How LBW Sees It
Humans have been bartering since the beginning of time. For example, between 9000 – 6000 B.C. humans used cattle as a form of currency to trade for other objects and by 1200 B.C. Cowry Shells were used as a form of currency. Fast forward to today, fancy cotton-based paper and metal coinage is used to pay for a movie and popcorn (we sure have made some advances). Even though the physical form of currency hasn’t changed much for many years, the backing of currency has. Today, most countries support and back their own currency – otherwise known as fiat money. This type of currency is regulated and backed by the full faith of governments. The U.S. dollar was originally backed by gold, meaning each piece of currency could be converted into its respective share of gold. This meant the government did not have the option to print more money as they would have needed more gold to support such an idea. In 1971 President Nixon officially took the U.S. dollar off the gold standard, allowing the government to have full control over the expansion of its money supply in addition to backing it 100% - yes, the $100 bill in your pocket is only worth $100 because people feel it is worth that much. In essence, the money supply for most countries is a monopoly and can be controlled or manipulated at the government’s discretion. They can print more money to increase money supply causing the value of their currency to decrease. Or, they can restrict or take money out of the system to help pump up the value of their currency. At this point you’re probably wondering to yourself “What does this have to do with cryptocurrency?” – the answer: everything.
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