Until Bitcoin, money had always been manipulable.
People demand bitcoin because they seek certainty.
“I don’t think we’ll ever have good money again before we take it away from the government. Since we cannot violently take it out of the hands of the government, all we can do is, by some clever indirect means, introduce something that they cannot stop.
Friedrich Hayek
Bitcoin is neutral money. No one, no matter how powerful, is able to change it arbitrarily and unilaterally. Just as no person, no matter how much money or title they have, can raise their hand and order the properties of gold to change, the same thing happens with bitcoin. It is this neutrality that allows it to absorb the actions and feelings of all participants in the economy and reflect the reality of the market.
Since money exists, there was always the possibility of market manipulation. Back when money was made of precious metals, rulers could lower its value changing your alloys. Nowadays, when there is no anchorage in some neutral money like gold, governments and banks can print new currencies out of thin air to support causes that suit them only, such as war or controlling their population. This without mentioning the personal enrichment, a result of cantillion effect.
Even with the gold standard, it was necessary to trust that the politicians and bureaucrats were telling the truth about the reserves, and that they would not betray the trust placed in them, something they ended up doing by breaking it arbitrarily and which was reflected with the Nixon Shock.
Political arbitrariness has always been closely related to government money, which we used until 15 years ago for lack of something better. Since this type of money carries the germ of manipulation within it, is unable to reflect the reality of the market, and, therefore, hinders efficient human action. This is how the economist Friedrich Hayek explains it:
“Fundamentally, in a system in which knowledge of relevant facts is dispersed among many people, prices can act to coordinate the separate actions of different people in the same way that subjective values help the individual coordinate the parts of his plan.” ».
Friedrich Hayek.
It should be remembered that one of the properties of money is to serve as a unit of account. If an actor has the ability to directly influence the value of money, it is impossible for him to transparently measure people’s desires in relation to the availability of their objects of desire (expressed in demand and supply) in order to know with certainty how We value things in society.
In this way, in history one can see peaks of prosperity in a market that was basically known to be damaged, or a collapsed market could be seen when the conditions were in place for success.
A clear example of this is presented by Murray Rothbard in his book The Great Depression, where he demonstrates that the credit expansion of the 1920s, driven by the interventionist policy of the Federal Reserve, exceeded the volume of savings, led to unsustainable investments and an overaccumulation of debt. Government interventions that attempted to artificially maintain the economic boom before the crash, according to Rothbard, distorted the market, prevented natural adjustments, and prolonged the depression by delaying the liquidation of bad investments.
The ability of traditional assets to reflect reality is, to say the least, limited because The interests of those who control them have a greater effect on them than reality itself.
Fortunately this is now a story of the past. Since the launch of Bitcoin, the most advanced form of money that humanity has ever created, it is possible to once again have a mirror that reflects the reality of the world with more and more precision. And this is due to its neutrality. That there is no partiality on the part of the issuer is precisely one of the main characteristics that Hayek attributes to good money:
«Good money, like a good law, must function without taking into account the effects that the issuer’s decisions will have on known groups or individuals. Even with the best will in the world, no government can resist this pressure (from such groups or individuals) unless it can point to a firm barrier that it cannot overcome.
Friedrich Hayek.
The fact that Bitcoin has no political affiliations, that it cannot be manipulated by a specific will, but rather metabolizes each and every one of the wills involved at the same time, makes it the only free market that humanity has today. This despite the fact that there are still millions of people, wills, fears and desires to join this global market in order to really have the complete picture, the exact drawing of what is happening in society.
Bitcoin has been rising non-stop since its launch, and the bubbles it has had have only denoted over-enthusiasm, but they have always been left behind, surpassed by a new all-time high years later.
The reason is not only that bitcoin is the best money in the world, an intrinsic and unrepeatable characteristic that condemns it to monetary success, but also in its ability to reflect the reality of the world.
If we analyze the world we find ourselves in, it is one of chaos, war, discord, envy, manipulation. Maybe the world has always been like this; Maybe it’s human nature. But for the first time in history we have a monetary instrument whose rules are known by all its participants, accepted voluntarily and cannot be modified arbitrarily. For the first time in history we have an instrument with which to measure the truth about people’s desires without the possibility of trust being betrayed and reality distorted.
So why is bitcoin rising non-stop? Because the world demands a neutral instrument that is resistant to manipulation to be able to have some certainty in an increasingly uncertain world. It is a refuge to which people are fleeing, scared of a rotten system.
Thus, the price of bitcoin will be the clearest reflection of the reality of the world.