Satoshi Nakamoto: Not to Debase Currency
on Tuesday, October 11, 2016Creator of bitcoin and blockchain technology, Satoshi Nakamoto Money Quote saying trust of central bank required for currency to remain viable. History of financial systems trust shows that has failed repeatedly. Satoshi Nakamoto said:
“The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust” — Satoshi Nakamoto
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Satoshi Nakamoto means that trust is required for conventional currency to be viable. He suggests that the central bank must be trusted not to debase the currency, but the history of fiat currencies has shown that this trust is often breached.
Fiat currencies have repeatedly failed due to breaches of trust. The central bank must be trusted not to debase the currency, but trust has been broken, leading to the devaluation of currencies.
There are many examples of nations debasing their currencies throughout history. Here are a few notable ones:
- Ancient Rome: The Roman Empire debased its currency, the denarius, by increasing the amount of base metals used in its production and reducing its silver content. This led to inflation and the eventual collapse of the empire’s economy.
- Weimar Germany: In the 1920s, Germany printed large amounts of money to pay for reparations from World War I, leading to hyperinflation and the eventual collapse of the German mark.
- Zimbabwe: In the early 2000s, Zimbabwe experienced one of the worst hyperinflation episodes in history, with prices increasing by a factor of 100 trillion. The Zimbabwean dollar was eventually abandoned in favor of foreign currencies.
- Venezuela: In recent years, Venezuela has experienced severe inflation and a collapse of its currency, the bolivar, due to political instability, economic mismanagement, and the fall in oil prices.
- Argentina: Argentina has a history of currency debasement, including a major currency crisis in 2001-2002 that led to a default on the country’s debt and widespread poverty.
These examples illustrate the risks of debasing a currency and the potential consequences for the economy and the people living in that country. It’s important for nations to maintain a stable and trustworthy currency to ensure economic stability and prosperity.