50 years ago yesterday, on August 15, 1971, United States President Richard Nixon changed the world with a monetary policy that also led to the creation of Bitcoin. It seems like a stretch, but it all began with the depegging of the dollar from the gold standard.
Losing its peg to gold has led the dollar down a dangerous slope it likely can never recover from. The problem that started back in 1971, is spiraling out of control as more money is produced from nothing but debt. If the global reserve currency continues to head in such direction, complete collapse of the economy is possible unless a new standard of sorts emerges. Could that new standard be Bitcoin?
WTF Happened In 1971
A lot of things happened in 1971, but few have the same lingering impact as US President Richard Nixon ending the convertibility of the US dollar to gold.
Prior to this, the US had to maintain the US dollar at a price pegged to gold to ensure convertibility internationally. But to combat inflation and rising wage gaps, the Bretton Woods monetary system was ended.
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Without a dollar tied to the price of gold, new dollars have entered the monetary system in abundance ever since and it has sent the price per gold skyrocketing from the stable rate of around $35 for decades to more than $2,000 recently.
In 1971, the dollar was de-pegged from the gold standard | Source: XAUUSD on TradingView.com
This isn’t exactly the price of gold rising, so to speak, but the price of the dollar falling compared to the gold standard – which up until recently was the strictest and most scarce monetary system ever used.
The Bitcoin Standard Emerges 50 Years After Downfall Of Dollar
But today, things are very different. We live in a digital age, where coins are seldom trade at retail or at banks, and instead the market has begun to suggest that a new standard is emerging: the Bitcoin standard.
Bitcoin is disrupting the precious metal since its debut | Source: XAUBTC on TradingView.com
Books have been written with such a title, but it is the price chart comparing gold against BTC which truly shows the situation unfolding.
The complete divergence in the growth in value between the two in relative dollar terms, is nearly as noticeable between XAU and BTC as it is between gold and the dollar since 1971.
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Bitcoin is without a doubt, disrupting the gold standard, and it is gunning for the dollar itself next. Even since Bitcoin’s emergence, the dollar has done more and more to get away from its former peg to precious metals, and perhaps could itself turn digital in the days ahead.
The gold standard existed because before it no better monetary system ever existed. Today, the Bitcoin standard is here, and it is due to the decisions made some fifty years ago that’s still having a dramatic impact on society today.
— Tony “The Bull” Spilotro (@tonyspilotroBTC) August 16, 2021
Featured image from iStockPhoto, Charts from TradingView.com