is not controlled by any government?
During the 2008 crisis, someone who went by the false name of Satoshi Nakamoto published an article on the internet that explains in detail the operation of a virtual, encrypted private currency called Bitcoin.
This article solved a problem that always arose when someone tried to create a virtual currency: that of copying information.
Think of it like this: If I have a file on my computer and I email it to you, we now both have the same file. This made it impracticable to choose a digital file that served as currency.
Bitcoin solved this problem by creating a decentralized public record of all file exchanges ever made on the system and thus became the first of the cryptocurrencies.
Since then, the virtual currency market has only grown and has moved billions of dollars, completely outside the official financial system.
It is as if it were a return to the private world of the original idea of money as a means of exchange elected by private individuals without further interference from governments.
Changing your mindset about money and cryptocurrencies
There are a lot of technical details and advantages and disadvantages about using cryptocurrencies, but that’s not the point we want to address here.
What we want is to make you reflect and change your mindset about money.
Cryptocurrencies can help you better understand what money is, understood as a medium of exchange. And it can help you realize that anything you create that is scarce and desired can have value.
Andreas Antonopoulos [source: https://youtu.be/jw28y81s7Wo] often uses the example that it is possible to understand money as a way of expression and that today anyone can create their own currency. Imagine, for example, children competing at school to see which currency was most widely adopted according to popularity: Joe Coin or Maria Coin.
In other words, you have the power to create a cryptocurrency and seek to earn the trust of enthusiastic people who recognize the value of this initiative. But when you think of value even more broadly, you don’t even have to limit yourself to the world of cryptocurrency algorithms to produce something of value and earn money for it.
The knowledge you already have today on any subject can very well be systematized and turned into digital files for sale on the internet and thus generate extra income for you.
The same can be done with services you can offer, such as teaching something, doing some distance work or simply giving advice and mentoring people who know less than you about any subject.
By changing your mindset about what money is and what people value, you can change social class and live a more abundant life without relying on a change of job, career or winning the lottery.