Jan 17 / CoinEd

What is Bitcoin's value proposition?

In 2009, Satoshi Nakamoto, the creator of Bitcoin, attempted to create a new form of money. Defining it as “an electronic cash system that’s fully peer-to-peer, with no trusted third party”, he succeeded, and sparked a new industry of digital, decentralised and borderless assets. The past 13 years has seen Bitcoin bringing with it incredible opportunities for global commerce. Here are some of the reasons why Bitcoin should not be ignored.
In the current financial system, the money that we hold in bank accounts doesn’t quite belong to us. We give the bank custody of our money, and in doing so, we give them tremendous power over that money – a power that they can exploit. They have been known to manipulate exchange rates, freeze customer funds without notice and cause global crises like in 2008. This is not to say that banks are bad, or that we should stop using them. They provide trust between two parties that need to transact, but herein lies the problem. They are a middleman; a central party that also controls the financial system, and for this reason, we need to be aware of their shortcomings.
Bitcoin, on the other hand, is designed to be peer-to-peer, meaning there is no need for a middleman. People transact directly with one another without needing to know one another. Because of this, your Bitcoin cannot be seized or censored by any government or institution. Bitcoin gives people an alternative financial system where their current system is failing them - a system that does not require permission from anyone to use.
Another aspect of Bitcoin is its predictable supply. There will only ever be 21 million Bitcoin. It is the very opposite of fiat currencies (Dollars, Pounds, Rands etc) which can be “printed” at any time by a central bank. As the supply of something increases, we generally see it lose value, and this is what has been happening to fiat currencies. This phenomenon is known as inflation, and in extreme cases, hyperinflation.
To understand the evolution of money and how it led to the creation of Bitcoin, watch the first lesson of our course: 'Cryptocurrencies & blockchains, easily explained' for free here.
As humanity has developed, our monetary system has evolved to suit our needs. We went from barter trade between individuals, shells and beads between villages, and gold and silver coins between kingdoms, to digital wealth between nations. Our society is now largely internet-based. Fiat currencies are restricted by borders, whereas the internet itself is borderless. Is our current money, therefore, a good medium of exchange for an internet-based society? Probably not. We're not saying that Bitcoin is going to replace our current money, but it is paving the way for its next evolution.
Bitcoin can be traded for fiat or other cryptocurrencies, just like the Dollar can be traded for the Pound. Cryptocurrencies, however, are a new technology, and this is what makes them interesting for investors. For others, Bitcoin represents a financial system that is censor-resistant. In summary, Bitcoin is borderless, digital cash designed for an internet-based society that nobody can take away from you.
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Disclaimer: CoinEd does not endorse or promote any 3rd-party products, services or content that it does not believe has value to its audience. The information and views expressed on the CoinEd blog are for educational and entertainment purposes. CoinEd endeavours to provide accurate and truthful content with the information at hand at time of publication. CoinEd is not a licensed financial adviser and encourages its audience to do their own research and consult a trusted financial specialist before investing money. CoinEd’s aim is to expand our audiences’ understanding of cryptocurrencies & blockchain technology. E&OE.

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