All historical manuscripts show that people have always been involved in commerce. It started with barter trade which involved exchanging one good for another. In many civilizations, gold then became the means of exchange. As the 19th century ended and as globalization started to become common, gold was adopted as the main means of exchange. As the World War 1 continued, countries moved to their local currencies because there was no enough gold to buy the weapons. In the 1940s, the Bretton Woods Agreement led to the establishment of the world monetary system as we know it. It was soon to be broken down in 1970s after Richard Nixon abandoned the gold standard.
The next revolution in the currencies market happened in 2008 when the world experienced the biggest financial crisis since the great depression. This crisis led to the collapse of Lehman Brothers, which was then one of the biggest investment banks in the world. As the crisis went on, the unemployment rate spiked and the number of foreclosures increased. In response, the government moved to bail out the banks or Wall Street. It did this by creating the Troubled Asset Relief Program (TARP) which provided almost a trillion dollars to the banks.
The perceived bailing out of Wall Street instead of Main Street led to a lot of distrust in the government and its institutions. Politically, it led to the formation of the Tea Party. Economically, it led to the formation of Bitcoin, and the new field of Blockchain.
Bitcoin was created to be a replacement of the centrally-regulated fiat currencies. In its place, the digital currency would be important in transactions without the need for a central bank. To get Bitcoins, people had to mine it in a decentralized way, which would avoid the regulators. It promised speed, efficiency, safety, and lower costs for transactions.
The earliest users of Bitcoin were the dark web community. The dark web is the world of internet that is not visited by many people. In fact, the modern browsers like Edge, Opera, and Mozilla cannot access these websites. In their place, people use Tor, a private browser developed for the military. It is also used by people like journalists who want to make secure communications.
In the dark web, people trade all types of goods. They range from human parts to drugs and credit card credentials. The difficulty before Bitcoin was that transactions were easy to track. With Bitcoin, it was impossible to figure out who bought what. One of the biggest dark web sites then was Silk Road. Before it was shut down, the site made more than a million dollars a day. Its founder valued it at more than a billion dollars.
As Bitcoin gained popularity, it led to the development of other cryptocurrencies like Ethereum, Litecoin, and Ripple. Today, there are more than 2000 cryptocurrencies. At their peak, the cryptocurrencies were worth almost a trillion dollars.
Today, the industry is going through a major change as Bitcoin fails to deliver on its promises. Its transactions are no longer secure, the cost to transfer it has risen, and the number of hackings have increased. In fact, more than $700 million worth of cryptocurrencies has been stolen this year. Most importantly, Bitcoin has not been adopted by many sellers.
All this leaves Bitcoin at a difficult position as people start to worry about its use. Many enthusiasts have changed the case for Bitcoin and are now positioning it as the potentially next digital gold. As you know, gold is mostly bought as a hedge against inflation. Buyers of gold believe that it may be valuable if the world faced a major economic downturn. This may be true because of the historical value of gold. However, Bitcoin is different because in case such a disaster happened, the internet may be the first to be affected. Without the internet, there is no Bitcoin.