Introduction

If we are to discuss a new money such as Bitcoin, we have to first understand the very real problems it is trying to solve. This means discussing the issues with the current fiat money that we use - such as the US dollar, Euro, Japanese yen, Argentinian peso, and so forth - and understanding where these issues come from.

To put it simply, the problems of the money we use today can be summed up as follows: our money is not completely in our own control. For our money to function well it requires trust in other parties such as private banks, central banks, and the governments that oversee them.

For our money to move freely we have to trust that our banks will act in our best interest, and that they maintain good financial hygiene and security practices to prevent loss of our funds. We have to trust that they will allow us to access our money whenever we wish, and that they allow us to transact money with other individuals and organizations of our choice.

For our money to hold its value over time and allow us to save to improve our lives over the long-run, we need to trust that the central banks act responsibly and sensibly. The central banks have the sole power of creating new money and their decisions on monetary policy directly influence whether and how fast our money loses value over time.

In large part, these issues of trust do not stop at the private banks or the central banks but extend to the government that oversees them, which ultimately has control by virtue of regulation and military oversight.

The severity of these problems of trust and control, and thus their impact on everyday life, will vary strongly depending on what country you live in and what financial system you are having to take part in. In large part, their prevalence will come down to how well property rights and human rights in general are protected, and how well creation and enforcement of the rule of law is democratized.

These issues of trust in private banks, central banks, and governments are very real for billions of people around the world. According to the Human Rights Foundations Annual Report of 2020, 53% of the world's population lives under an authoritarian government. That is around 4 billion people for whom these fundamental rights are not protected properly, and where alignment between government, banks, and its citizens is shaky at best, more often non-existent.

Even for those in developed countries that have perhaps been fortunate enough not to be confronted with these trust issues first hand, they are still present. In fact, they have become more pressing as policies of high monetary inflation by central banks have become the norm and central bank digital currencies (CBDCs) that offer an increased control over money are a near-future reality.

These upcoming segments will highlight the practical reality of these issues of trust. The goal is to show that these issues exist, and that they are fundamentally linked to the use of our current money. You will then be able to make an informed judgement on how significant these problems are and how valuable a solution might be, whether for yourself or for others that have perhaps been less fortunate with their financial situation.

After these segments we will talk about why we have private banks and central banks in the first place, and why, despite the aforementioned issues, we still use them. I can imagine that for many these discussions surrounding the use of money aren't thrilling but they are crucial to touch on if we want to truly understand Bitcoin.

Let us now walk through some examples and stories that highlight the practical reality of these issues of trust that are tied to our current money.