Bitcoin: The End of Money as We Know It Page #3

from the Medici

for 100 gold coins.

His promise to pay the

Medici was put on paper.

Meanwhile, the Medici

owed 100 gold coins,

to another trading partner,

for delivery of

wine from France.

The parties didn't

go to the expense

of transporting and

exchanging gold coins.

Instead, the paper

was transferred.

Everyone agreed that

the paper had value,

100 gold coins.

But only because the

everyone trusted the Medici,

as solvent middlemen.

They had created a

paper money machine.

Within a few generations,

they rose from low crime

to high finance.

Their great wealth,

helped fuel the

Italian renaissance

and elevated the family

to levels of enormous

political power.

The power to marry

into royal families

and get elected as popes.

The ties binding money

to power, politics

and influence now ran

through church and state.

Merchants had proven that

creating paper currency

could be wildly profitable.

Goldsmiths wanted

in on the action.

- Imagine it like this,

if the goldsmith had seen

over a period of time that some

of the coins he is storing for

people were gathering dust.

The people who own them,

don't need them right now.

So what if I go and lend

them out into the community

and I charge them

interest on this loan.

So he starts out lending

some of these gold coins

and then later he

realizes, actually people

don't even want the gold

coins they just want the piece

of paper that says that the

gold coins are in the bank

and with the goldsmith.

So I can now make a loan

with these pieces of paper.

And whatever I write

on the piece of paper,

as long as the people trust

me, they'll trust the paper.

And effectively the goldsmiths,

the early day bankers,

they had literally acquired

the power to print money.

- [Voiceover] More and more

such private paper money

from merchants and

banks circulated

and began to rival

the crown's coins.

The power inherent

in controlling

and issuing money began

slipping away from the rulers.

They couldn't tax or de-base

this new kind of money.

But they had bigger ambitions

than ever with trading posts,

colonies, and empires that now

stretched across the globe.

For centuries,

European countries

would take turns

building massive fleets

and waging war on each

other to rule the world.

(yelling)

- Government wanted to

take the people's money

in order to finance its wars.

That's essentially

the history of money.

Money and warfare go together.

- [Voiceover] War is expensive.

One year's income taxes

simply aren't enough.

Kings and queens had to borrow

money against future taxes.

They needed a ground breaking

financial innovation,

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