Why Bitcoin Was Created?

#blockchain #webdev #bitcoin #web3

To understand the importance of Bitcoin, we need to go back to the period after World War II, when the Allied nations came together to rebuild the global financial system.

The Bretton Woods Agreement (1944)

In July 1944, representatives from 44 allied nations met in Bretton Woods, New Hampshire, to design a new framework for international trade and monetary stability.

Two competing proposals emerged:

🇬🇧 United Kingdom (Keynes Plan)

Create a new international currency called the Bancor, not tied to any single nation.
Establish an International Clearing Union (ICU) to manage trade balances.
Require both debtor and creditor nations to adjust trade imbalances.
Allow more flexible exchange rates to avoid deflationary pressures.

🇺🇸 United States (White Plan)

Create a system of fixed exchange rates tied to the U.S. dollar, convertible to gold at $35 per ounce.
Establish the International Monetary Fund (IMF) to help countries with short-term balance-of-payments issues.
Establish the International Bank for Reconstruction and Development (IBRD) — later part of the World Bank — to finance post-war rebuilding.
Make the U.S. dollar the central reserve currency.

The U.S. proposal prevailed — largely because America held about 50% of the world’s gold reserves at the time.
This meant the dollar was backed by gold, and all other major currencies were pegged to the dollar at fixed rates.

The Collapse of the Gold Standard

This system brought stability for decades… until 1971.

That year, U.S. President Richard Nixon ended the dollar’s convertibility to gold — effectively ending the gold standard.

From that moment:

All major currencies became fiat money (not backed by a physical asset).
Inflation rose.
Monetary policy became increasingly centralized.

In the years that followed, concerns about centralized monetary control, inflation, and financial surveillance continued to grow.

Pre-Bitcoin Attempts at Digital Money

Before Bitcoin, several digital currency projects tried to create alternatives to government-issued money:

Name	Year	Description	Reason for Failure
E-gold	1996	Gold-backed digital currency	Shut down (2009): legal issues
Liberty Reserve	2006	Anonymous USD/EUR transfers	Shut down (2013): money laundering
DigiCash	1989	Privacy-focused digital cash	Bankrupt (1998): no adoption
GoldMoney (P2P)	2001	Gold as digital money	P2P disabled: regulation