> What problem does Bitcoin (Or blockchain, if you prefer, I'll take either answer), solve?
My opinion - the most significant problem bitcoin (and, historically, gold) solves is it is a store of value that is difficult (arguably, technically impossible) to inflate - there will only be 21M bitcoin, ever.
We all trust the fiat USD as a store of value bc we have trust that the US treasury and central bank will not start to fund government operations by "printing" more money.[1] However, that is effectively what is happening.[2] This is a really hard pill for people to swallow bc it fundamentally changes our worldview - "the US government is the most trustworthy, I have saved all my money in USD, how could they do that to me?" That emotional response will look like anger, hate, denial, etc.
So, what the fed and the treasury are doing is very bad for everyone. Hopefully, the majority of Americans will come to that conclusion before it is forced upon them. How does bitcoin solve this? Bitcoin does the same thing gold did (except a lot better in a couple ways [3]). When I dig up a gold nugget, I worked to create it, which is another way of saying I spent some energy and that energy is represented in that nugget I hold in my hand.[4] Bitcoin is the nugget in electronic form. Digging those nuggets is hard bc they are rare, so I don't worry about more people competing with me with more nuggets.[5] Now the dollar has a competitor. I hope that bitcoin keeps the stewards of the USD honest, bc people can trade their dollars for bitcoin - that is the problem is solves.
[1] I am not a fan of the word "printing" when describing the mechanics of what's going on today. It's an over-simplification, but analogous enough for people who do not have the intellectual inclination to go into the specifics. Most people get bored very fast when I try to talk about economics.
[3] It weighs as much as the thing that holds the private keys, takes up almost no space, is divisible, can use it for a payment very quickly, very divisible, bitcoins supply is known, etc.
[4] If you take away anything from this post, please let it be this - energy is the master resource.
If your entire life savings are in USD, you're doing it wrong. USD (any real currency, really) is to be spent. It has no returns. It is not a productive asset. The only reason to hold USD is to have liquidity. It is not a good thing for your non-productive medium of exchange to be one of the better stores of value, as it discourages investment into actually productive things. We shouldn't want a society that takes all their value and buries it in the backyard, we should want a society that is encouraged to invest in each other, trade, and grow.
21M bitcoin, and 21M Bitcoin Cash, and however many ether, and doge, and shiba, and Floki, etc... Will all of these retain their current valuation? If not, why should any of them?
My opinion - the most significant problem bitcoin (and, historically, gold) solves is it is a store of value that is difficult (arguably, technically impossible) to inflate - there will only be 21M bitcoin, ever.
We all trust the fiat USD as a store of value bc we have trust that the US treasury and central bank will not start to fund government operations by "printing" more money.[1] However, that is effectively what is happening.[2] This is a really hard pill for people to swallow bc it fundamentally changes our worldview - "the US government is the most trustworthy, I have saved all my money in USD, how could they do that to me?" That emotional response will look like anger, hate, denial, etc.
So, what the fed and the treasury are doing is very bad for everyone. Hopefully, the majority of Americans will come to that conclusion before it is forced upon them. How does bitcoin solve this? Bitcoin does the same thing gold did (except a lot better in a couple ways [3]). When I dig up a gold nugget, I worked to create it, which is another way of saying I spent some energy and that energy is represented in that nugget I hold in my hand.[4] Bitcoin is the nugget in electronic form. Digging those nuggets is hard bc they are rare, so I don't worry about more people competing with me with more nuggets.[5] Now the dollar has a competitor. I hope that bitcoin keeps the stewards of the USD honest, bc people can trade their dollars for bitcoin - that is the problem is solves.
[1] I am not a fan of the word "printing" when describing the mechanics of what's going on today. It's an over-simplification, but analogous enough for people who do not have the intellectual inclination to go into the specifics. Most people get bored very fast when I try to talk about economics.
[2] https://www.youtube.com/watch?v=csf4fdV-EOQ
[3] It weighs as much as the thing that holds the private keys, takes up almost no space, is divisible, can use it for a payment very quickly, very divisible, bitcoins supply is known, etc.
[4] If you take away anything from this post, please let it be this - energy is the master resource.
[5] This is the best starting point for people to dig deeper (trigger warning, Jordan Peterson is in it) - https://www.youtube.com/watch?v=FXvQcuIb5rU&t=65s