Page 6 - My FlipBook

Yuthas. “The central bank must be trusted not to debase the currency, but
the history of fiat currencies is full of breaches of trust.”
Some critics believe that governments, inevitably, will print money
to solve short-term problems or meet immediate needs. These people are
often skeptical of government in general, which they argue has too much
power—to print money, collect it, and monitor it. Some people believe
that the government won’t properly oversee the financial system, which
is charged with holding savings, making loans, and investing. If the
government fails in this role, citizens’ savings would be jeopardized.
All of these fears appeared to come true during the global financial
crisis of 2007–2008. In January 2009, the global financial system was
near collapse. In the United States, millions of home mortgages had been
given to people who were unable to repay them. These mortgages had
been repackaged into securities that had been sold to banks and other
financial institutions around the world. When the home mortgages soured,
financial firms began to implode.
Governments were forced to spend hundreds of billions of dollars
to prop up financial institutions to avoid a catastrophic economic
depression. The bailouts were controversial. Families lost their homes, and
investors lost fortunes. But the CEOs who ran these companies seemed
to largely escape punishment. The global financial crisis of 2007–2008
eroded trust across society—in government, institutions, and individuals.
In the very first Bitcoin transaction, Satoshi Nakamoto quoted the title of
a story in the London Times from January 3, 2009: “Chancellor on Brink of
Second Bailout for Banks.” With this reference, Nakamoto summed up the
issues that led them to launch Bitcoin. They didn’t have to make a case. They
only had to point to the global financial crisis of 2007–2008, which led many
people to an extreme conclusion: governments can’t be trusted with money.
Bitcoin was Nakamoto’s answer to the challenges of fiat money. It
could be easily stored, instantly transmitted, and verifiable through a
simple process.

CRYPTOCURRENCIES ANd THE BLOCKCHAIN REvOLUTION 10