"few understand this"

"if they knew what we know"

"another all time high"

Instead of getting all hyped up, I actually picked up a few books on the subject.

Here are some notes on what they are talking about when they talk about bitcoin or money or gold or finance:

Money isn't a thing.

Gold? Ditto.

Keep that in mind the next time you talk about Bitcoin.

Let's forget everything we know about money — barter, and all of that.

Money was no more ever “invented” than music or mathematics.

It's probably as old as human thought.

To put it simply, money is just an accounting tool — units of currency are merely units of measurement.

And historically, this system of accounting emerged long before any particular token.

So, if money is a just a measuring tool, what then does it measure?

The answer is: debt.

A coin is, effectively, an IOU, not a fancy banking term, but, literally, a shortand for "I owe you.”

Conceptually, the idea that a piece of gold is just an IOU is rather difficult to wrap one’s head around, but it's true, because even when gold and silver coins were in use, they almost never circulated at their bullion value.

Here's why:

A gold coin is simply a promise to pay something else of equivalent value to a gold coin.

The value of a gold coin, in turn, is the value we assign to it.

After all, a gold coin in itself has no value.

One only accepts it because one assumes other people will.

Does that mean we could have used anything other than gold, and it would have worked just fine?

Absolutely.

In fact, in the past we did use all sorts of things to exchange value in the absence of gold coins — everything from sugar and salt to sex as exchange of value.

What worked for gold, and similar metals, was that they carried all characteristics of good money as we know now:

• durable
• portable
• scarce
• divisible
• uniform
• and hard to counterfeit

Here’s why gold coins, or any such tokens, never made it as a full-blown currency on their own:

1. To carry out a significant portion of daily transactions in such currency would require millions of tokens.
2. There’s a need to establish uniform systems of weights and measures.

It only made sense for kings, and eventually the state, to concern themselves with such matters.

Finally, whatever the state was willing to accept whether it was gold or sea-shells, would become the new currency.

And all of this led to the birth to the modern banknotes.

The earliest banknotes or paper money followed what is famously known as the gold standard — a monetary system where a country's currency or paper money has a value directly linked to gold.

Silver was also utilized, often as part of a bi-metallic system.

But slowly, almost all countries moved away from the gold standard.

Today, all national currencies are known as fiat money:

1. They are defined as legal tender by government decree.
2. Backed only by the public trust.

Once again, as it was with gold, the U.S Dollar or the Indian Rupee or any other currency doesn't have any value of its own.

The value of fiat money, is derived from the relationship between supply and demand and the stability of the issuing government among other things.

Now you know what I mean when I say money and gold aren’t real things.

They are just made real because of our trust in each other, and even more significantly, in our institutions.

But what if these institutions fail us?

Which brings us to Bitcoin.

Before we get into Bitcoin, let’s get back into gold.

Why is gold still so valuable?

For the most part, gold still provides a hedge against political and economic instability. People are willing to bet on it, and use it as a form of exchange in case all hell breaks loose.

Back to bitcoin.

The concept of Bitcoin was introduced by an anonymous creator by the name of Satoshi Nakamoto.

At its base, Bitcoin is, very simply, a new way of creating, holding, and sending money.

Decentralised-finance (DeFi)

Bitcoin is designed to live within a decentralised network — a network that isn’t run by some central authority — much like the internet.

Instead it’s built and sustained by the people who hook their computers into it, which anyone can do.

Other than decentralisation that sets it apart, bitcoin, also carries all the characteristics found in successful coinage:

It’s durable, portable, divisible, uniform, and scarce — only 21 million Bitcoin will ever be released.

Although, the most essential quality of any successful money, is the number of people willing to use it.

And therefore these new digital coins were worth only what someone was willing to pay for them—initially nothing.

But as acceptance picked up, so did the price of a Bitcoin.