The COVID-19 pandemic, but more importantly the actions that were taken by the central banks and governments of the world's major economies, will have brought the advantages of Bitcoin over fiat currencies into sharper focus than ever before.
More and more people are understanding the main value proposition of Bitcoin today: Bitcoin protects the fruits of your labor from the ravages of monetary inflation in a way that is resistant to censorship.
Bitcoin is proving to be the most widely adopted store of value in the digital world of tomorrow. This makes some people forget that Bitcoin is also money that will be increasingly used in the future as a means of payment and exchange in everyday life. The Lightning Network is Bitcoin's future solution for this use case.
To convince you of Bitcoin's qualities as money, I propose to look at 6 characteristics that define real money in which Bitcoin excels.
1. Durability
New units of BTC are issued when a new block is successfully added to the Bitcoin Blockchain. Miners who have validated successfully this block receive newly created units of Bitcoins as a reward.
Once issued, Bitcoins will exist indefinitely in the system. They can never disappear.
As long as the Bitcoin network continues to exist securely, the Bitcoins you have obtained will exist. The good news is that the Bitcoin network has never been hacked since its launch on January 3, 2009.
The second piece of good news is that the security of the Bitcoin network continues to strengthen as shown by the constant increase in its Hash Rate:
This makes Bitcoin the most secure decentralized network in the world.
2. Portability
Bitcoin can be transferred around the world in just a few minutes with relatively low transaction fees in general. Besides, there is no limit to the number of BTC you can transfer per transaction or over a given period. The only limit on the amount of what you can transfer on the Bitcoin Blockchain is what you own in Bitcoin on your sending address.
You can transfer your Bitcoin at all times because the Bitcoin network operates 24 hours a day, 7 days a week, 365 days a year. Since its creation, Bitcoin has had an uptime of 99.985%, which has nothing to envy those of the web giants from Google to Facebook.
Another strength of Bitcoin in this respect is that no one can prevent you from making the transactions of your choice as long as you have the private keys associated with your Bitcoin. Bitcoin gives you total power. By allowing you to resist any type of censorship, Bitcoin gives you the freedom to live your life on your own terms.
3. Divisibility
Bitcoin is divisible to eight decimal places. The smallest unit in Bitcoin is called a Satoshi. We have the following equivalences:
1 Satoshi = 0.00000001 BTC
1 BTC = 100,000,000 Satoshi
Bitcoin’s exceptional divisibility makes it accessible to the greatest number of people. As long as you have a smartphone and an Internet connection, you can purchase a portion of Bitcoin. This explains why Bitcoin is a much better store of value for the masses than gold.
The #StackSats movement also highlights the importance of accumulating as much Satoshis as possible today. In the future, when the Bitcoin price reaches new heights, talking in Satoshi rather than in BTC will become the norm. All Satoshis easily accumulated today will be of paramount importance.
4. Uniformity
All units of BTC are equal. Each Bitcoin has the same value and price as another. Uniformity should not be confused with fungibility. The units of Bitcoin are not completely fungible. It is still possible to trace the origin of Bitcoin’s units with different tools. This is because the Bitcoin Blockchain is transparent and everyone can access the history of all the transactions made.
However, solutions exist to improve the fungibility of Bitcoin. The problem is that few users are aware of them at the moment. The developers in the Bitcoin community are working on solutions to improve this fungibility in the future.
5. Limited Supply
In creating Bitcoin, Satoshi Nakamoto defined precise rules that have never changed for more than eleven years. There will never be more than 21 million Bitcoins. Bitcoin’s monetary policy is programmatic. It responds to rules written in the Bitcoin source code. They are executed by the full nodes of the Bitcoin network and therefore do not depend on any arbitrary human decision.
Bitcoin is therefore not subject to human corruption, which is one of the deadly sins of the current monetary and financial system. Since the Bitcoin supply is hard-capped, you have an incredible guarantee when you buy 1 Bitcoin today. You know that your Bitcoin will still represent 1 Bitcoin out of 21 million in 10, 20, or 50 years.
The scarcity of Bitcoin protects your wealth over time. Bitcoin is the hardest money in the world.
6. Acceptability
Bitcoin is increasingly accepted as a means of payment. It is already a widely used means of exchange. If some people living in Western countries criticize the acceptability of Bitcoin, I invite them to look at what is happening in many emerging countries or under authoritarian regimes.
Bitcoin is already being used there as a means of payment for everyday life. The effects of Bitcoin are more easily observable in countries with the worst economies.
In Western countries, Bitcoin is still mostly seen as an incredible store of value. All this is a normal path. Before Bitcoin can become a generalized means of payment to the general public, it will have to become a generalized store of value. This is what is gradually happening at the moment. Bitcoin is being adopted more and more, whether by large companies like MicroStrategy and Tesla or by institutional investors like Paul Tudor Jones or Bill Miller.
The acceptability of Bitcoin will continue to increase over the next decade. This is Phase 2 of the mass adoption of Bitcoin by the general public.
Final Thoughts
In Western countries, Bitcoin is mainly seen as a formidable store of value at present. This is logical because it is the greatest value proposition of Bitcoin today. However, what is happening on the African continent, in South America, or the Middle East, is there to remind us that Bitcoin is also excellent money.
In reality, Bitcoin adapts to the needs of its users. This is one of its incredible strengths. The main difference between Bitcoin and fiat currencies is that all the features that make Bitcoin money are guaranteed by computer source code.
Bitcoin abstracts itself from human arbitrary decisions to function. Bitcoin is backed only by the laws of mathematics and its users’ belief in its revolutionary system.
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