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Bitcoin introduced the world to the Cantillon effect 2.0, commonly known as the Nakamoto effect. Rather than being rewarded for privilege, status or geography, those who live closer to the truth can reap the value creation benefits in the Bitcoin world.
The question of why we need bitcoin (Bitcoin) is trending right now, but most people’s reaction has them shaking their heads and declaring it’s either a Ponzi scheme or money for criminals. This conclusion fails to describe how Bitcoin has the potential to solve the systemic inequality and corruption that plague our current monetary system.
Miners who contribute to the security of the Bitcoin network earn new bitcoins and fees based on the level of protection they provide, which is known as the Nakamoto effect. By contrast, the Cantillon effect, a long-forgotten classic theory of how the distribution of money affects individual wealth, is one of the injustices of our current society.
Our modern monetary system is based on generating money primarily through interest-bearing debt issued by banks, transferring wealth from the middle to the top, leading to an unstable monetary system and a society where the “future doesn’t matter”. “
Between 1970 and 2010, the International Monetary Fund report 425 systemic banking, currency and debt crises, an average of 10 per year. A monopoly national currency is a fragile and unequal system, while countries with multiple currencies have historically experienced greater stability and equality.
Answers to many questions about state-controlled currencies can be found at Cryptocurrencies, a new type of non-state currency. After the 2007 financial crisis – 08, The first and most important of these, Bitcoin, appeared, and the system went live in January 2009.
This article explains the Nakamoto and Cantillon effects, and whether Bitcoin is an antidote to the Cantillon effect.
Read our guide: Who is Satoshi Nakamoto: The Creator of Bitcoin, to learn more about the founder of the world’s first decentralized cryptocurrency.
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