Back in 2009, Bitcoin was published as a sort of open-source peer-to-peer math experiment for cypherpunks and utopian technologists. Since then it has grown to be something much more than that. It has proven itself as the most sound form of money in all of history. For this very reason, it will also prove to be the greatest transfer of wealth in all of history.
What Is Wealth?
While it’s easy to think of wealth purely as money, that’s not actually how money works. Real wealth is actually goods and services that enrich the lives of human beings. Money is simply the tool that we use to manage that real wealth. Money is how humans store value, exchange value, and account for value.
In short, money is just a representation of actual wealth. Money is not the wealth itself.
How Fiat Money Distorts Wealth
When money is printed, the total money supply increases but the total amount of goods and services in circulation doesn’t increase in relation. This means that that the overall cost of goods circulating within society will absolutely get more expensive because there is now an increased supply of money to represent the same amount of actual goods.
This increase in the cost of goods (and subsequently services) is commonly known as price inflation.
Since fiat money can simply be printed off at the whims of politicians and bankers, whoever gets that freshly printed money first gets the benefit of spending that money before the effects of price inflation have taken effect.
The natural result of such a fraudulent system is an increase in the cost of goods and services and an overall transfer wealth from those with savings to whoever gets the printed money first. This effect is known as The Cantillon Effect.
How Bitcoin Fixes Wealth
Bitcoin, on the other hand, cannot be printed off at the whims of politicians, bankers, or even the bitcoin miners themselves. Instead, the total supply of bitcoin is fixed at 21,000,000 and the creation of new bitcoins is limited by the difficulty of the bitcoin protocol. As more bitcoin miners compete to find the next bitcoin block and win freshly minted bitcoins, the difficulty of the hash rate continues to increase in relation to the amount of hashing power and thus keeps the creation of newly minted bitcoins limited.
This system of adaptive difficulty adjustments is what prevents Bitcoin’s monetary policy from falling victim to economic theft caused by the Cantillon Effect. When new bitcoins are mined, wealth isn’t transferred from HODLers to whoever mines new bitcoins because there can NEVER be any runaway inflation with bitcoin.
Bitcoin Will Be The Greatest Transfer Of Wealth In History
When someone buys bitcoin or accepts it as payment, they are actively participating in transferring their wealth from the fiat monetary system to the soundest monetary system that the world has ever known. This effectively makes each and every dollar (or whatever fiat currency is being sold off for Bitcoin) worth less in relation to each and every bitcoin.
As more and more people buy bitcoin (the same as selling their fiat money) the overall price of bitcoin will rise in relation to that fiat money. In the last 10 years or so, Bitcoin has gone from being worth just pennies to now being worth more than $10,000 USD. Most people tend to only view Bitcoin’s value increasing compared to fiat currencies (which is 100% true) but the inverse way of thinking of this relationship is that the price of fiat currencies are falling in relation to bitcoin.
This is the wealth transfer in action.
As more and more people abandon their failing fiat currencies to buy bitcoin or accept it as payment, the more the price of fiat currencies will decrease in relation to bitcoin. This essentially devalues each and every unit of fiat currency in the world while increasing the value of each and every bitcoin.
Whenever this happens, wealth is transferred from fiat holders to Bitcoin HODLers.
This wealth transfer will prove to be the greatest transfer of wealth in all of history and just one of the many reasons why everyone should use bitcoin.
Use Bitcoin
Every fiat monetary system in the world can be printed on demand by central banks. This runaway printing of money always leads to the same demise of the wealth of any given society via the Cantillon Effect. There is only one single outcome of such a system and that is widespread poverty for the many and centralized wealth for the few.
If you want to prevent your wealth from being devalued by the Cantillon Effect and the never-ending printing of fiat money, then transfer at least some of your wealth into Bitcoin. Historically, there has never been a monetary policy as sound as bitcoin and the long term benefits will prove to be worth far more than any fiat currency.