These concerns led to the final abandonment of the gold standard and the transition to a system of fiat currencies, where the value of money is determined by supply and demand in the market. The gold standard had its pros and cons. One of the pluses was the restriction of the state in the flexible management of the country and the prohibition of the possibility of getting money from nowhere.
Occasionally, there were situations where a shortage of gold or an excess of gold led to economic problems. For instance, if the country needed a major construction project and the treasury was short of funds, with the gold standard, the government could not simply print money. Instead, it had to suspend construction until the required amount was accumulated. Also, if the government started a war and the citizens were against it, they could cut back on consumption, and the money would stay with the people. It caused difficulties for the insolent government in financing the war effort.
The gold standard also limited the ability of governments to control the economy and manipulate money. It could also prevent the destructive influence of politicians and government. At the same time, the gold standard gave the population greater financial independence and incentivized the preservation of valuable ideas and innovations without the risk of government impairment. However, history has shown that the gold standard had limitations and led to a shift to more flexible monetary systems.
Today, we are seeing the development of new technologies, such as cryptocurrencies, that offer alternative approaches to monetary policy and financial stability. These innovations open up new economic and societal opportunities but also come with certain risks and challenges.
In this way, the history of the gold standard reminds us of the complex interrelationships between government intervention and economic development. The world is constantly changing, and we are learning from the past as we strive to create more flexible and sustainable systems that meet the needs of today’s economy. BITCOIN itself is a tremendous combination of sections of academic sciences and disciplines such as economics and finance, programming, and financial law. Therefore, even with a 2, 3, or 4 educations, a person will not understand the essence of Bitcoin at once.
One of the most important features of Bitcoin is that it is a currency that has not been known in the world before. It is an entirely new part of the economy, and currently, no single focused education process delivered professionally can explain what Bitcoin is.
Acceptance of BITCOIN
Psychology identifies 3 to 7 stages of accepting the inevitable. Here are the three main ones:
Denial. People in this stage may refuse to accept information about the inevitable event and stubbornly deny its reality. They may look for excuses or seek to find reasons why the event should not happen.
Anger. People in this stage may display anger and irritation toward those associated with the inevitable event. They may be aggressive and express anger and resentment.
Humility. People who have reached this stage accept the inevitable event and may begin to find ways to come to terms with it. They may start to find ways to adapt to the new situation or look for new opportunities.
Given the current trend of acceptance, the price of BTC will grow strongly over the next ten years and then follow a more linear trend. Bitcoin has yet to reach even half of its adoption potential, which means that the highest growth is yet to come. Bitcoin will perform outstandingly in the coming decades when only 4% of the world’s population will use it, and then that number will only increase. In the long term, BTC is expected to grow significantly, and despite short-term declines, we should pay attention to the overall development trend.
Let’s consider how users came to the World Wide Web and blockchain.
Figure 7 shows the curves of Internet users and active cryptocurrency wallets over the 24 years of the World Wide Web’s existence. The dotted line indicates the expected growth rate of the number of blockchain wallets based on the Internet adoption dynamics in the past.
Fig.7 The level of take-up of cryptocurrencies and the Internet
As we can see, both technologies had a slow start in the first few years. In eight years, the number of Internet users worldwide grew to 500 million, while only 50 million people started using blockchain in the same period of time. It took the Internet a quarter of a century to reach more than 4 billion people. The blockchain user base is projected to grow to 350 million people in the same timeframe (Figure 7).
The study only covers the period of time when the Web has already become a user-driven phenomenon. The network began to be created in the United States in the sixties, but at that time, it was used only by government organizations. It wasn’t until the nineties that the Internet began to gain noticeable popularity among ordinary people, both in America and the rest of the world.
The approximate number of Bitcoin wallet owners with a balance of more than zero exceeded 23 million people as of 2020. As of 2023, according to the latest tweet published by crypto analyst Ali, the current number of BTC holders exceeded the entire population of Spain (47.5 million), reaching 48.5 million people. An interesting comparison between the number of addresses and Bitcoin users is shown in the following graph.
Fig.8 Comparison of the number of BTC addresses and users
The bottom line of the graph shows that the number of Bitcoin users grew linearly from 2018 to 2020. Therefore, we did not have a sudden upsurge, as people entered the market gradually. Nevertheless, despite the lack of frantic price growth, the number of Bitcoin users has been growing steadily, and more and more people are starting to use the first cryptocurrency (Fig.8).
If we remember market cycles and look at the same graph and the bottom line from 2016 to 2017, we see a parabola when the influx of new people into the market was many times greater. It is quite logical, given the sharp rise in prices at the time, but now the excitement has subsided, and the industry lives off those who have made a conscious choice to use cryptocurrencies.
What BITCOIN is like
Bitcoin is like a bank, only better because you can put money into Bitcoin and earn income from the growth of a currency that relies on inflation as long as you buy it at the lower end of cost. Think of the interest rates banks offer. Usually, it is 2% per annum in dollars and euros. Thus, over three years, you will get 6% at best. In turn, BTC has risen in price by 150% over the past three years, and this does not include the moments when its rate increased by 400%.
Bitcoin is a cross-border transfer system. It can be used to make payments and transfers for goods and services in the same way as using a bank card.
Bitcoin is a company’s share because when investing in BTC, it is as if you buy shares in the form of tokens and, owning them, receive dividends in the form of growth in the company’s capitalization. Bitcoin’s market capitalization now rivals that of Visa (NYSE: V) and Mastercard (NYSE: MA), which have had millions of users and name recognition for decades (Figure 9).
Fig.9 Market value of bitcoin
Bitcoin is decentralized, meaning it has no CEO, board of directors, and marketing budget. Yet its total value is roughly the same as the two largest credit card companies. Securities, such