Why mine Pi – In these days of anticipation for the announcement of Pi Network’s first mainnet version in the latter half of October 2023, I’ve read numerous materials and watched many videos about the significance of various types of currency and why scientists around the world have created digital currencies.
Today, I want to share my thoughts with you on the emergence of Bitcoin and Pi Network. According to some technical scientists as well as global financial experts, they say that the current Fiat currencies have no intrinsic value. This means these currencies only have value based on the power and political orders of governments.
Why mine Pi? Mine Pi to protect yourself. Fiat is air money – pi coin
Why do they say these currencies have no intrinsic value? The answer is that any piece of paper or coin, regardless of the material, under the authority and political orders of the government can be considered money. However, they have no inherent value at all.
In contrast, every Bitcoin we mine contains a tremendous intrinsic value, similar to gold and silver from the early days of humanity. This raises the question: what is its value? It’s not just a mere digital or cryptocurrency; it’s truly a mathematical currency, a currency of algorithms and encryption. It’s born from the smartest minds, making it a currency with a value that can’t be measured by conventional currencies.
With this philosophy, Pi Network gives us a new perspective on the value of Pi. It’s not just a cryptocurrency; it’s a mathematical exploration, an understanding of cryptography, and the intersection of artificial intelligence and human intellect. Therefore, we need to appreciate the intrinsic value of each Pi we own. It’s not only shaping our future in the digital world but also a profound journey into the realm of knowledge and wisdom.
First and foremost, I want to share these thoughts with you. Now, let me briefly go through some historical stages of currencies. Of course, those in the Finance industry and some of you are already well-versed in this topic. But why do we have a type of currency called Fiat that all countries in the world use today?
Please take a look at some stages below. According to my research, currencies began to develop around 6000 to 9000 years ago. People used anything with value to exchange with each other. Societies worldwide started choosing gold and silver as their primary currencies. They reached a consensus to exchange something through an intermediary, which was gold and silver. Before that, it was primitive shells and mollusk shells. Around 3000 years ago, in 680 BC, governments started creating representative currency, known as Government Money. Gold and silver were mined and cast into equal-weight coins. Converting gold and silver into currency, they became market currency (MC) for exchange in society.
Throughout history, precious metals have always chosen as money. Choosing precious metals like gold and silver as currency didn’t go through any government decree. It wasn’t an order from the government. These metals were automatically chosen as currency because of their unique features. They were extremely rare, couldn’t be divided easily, and were easily recognizable.
Silver has always been viewed as a store of value. Please note these points for the later part of the video when we will discuss why Bitcoin and Pi are similar to gold and silver in the early modern history.
When World War II ended, the Allied nations gathered in the small town of Trenton Wood, New Hampshire, USA. Here, they drafted a new financial system, one that would stabilize the world’s financial system after the war ended in 1944.
At that conference, the US dollar was chosen to become the world’s reserve currency. Here, we see that it wasn’t the US forcing the world to accept their dollar; it was an agreement, a consensus reached at a conference comprising 44 nations. Why was the US dollar chosen? Because the technology used to produce the US dollar at that time was deemed perfect. People said the US dollar was chosen because it was as good as gold, representing the unity of many nations. The US didn’t impose this through the new financial system; it was called the “Ringwood” system. In this system, countries worldwide would peg their currencies to the US dollar at a fixed exchange rate. For example, the Vietnamese dong had a fixed rate against the US dollar, which couldn’t be changed.
At that time, most of the world’s gold was stored in the US Treasury, regulated by the $35 per ounce rule, known as the “gold pool.” The PRW conference stipulated that $35 per ounce of gold would have a fixed exchange rate with other countries’ currencies, which couldn’t be altered. Because of this, people said the currencies of nations at that time had intrinsic value because they were backed by a certain amount of real gold. It was measured through the US dollar, meaning if you had some money from your country, you could exchange it for US dollars, and every $35 would get you an ounce of gold.
Conversely, people could also sell gold to convert it into US dollars. Then, based on the fixed exchange rate between the dollar and other countries’ currencies, you could exchange it for your own country’s currency. At that time, people referred to the currencies of nations as having intrinsic value. The Ringwood conference created a system where various world currencies were efficiently supported by gold through the US dollar.
We can see how current African currencies compare to those of other nations back in 1944. However, there was an unexpected event called the “Nixon Shock” on August 15, 1971. President Nixon directed his Treasury Secretary, Mr. Connally, to temporarily suspend the dollar’s convertibility into gold or any other reserve assets. This meant that the conversion between gold and the dollar at the fixed rate of $35 per ounce ended on August 15, 1971.
By that time, the world’s Pren Wood financial system had existed for 25 years, from 1944 to 1971. This was a surprising event known as the “Nixon Rescue.” After August 15, 1971, no currency was backed by gold or anything valuable. The currency used after August 15, 1971, in financial systems, was referred to as “Fiat money.” This is a type of currency with no backing except for the promises made by the government. “Fiat” is a Latin term, generally meaning that the currency in circulation relies on the will and decision of the government. If people have faith in their currency and the government has enough power, it will activate the currency in circulation for a period until people lose faith in that currency.
Currency is a medium of exchange, evolving from its origins. Initially, it was always linked to something specific with intrinsic value, like precious metals such as gold or silver; it had intrinsic value. However, in modern times, governments and politicians say we don’t need any intrinsic value. In other words, all we need is a political decree. This piece of paper is money. Money has a new characteristic; it is tied to the power of governments and declares something to be valuable even without intrinsic worth.
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