How to understand and what the bitcoin price means in dollars

Bitcoin is an illusion, a mass hallucination, once people hear. It's just a number in cyberspace, a mirage, as insignificant as a soap bubble. Bitcoin is not supported by anything other than the beliefs of the fools who buy it and from the more fools who buy it from these lesser fools. And you know what? Fair enough. All of this is true.

What may be less easy to grasp is that the U. S. the dollar is also an illusion. They are also mainly made up of numbers in cyberspace. Sometimes they are stored in paper or coins, but while paper and coins are material, the dollars they represent are not. US dollars are not supported by anything other than the belief of the fool who accepts it as payment and other fools agree to accept it as payment from they. The main difference is, for now at least, the illusion, in the case of the dollar, is believed to be wider and stronger.

In fact, nearly all of our US dollars, about 90 percent, are purely abstract - literally nonexistent. James Surowiecki reported in 2012 that "only about 10 percent of the US money supply - about $ 1 trillion out of a total of about $ 10 trillion - exists in cash and coins."

(The amount now appears to be around $ 1.5 trillion from $ 13.7 trillion.) Nothing can stop our banking system from making more dollars every time the mood strikes. Of the $ 13.7 trillion in M2 money supply in October 2017, $ 13.5 trillion was created after 1959 - or, in other words, M2 has grown nearly 50 times.

The US dollar is what is known as a "fiat" currency. Fiat is Latin for "let there be," as in fiat lux, let there be light; hence, fiat denarii, let there be the lira, the bolivars, the dollars and the rubles. The temptation for nation-state leaders to make money is practically unbearable. One obvious result of this carelessness is inflation: The purchasing power of $ 1 in 1959 is now a little under 12 cents.

The bitcoin blockchain was created, in part, to overcome this historical weakness. After 21 million bitcoins have been mined, around 2140, the system will no longer produce.