'To the moon🚀' and 'Its going to Zero' are the 2 common phrases associated with Bitcoin in conversation of common people. But price is not something I want to talk about in this piece. I believe price is a side-effect of this asset as opposed to intention. I also won't discuss technicalities of how Bitcoin network works as there are better sources on internet which will do a better job of explaining it. I will try to put it as simply as I can.
Any transaction we make using traditional assets cannot be completed without a trusted third party (central bank, banks, payment processors like Visa, MC). This puts our money at mercy of these third parties. While you may never have considered your govt., banks or institutions to be a threat to your assets, it takes one person or institution to turn your world upside down. And this has happened over and over in history. Current form of money is designed to be centralized which makes it seizable and easy to corrupt. Not to mention, multiple third parties between transactions make fiat systems inefficiency and expensive.
Take an example of Turkey. Turkish Lira has tumbled over 80% against US dollar since 2014. The official inflation in the country as of January 2022 crossed 48.7%. To 'control' the inflation, the Turkish govt. has mandated all household to convert all the hard earned gold they hold to Turkish Lira (this increasing buying pressure on currency). Turkey is taking away the only inflation hedge that the population had.
In not so uncommon stories, China is famous for seizing / freezing bank accounts and assets of people raising voice against the autocratic govt. of Xi.
In another story, GoFundMe, the famous crowdfunding site that allows people to donate money froze the amount donated for supporting the Truckers who were peacefully protesting govt's covid-19 policies.
Its quite simple. Control the money, control the population. There is no revolution without money. This can happen on a micro scale, like increasing difficulties of political opponents to macro scale like what we see in these extreme scenarios. Fiat money is also prone to getting corrupt due to centralization and devalues with inflation.
There needs to be an asset that no one controls, is scarce, portable, cannot be seized and nature of which cannot be changed.
Bitcoin is a concept proposed in 2008 by a pseudonymous person named Satoshi Nakamoto in 'Bitcoin White Paper'
Satoshi put together some of the already existing technologies and ideas to create what we today know as Bitcoin. 'Bitcoin' is a peer to peer, decentralized network which uses 'bitcoin' token to transfer value without any intermediaries in a trust-less manner. This technology is open source, which means anyone can review the source code and verify what is happening. No closed doors here.
Here is a non-tech explanation of it.
Let's say A and B want to transact with each other. If both A and B use a simple hardware called 'Bitcoin node', they can send and receive bitcoin without any bank, institution or authority needing to facilitate and oversee this transaction. It just happens. Like Magic. Unlike banks transactions, no one can stop this payment, seize your bitcoin or make changes to your transactions or assets.
Why shouldn't you own an asset that no one can take away from you?
It solves all the issues with traditional finance that we have spoken about in this and previous articles-
Inflation: Only 21 millions bitcoins will ever exist. No one can 'print' more bitcoin out of thin air. 21 millions coins for 7 billion people. Scarcity.
Centralization: Bitcoin is decentralized. No single entity controls it or can make changes to the network protocol.
Prone to being seized: Unlike gold, fiat and other traditional assets, bitcoin cannot be seized. Only YOU can access your assets with your private keys.
Portability / Mobility: Unlike gold, its digital. You can transfer value from one end of the world in seconds.
Counterfeiting: Well, you know the answer by now.
Divisibility: Bitcoin is divisible till 8th decimal. 1 bitcoin =100 million satoshis.
Safety: Bitcoin transactions are recorded on a blockchain and protected by PoW mining and cryptographic hash functions which makes it extremely difficult to hack this network. There have been Zero hacks of this 1 Trillion USD network till date and this most likely will stay the same in future.
I would recommend you reading the Bitcoin White Paper for yourself.
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