The pitfalls of inflation

Is the Bitcoin the money of the 21st century or just a fleeting phenomenon of modern times? What is money anyway? Which characteristics distinguish „good money“? Especially the libertarian branch of Bitcoin enthusiasts praises the crypto currency as the „money of the future“. One reason for this is the state’s control of classic monetary systems.

This series of articles takes up the findings of the Austrian School and classifies crypto currencies in the free-market economic philosophy. The source text is „What Has Government Done To Our Money?“ by Murray N. Rothbard. The previous articles (1 & 2) showed that money is a commodity in the economy which is primarily used as a medium for exchange. Now we look at the role of the state in the monetary system.

Inflation and the Bitcoin code

The state is the only organization in society that does not receive its income from the voluntary exchange of goods and Bitcoin code services. Instead, a state confiscates, in sharp terms, its citizens‘ money in the form of taxes. While these are a relatively direct source of income that citizens easily notice, the modern state can use another, more subtle means to increase its „profit. This is inflation. Inflation refers to the increase in the money supply and means a loss of purchasing power of the individual monetary unit.

Let us take as an example an economy with a money supply of 10,000 ounces of gold. A counterfeiter enters the stage and inserts 2,000 ounces of counterfeit money. What happens first? First, the counterfeiter experiences an advantage: he is 2,000 ounces richer in gold. But the more the new money penetrates the economy, the more the prices rise. The prices rise until they have adapted to the new money supply (of 12,000 ounces of gold). The advantage of the counterfeiter arises on the backs of those who get the „new“ money last.

The consequences are dangerous for the Bitcoin code

„For many people, „more money“ means „more prosperity“ – in the case of inflation, however, this conclusion does not follow. Inflation usually happens insidiously and inconspicuously. Inflation is a race – the quickest person to get the new money has the greatest Bitcoin code advantage. Citizens with a „fixed income“ – such as pensioners – are most affected by inflation. Inflation distorts the Bitcoin code price signals of the market. Companies overestimate their situation with the additional money. Inflation rewards debt taking.

Such a monetary system cannot exist forever. The more monetary units that are added, the more people want to get rid of their money. This culminates in a so-called hyperinflation – no foreign word for the population of Venezuela or that of the Weimar Republic almost 100 years ago in Germany. In hyperinflation, prices have to be adjusted daily or hourly because money is losing value so rapidly.

The cornerstone of currency devaluation
In order for a state to be able to make use of the silent tax resource, inflation, it needs one thing above all else: a monopoly on the minting of money. Many steps are necessary for the people to bow to such a monopoly. One is to spread the myth that only the sovereign – the state or the king – has the prerogative to coin a currency. Another is the separation of the currency name from any unit of weight (so „the dollar“ was originally a synonym for a weight – namely „1/20 ounce gold“). Legal terms of payment are used by the state to determine which good is meant as „money“ in the first place. As long as these laws function with money that the market has chosen, they do not play a major role. However, these laws establish an essential precedent: state control over money.

Once the state has claimed sovereignty over the currency, it breaks all ties to other goods. Measuring the weight of a monetary unit hinders this effort. In other words, „the dollar“ must be detached from its original meaning (thus, „1/20 ounce gold“) and itself become a „tangibles good“. If any attachment to the real good is abolished, the state finally has the power to arbitrarily manipulate the money supply. The one who controls money controls the economy.

The monopoly position in the means of payment leads to further, unpleasant side effects. On the one hand, there is no longer any competition between means of payment – people can no longer choose „the best“ money. On the other hand, there is no competition in coinage – the costs for this can be passed on to the involuntary „clientele“. The monopolist simply has no incentive to produce effective and efficient money – his customers have

Press comments: Bitcoin between hype and horror

The unprecedented hype surrounding the Bitcoin of these days is unparalleled: The fascination has never been greater, but the voices of doubt have never been so loud. With the launch of the long-awaited Bitcoin futures last week at the latest, the probably most prominent crypto currency found its place in the publications of the major media houses and publishing houses worldwide. Despite all the enthusiasm in the reporting, critical voices are also increasing: Tulip, bubble, fraud – all this has been blamed on Bitcoin in times of ever new price sprints and all-time highs.

4 Reasons why the Bitcoin profit review hype ends at zero

A year ago it was a nerdy marginal phenomenon, today it has arrived in the leading media: Bitcoin Profit Review 2018 » Full Scam Check Anyone who looks at the media world will quickly notice: The Bitcoin profit review goes through the ceiling and has made its way not only on the part of the financial specialists, but also into the economic parts of traditional newspapers.

BTC-ECHO has embarked on a journey for you through the commentary columns, columns and business departments of the media landscape and has taken a close look at the eyes with which the rapid rise of Bitcoin is viewed.

We are currently experiencing an invention that can change our lives. Which may make banks or other payment systems like PayPal superfluous.

Bitcoin’s price reaches dizzying heights. Lawrence Baxter advises investors not to be blinded by it. He predicts a sudden crash for the digital currency.

Bitcoin profit scam has a future

Everyone is talking about the digital currency Bitcoin profit scam; and rightly so. Because it will revolutionise our monetary system.

This alleged currency may be fascinating. But it doesn’t have what it takes to create a completely new monetary system that is not controlled by anyone and in which no central bank is in charge. Its value fluctuates far too much for that.

A few massive investors can rock it with a shrug. [Some big investors can make the market tremble with a shrug of the shoulder.]

3 reasons to doubt bitcoin, ethereum, litecoin and other cryptocurrencies [3 reasons to doubt Bitcoin, Ethereum, Litecoin and other crypto currencies]

Bitcoin’s euphoric rise has spread, something like cancer […] [Bitcoin’s euphoric rise has spread like a cancer]

Bitcoin Has Gone Mainstream. That`s a Big Deal [Bitcoin has arrived in the mainstream. This is a big deal]

Why investors needn’t fear bursting of bitcoin bubble [Why investors should not be afraid of the bursting of the Bitcoin bubble]

Will bitcoin become the fourth classic bubble in history? [Will Bitcoin be the fourth big bubble in history?]

Now, as the Chicago Mercantile Exchange prepares to launch bitcoin futures, the market could become more transparent going forward. [Now that CBOE is preparing bitcoin futures, the market could become more transparent and thus grow].

I Was Wrong About Bitcoin. Here’s Why. [I was wrong about Bitcoin. Here’s the reason.]

„The Bitcoin dream is all but dead,“ I wrote. Hoo boy, did I blow it. „[„The Bitcoin dream is dead,“ I wrote. Boy, was I wrong.]

The Bitcoin revolution is only just beginning.

Technology that backs up cryptocurrencies could also transform tax collection, benefits delivery and border control [The technology behind crypto currencies could also strengthen tax collections, bonus distributions and border controls]

Conclusion – Between Horror and Hype
Although the Bitcoin’s spectrum of interpretations is wide when viewed from the perspective of the global media landscape, there is still something decisive to note: While Bitcoin’s IPO last weekend was the first time it was able to bring its foot into the difficult-to-open gate of the conventional financial world, the currency made another groundbreaking leap – into the mainstream of international reporting and traditional leading media.

Bitcoin demand in India is ground for crypto-fraud

The efforts of the Indian government to demonstrate led to an unforeseen increase in the Bitcoin price in this country. The government’s decision led to a sharp increase in popular interest in Bitcoin. After the decision, the search term „buy bitcoin“ could be identified as one of the most popular Google trends.

A sensible alternative to cash

After the first onslaught of people who tried to get their ’sudden‘ black money down, a second wave followed. These people are looking for a sensible alternative to cash and are driving demand for Bitcoin.

But as with all new things, the Bitcoin adoption in the country comes with its own typical challenges. The sudden interest in Bitcoin, without a sound knowledge of crypto currencies, makes the local community vulnerable to fraud.

The majority of Indian Bitcoin users are simple speculators who know relatively little about the technical details. This gap has resulted in Bitcoin investment projects sprouting up – including cloud mining and stock exchanges. BTCIndia seems to have been created by such a gap.

BTCIndia is found guilty of fraud in a Reddit thread. The editor ‚twistyeyed‘ claims that BTCIndia takes advantage of India’s price differences and that the corresponding website link was deleted after it was addressed to Reddit. The Reddit account ‚twistyeyed‘ also reminded that there should always be an investigation. If you are in doubt, you should always go back to the community and ask there before sending your BTC to a certain destination.

Warning signals that the editor addressed are, among other things, the course rates on the website that fluctuate strongly and the deposit address that leads directly to fraudsters.

Transaction details

Another editor gave his transaction details, which should serve as proof for the thread „Scammed at“ (German: Betrogen durch Another editor named Anducck added in this article, „Compared to the real rates in India (which so far are no more or less than 770 and 790 US dollars), > 900 US dollars is a clear sign of fraud.“

Another Reddit thread called „Has anyone done any trading with“ raised further doubts: „Did anyone do any trading on“? In the article, editor Nimble Bodhi said that he was sure that BTCIndia’s site was a fraud. The template of the site, as well as the promises and the graphics had already been used for other fraudulent exchanges. One should avoid these in any case.

Ultimately, a growing interest in Bitcoin is good, but people should take their steps in the new direction with caution.