[This article is excerpted from the introduction of the book Bitcoin -- a moeda na era digital]

For many centuries, money in every country was a different name for what was essentially the same thing. It was a commodity, generally gold or silver. These were what the market had selected for their unique properties that were particularly suitable for monetary functioning. This universalism of money served the world well by fostering free trade, assisting merchants in calculation, and providing a sound and reliable check on the power of governments. It curbed the nationalist impulse.

Two forms of nationalism wrecked the old monetary system. Nation states themselves sought greater power and found that the best means to do so was through monetary depreciation, which turns out to be less painful and more opaque that the traditional method of taxing people. To get away with this process, governments fostered currency zones, protectionism, and capital controls, thereby removing an element of the emerging universalism of the old world.

Then early in the 20th century, governments took the next step of nationalizing money itself, removing it from the sector of competitive market forces. Central banking was, in this sense, a form of socialism but of a special variety. Governments would be final arbiter of the fate of money but its daily management would fall to a banking cartel that was guaranteed against failure -- at public expense.

The new power of money creation under central banking was immediately put to use by way of the mass death of World War I. It was a total war, the first international war in history that made the whole of the civilian population part of the war effort, and it was funded by debt backed by the new magical power of government to use the banking system to manufacture revenue with the printing press.

Intellectual opposition to these unsound policies emerged in the interwar period. The Austrian economists led the charge toward reform. They warned that unless something was done to denationalize and privatize money, the result would be an unending series of business cycles, wars, catastrophic inflations, and the continued rise of the leviathan state. Their predictions were uncanny but that is no real satisfaction; they were powerless to do anything to stop the inevitable. In the course of the century, most every other good and service in society was improving in quality but money, now removed from market forces, only became worse. It became the enabler of despotism.

For all these decades, economists had puzzled about how to deal with this problem. Money needed to be reformed. But government and banking cartels had no interest in doing so. They benefited from the bad system. Dozens and hundreds of books and conferences have take place that urged a restoration of the old-world universalism of the gold standard. But governments ignored them. The stalemate became particularly intense after the last vestiges of the gold standard were removed in the 1970s. Great minds had shelves full of reform plans but they gathered dust.

Such was the situation until 2008, which Satoshi Nakamoto took the incredible step of reinventing money in the form of computer code. The result was Bitcoin, introduced to the world in the most inauspicious form imaginable. He threw it out with a white paper on an open forum: here is a new money and payment system. Use it if you like it.

Now, to be sure, there had been previous attempts to design such a system. Prior attempts at digital money failed for one of two reasons: 1) they were usually proprietarily held by a single commercial company and therefore had a centralized point of failure, or 2) they did not successfully overcome what is called the "double spending" problem. Bitcoin, on the other hand, was absolutely unreproducible and constructed a ledger tight enough so that every currency unit was accounted for and verified in the course of the currency's evolution. Also, and crucially, the currency lived on an open-source network that was unowned by anyone in particular, thereby removing the problem of a single failure point. There were other elements too: cryptography, distributed networking, and ongoing development made possible through a developers were were paid for their work through the transaction verifications they provided.

Hardly a day goes by when I -- and so many others -- do not marvel at the stunning genius of this system. It is so thorough, so seemingly complete, so clean. Many people, even in the Austrian camp, had been convinced that it was impossible to reinvent currency on a private basis (F.A. Hayek was the great exception here; he suggested the idea as early as 1974). Nonetheless, it became an undeniable fact that Bitcoin did exist and it was obtaining a market value. Two years after it hit the world, it achieved parity with the U.S. dollar -- something that very few ever imagined possible.

Today we stand in awe at what has happened. We have before us an emerging international currency, one created entirely by market forces. The system is being reformed, not because central bankers wanted it to happen, not because of an international conference, not because a group of academics got together and made a plan. It is being reform from the outside in and from the bottom up, based on the principles of entrepreneurship and market trading. It's all quite incredible the extent to which the whole process unfolding before us conforms to the model laid out in Carl Menger's theory of the origin of money. There's just one difference and it is one that took the world by surprise: the basis of Bitcoin's value is not its previous use in barter as Menger had described but its present use as a payment system. How privileged we are to observe this happening in our time!

And what is the potential? Bitcoin has all the best traits of the best money: scarce, divisible, durable, portable, but even goes further in the direction of the monetary ideal by being both weightless and spaceless. This enable the transference of property regardless of geography at virtually zero cost and while using no third-party intermediary, thus bypassing the entire banking and credit systems that have been so thoroughly wrecked by government intervention. Bitcoin, then, holds out the prospect of restoring the soundness and universalism of the old-world gold standard but actually improving on it by existing completely outside the direct control of government. Again, this is awe inspiring.

Many have warned that governments will not tolerate the monetary system to be reformed by a bunch of cyberpunks and their magic internet money. There will be interventions. There will be regulations. There will be taxations. There will be attempts to control. But look back at recent history. Governments tried to stop and then nationalize email. They tried to end file sharing.  They tried to end piracy. They tried to stop online pharmaceutical distribution. They tried to end drug use, manufacturing, and online distribution.They tried to manage and control software development through patents and antitrust. If they try to stop or even control cryptocurrency, they will not succeed. They will be once again outrun by market forces.

And here is the irony. The most direct way that governments can control Bitcoin is by intervening the conversion to and from nationalized monies. They more they intervene, the more they incentivize traders to move to and stay in the Bitcoin ecosphere. All these attempts could actually end up fueling the market. But there are other reasons even apart from this consideration that make cryptocurrency unstoppable: near-zero transaction fees, security, fraud protection, speed, privacy, and many more. Bitcoin is just a superior technology.

One hundred years ago, the development of money was taken away from market forces and put in the hands of governments. The results were war, economic instability, the robbing of savers, mass exploitation, and the explosion in the power and size of governments all over the world. Cryptocurrency holds out the prospect of not only reversing these trends but also playing a crucial role in the building of a new world of liberty.

What can all of us learn from the recent history of Bitcoin? Be honest: hardly anyone thought this was possible. The markets have shown otherwise. The lesson is to be humble, to look outside the window, be willing to be surprised, defer to the results of human action, never let your theory get in the way of your understanding, and expect the market to deliver more than you ever imagined possible.

This is why the book you hold in your hands is so important. Published by the prestigious Mises Institute of Brazil, Fernando Ulrich has explained the workings and potential of Bitcoin for the future of money, national policy, and human freedom itself.