50 years later: Why Bitcoin is the new gold standard

Yesterday 50 years ago, on August 15, 1971, US President Richard Nixon changed the world with a monetary policy that also led to the creation of Bitcoin. It seems like a long drawn out affair, but it all started with the dollar decoupling from the gold standard.

The loss of the gold peg has put the dollar on a dangerous decline from which it will likely never be able to recover. The problem that started in 1971 is spiraling out of control as more money is produced only from debt. If the global reserve currency continues to go in this direction, a complete collapse of the economy is possible, unless some kind of new standard comes along. Could this new standard be Bitcoin?

WTF happened in 1971

Many things happened in 1971, but few have the same lasting effect as US President Richard Nixon, who ended the convertibility of the US dollar to gold.

Previously, the US had to keep the US dollar at a price pegged to gold to ensure international convertibility. But to fight inflation and widening wage differentials, the Bretton Woods monetary system was ended.

Related reading | Gold versus Bitcoin chart makes it look like the bull run has barely started

Without a dollar pegged to the gold price, new dollars have invaded the monetary system in abundance since then, and the price per gold has skyrocketed from a stable rate of around $ 35 for decades to over $ 2,000 recently.

In 1971 the dollar was decoupled from the gold standard | Source: XAUUSD on TradingView.com

This is not exactly the rising price of gold, so to speak, but the falling dollar price compared to the gold standard – which until recently was the strictest and tightest monetary system ever used.

The Bitcoin standard emerged 50 years after the dollar went down

But today things are very different. We live in a digital age where coins are rarely traded in retail stores or banks and instead the market is suggesting that a new standard is emerging: the Bitcoin standard.

Gold versus Bitcoin

Bitcoin has been bothering 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 to BTC that really shows how the situation is evolving.

The total divergence in value growth between the two in relative dollar values ​​is almost as evident between XAU and BTC as it has been between gold and the dollar since 1971.

Related reading | Gold fractal is a good sign for Bitcoin if the bull flag is confirmed

Bitcoin is undoubtedly disrupting the gold standard and is next aiming for the dollar itself. Even since the advent of Bitcoin, the dollar has done more and more to break away from its previous bond with precious metals, and it may become digital itself in the days to come.

The gold standard existed because there was no better monetary system before. Today the Bitcoin standard is here, and it is due to the decisions that were made some fifty years ago that are still having a dramatic impact on society today.

All thanks to a man who is known to be quoted as saying “I’m not a crook”. #ThanksNixon # wtfhappenedin1971 #Bitcoin pic.twitter.com/kxcfwruqdK

– Tony “The Bull” Spilotro (@tonyspilotroBTC) August 16, 2021

Follow @TonySpilotroBTC on Twitter or via the TonyTradesBTC Telegram. The content is educational and should not be viewed as investment advice.

Featured image from iStockPhoto, charts from TradingView.com

Comments are closed.