MONEY MAKES ME WANNA HODL
If you haven't heard, Elon Musk recently announced that you can now purchase a Tesla with Bitcoin. A common misconception is that Bitcoin is a physical coin… it's not. You can't just walk into Telsa, drop a bag of bitcoins on the counter and say, 'Hey! I’d like to buy that Model S!" You can think of Bitcoin as a form of currency - money we transact with every day, except in a digital form.
So, let's begin to connect the dots. First, let me break down a few things about currency, aka "fiat currency," aka "fiat money." Believe me, without this basic understanding, you can't appreciate what Bitcoin brings to the table or the value of becoming a HODLER like myself and other EARLY ADOPTERS.
*HODL is crypto slang, an acronym for "Hold on for dear life"; a HODLER is someone who holds Bitcoins and other cryptocurrencies- but doesn't sell. *
For those who don't know, the US Dollar is considered the reserve currency of the world. It all began with the barter system of exchange, then a transition to commodity money (gold and silver metal coins), which was then slowly replaced by the invention of paper money or fiat. Fiat is Latin and, by definition, means "let it be" or, in financial terms, means the currency that is circulating by force. It used to be that every US Dollar in existence was backed by an ounce of tangible gold in a vault. But in 1971, US President Nixon abandoned the so-called 'gold standard.' Instead of dollars backed by the value of gold, they became backed by NOTHING but the trust of the government.
Essentially, the government-backed dollars we transact with every day have value because the government says it does. Just think about this. When you go to a McDonald's drive-thru to buy a big mac, why do we pay using fiat or digital money and not rice grains? Because the government said so. It may as well be Monopoly money. It truly is just a piece of paper with some ink on it.
Now let's be clear the transition from commodity money to crypto is a century-long history lesson, but let's continue just to scratch the surface. Cryptocurrency is a currency, just in digital, not physical form. Right now, just over 90% of the entire globe is already using 'digital currency' in the financial system via bank accounts and digital electronic transactions such as swiping a credit card or sending an e-transfer. Tangible physical cash only represents approximately 1% to 5% of the world's currency. We already live in a digital-powered economy.
Ok, almost there. Remember when I mentioned that fiat is a government-issued currency that is circulating by force? Well, this is where cryptocurrencies come in, with Bitcoin taking centre stage. Bitcoin is usually the first and often only thing that comes to mind when you hear the word cryptocurrency. I like to think of Bitcoin as the first human on cryptocurrency earth, populated with OVER 5,000 CRYPTOCURRENCIES existing in today's crypto space.
Now, these are the key takeaways. All cryptocurrencies are digital currencies, but not all digital currencies are crypto (I'll flesh this out at a later date). For now, I'll make it easy to grasp. Think about digital currencies as something that governments, third parties and banking institutions CAN regulate whereas, CRYPTOCURRENCIES ARE UNREGULATED forms of digital currency. Bitcoin is a twelve-year-old digital currency that requires no permission from any organization, government or banking institution to buy, sell or exchange it. Bitcoin gives you the satisfaction of becoming self-sovereign - nothing forced, you're in control. Just grab your smartphone and an internet connection, and presto, you are now your own bank.
If you stop and think about it, money has constantly evolved to suit the times and the population's needs. I believe this is just another shift in history consistently trending towards development and expansion – the future of decentralized finance.
Join me next week, where I'll take a deeper dive into how Bitcoin works so that every crypto curious coiner and non-coiner alike can get their HODL on!
Bitcoin is the one crypto investment you don't want to miss!
Until then,
Stay Curious and Have a great week
Zo
If you enjoyed the newsletter today, please forward The Zo Code to someone that may find this insightful.
Share this post