Why the World Needs Bitcoin – Sean Hetzel
Here in the US, bitcoin might seem like little more than a speculative investment. A way to make a quick buck when the market pumps (well, unless you FOMO in at the top then give into FUD and sell at the bottom lol).
So why do I need some magical internet money when I can just buy stuff with my credit card and pay friends with Venmo you may ask?
Well, you probably don’t. At least not yet. But there are people in other parts of the world who do need it. There are 1.7 billion people who do not have access to a bank account as of 2017 according to a report by the World Bank (see image below).
This means there are 1.7 billion people who can’t save significant amounts of money. Can’t buy things online. Can’t do business in a serious way and can’t participate in the global economy. They are left out. This needs to change.
Bitcoin is “an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party.” — bitcoin white paper, written by Satoshi Nakamoto. This removes the need middle men such as central banks and large financial institutions who have an incredible amount of power over the global economy. Here is an example for you fellow millennials. Consider that the hotels were the only ones who could participate in the hospitality industry. Now of course there is Airbnb which allows for peer to peer transactions of value. Whether you like Airbnb or think staying at a strangers house is weird (I’m in that camp if you can’t tell), bitcoin can decentralize and democratize money in a similar way.
Unlike that of a traditional bank account, bitcoin grants you complete control over your finances. But with complete control, also comes complete responsibility. There is no backdoor to reverse transactions. You can’t call up your bank and ask them to help you recover your funds. Once a transaction is added to the blockchain, it would take more computing power than the majority of the bitcoin network to reverse it. This means bitcoin is immutable and censorship resistant. It also means that it would be complicated and dangerous for average users to manage their own private keys. So there will likely need to be some sort of second layer solution to protect users from losing their keys or sending funds to the wrong address, as there is no inherent way to reverse transactions in the bitcoin protocol.
All money really needs to be is a system of accounting. A way to keep track of value transfer. Something to give goods and services a price relative to other goods and services. Fiat currencies like the US dollar actually achieve this quite well. However, among many other flaws, right now, the quickest way to send money across boarders is to put cash in a suitcase and fly it over because wiring money can take days. This is impractical and no longer good enough for the fast passed global economy. Also, many banking services are closed during weekends and after the work day. Why is something so potentially time sensitive and critical as sending money restricted to 9am to 5pm on weekdays? Doesn’t matter. The legacy financial system is a dinosaur waiting to be disrupted. And bitcoin is the astroid. Maybe it will take another global recession to weaken the US dollar and provide the catalyst for mass adoption of bitcoin. As dark as that sounds, the current financial system cannot continue forever. What goes up must come down and there are many, many flaws with the current financial system that make it unsustainable. Bitcoin may be the solution.
Do you like money? If the answer is yes, then yes, you should buy bitcoin (not financial advise invest at your own risk and DYOR please don’t get mad at me if you lose money). But all joking aside, it is important for bitcoin to have a financial incentive to encourage people to get involved. Bitcoin miners are rewarded in bitcoin for securing the network and HODLers are rewarded for holding bitcoin as it increases in value. To better understand the incentives, lets look at the two main functions of bitcoin:
A Store of Value — Bitcoin is like gold, only better. It’s generally agreed upon that gold has value. Because its shinny and you can make cool stuff with it. But it’s incredibly hard to store and transport. You need an actual physical location with like a vault and security guards. It takes up a lot of space and its heavy to move around. What if you want to buy or sell large of it? It’s not very useful if you just have some hidden in your house because how would you ever use it? Bitcoin is like digital gold. Have you ever tried to split off a piece of gold to pay for something? I haven’t, and I never will. Bitcoin can be divided into 100 million smaller bits called satoshis. Bitcoin is also safer to store because as long as you have your private key in cold storage such as written down and stored in a safe or on a hardware wallet like a ledger, it cannot be stolen. Assuming you are the only person who has access to your private keys, your bitcoin is yours and only yours and no one else can touch it. Well unless a hacker has more computing power than 50% of the bitcoin network but that is incredibly unlikely. It is also much easier to transport (because it’s digital duh). And like gold, there is a limited supply of bitcoin. There will only every be 21 million bitcoin in existence so naturally, for as long as the demand for bitcoin grows, the price will increase given a fixed supply. This is in stark contrast to the US dollar which loses about 2% of its buying power each year due to inflation.
A Currency — Bitcoin is also a currency. But isn’t it volatile? Yes, it is. For now. But that’s just because the market is so small and young at the moment. Any whale can drastically change the price by buying or selling a large amount of bitcoin. But this will change as the market grows. The price will stabilize with more liquidity and adoption which will enable it to be a price for goods and services. The financial incentive for buying bitcoin speeds up adoption because more people buying bitcoin adds to liquidity, strengthens the network and stabilizes its price to equilibrium. This is the beauty of capitalism. People are not agreeing to work together. They are incentivized to be good players because by doing so, they will be rewarded with driving Lambos on the Moon (again not financial advise invest at your own risk).
Globalization is bringing countries closer together, and their citizens out of poverty. What better tool is there for such a transition than a global currency that doesn’t care about boarders or social status. Anyone with a mobile phone and an internet connection can transact bitcoin with anyone else in the world. That simply is not possible with the traditional financial system today. Bitcoin has the potential to connect business and individuals to the global economy like nothing else before. Increased access to banking allows for increased entrepreneurship. And increased entrepreneurship leads to increased economic activity. What we need is a global currency that has no governing authority and can be transacted freely with anyone around the world. Bitcoin is exactly that. It goes without saying that the internet has connected connected our society and given access to its entire wealth of information to anyone with an internet connection (well, unless you live in geo-blocked regions like China or Iran.. shoutout to Substratum). Bitcoin could do the same for finance as the internet has done for information. It is unbiased, unrestricted and open to everyone through a standardized protocol. It is decentralized. Meaning no one person or governing body can control it, or even stop it. Bitcoin is just code. And code doesn’t care. It doesn’t care who you are or what you’re doing with your money. That can be a good thing or a bad thing. It’s just a tool. A necessary tool.
There are still many problems to be solved. Bitcoin is still very slow and transaction fees are high. But solutions are in the works. Bitcoin transactions are on the rise (see graph below) and merchant adoption is too. It may not even be bitcoin that becomes the global currency, but some other coin that doesn’t exist yet. But bitcoin and cryptocurrencies as a whole are where it’s at. They are the next obvious step in the evolution of money. The crypto industry is at the same stage the internet was in the 90s. It has a long way to go but it has the potential to completely change modern life and few will see it coming. There is no way to stop it. Bitcoin has no central point of failure. As long as there are people who need it, and people who want to make money, bitcoin will be around and thriving. It’s hard to imagine what new innovations will come from this space just as it was hard to predict the rise of Amazon, Google Uber ect.. in the early 90s when the internet was just getting started. Bitcoin is a tool for helping the unbanked and underbanked. It can lift people out of poverty by allowing them to participate in the global economy. It can take power away from large financial institutions and give it to small business owners around the world. That is why this space is so exciting.
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Published at Mon, 22 Jul 2019 22:11:12 +0000
Bitcoin Pic Of The Moment
If you enjoy my photos, you are welcome to #donate #bitcoin to me at: 1Q2LV3bsxZjRBQoRXAXikpUGPCrNeGSUWc
By antwerpenR on 2013-09-08 10:08:32
