This is probably the most common question asked.
First, we need to take a look at the evolution of trade:
- Initially, trade was done through a barter system. You have an asset I want, I have an asset you want, let’s trade. Here, a apple farmer can trade his apples to a sheep herder for wool.
- Here, we run into a problem. What if you don’t have something I want? Metals, particularly gold and silver, were often used as a mechanism for trade.
- With the rise of kingdoms and nations, many wanted to show their reign and would melt metals and recast them to showcase an emblem with their nation.
- Eventually, nations realized that metals weren’t efficient, and paper money was created.
- With the rise of the internet, we now have online banking, where currency is just digital figures.
This is a simple look, but it’s obvious that cryptocurrencies are the next evolution of trade.
Like most features in evolution, the unregulated — capitalistic supply/demand — aspect is based off the Great Recession of 2007.
Sources
- http://bitcoin.stackexchange.com/q/182/30316
- https://medium.com/@sebfung/cryptocurrencies-101-c1c0a5a3cc2
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