The true value of Bitcoin cannot be expressed in relation to FIAT

By MichDon | MichDon | 25 Apr 2020

The simple truth is that Bitcoin will be an important pillar in the global financial system. In my opinion this is a matter of time and not whether this is going to happen. You may find this a bold statement. But if you step back and observe some macro trends, it is clear that Bitcoin has a proven use case and it is only going to get stronger.

From FIAT to Digital

Paper money quickly becomes obsolete. More and more companies are switching to "cashless". iDeal, PayPal, Apple Pay and Google Wallet already make cash unnecessary. Currently, people tie their credit and debit cards to third-party apps to make payments. Is it (perhaps for that very reason) a bit far-fetched to believe that a digital currency will be able to replace these cards?

The habit of "virtual money" is already there. There is only a small difference from "cashless" to digital money. As soon as the general public better understands Bitcoin's unique value proposition, there will be a tipping point. Bitcoin will be used as this digital currency - mainly because of the faster transaction processing through zero confirmation transactions, the Lightning network, SegWit and other potential solutions.

Centralized digital currencies are risky

All cryptocurrencies are digital currencies, but not all digital currencies are considered to be cryptocurrencies. This is an important distinction.

Facebook's Libra coin uses cryptography and is a digital currency, but it is not a cryptocurrency. The defining characteristic of cryptocurrency is that it is not issued by a central authority. It is decentralized. Libra does not use a blockchain and is centralized, meaning there is a governing body (in this case the Libra Association) that oversees. It is also linked to fiat currency in bank accounts, so Libra Foundation could in principle refuse the service as they manage the bank accounts.

Bitcoin, on the other hand, is completely decentralized, which means that no entity is responsible for its operation. No one can close Bitcoin or edit the ledger of transactions to manipulate the currency. This is part of the appeal. Andreas Antonopoulis talks about 5 pillars that crypto must meet. We'll go through them soon.

Open

An open cryptocurrency is by definition accessible to everyone. Anyone can access it, anyone can participate. No one needs authorization or verification of IDs / credentials. You only need to download the software.

Limitless

Just as the internet knows no boundaries, cryptocurrencies do not. It doesn't matter where you are geographically, the blockchain exists everywhere.

Neutral

The concept of neutrality in blockchain and cryptocurrency means that a cryptocurrency can be moved / transferred from one account to another without any middleman or questions. Neutral means that the cryptocurrency is yours and can send or receive from anyone, anytime, anywhere.

Censorship resistant

Censorship resistant means that an authority cannot stop the transfer of funds from one account to another (and from one person to another). Andreas goes on to say that money is a form of communication, just like speech, and that censoring is a form of oppression.

Public

Public is the idea that everything you do is verifiable on the network by someone else. This suggests that it will be very difficult to cheat, if someone can see the movement of funds, everyone will become a social watchdog. An informal, global, social regulation.

Economic mobility and freedom

In hyperinflationary countries, storing value is virtually impossible for people with lower incomes. Imagine a fisherman in a developing country who saves 10% of his income every year, but only after 10 years discovers that the real value of his savings has (more than) halved. Bitcoin offers an alternative for citizens who want to abandon their country's financial system.

Bitcoin is limitless. An entire industry has been built around money transfers between countries and currencies. For a long time, companies like Western Union charged high costs and added friction to the cash flow. While new companies like TransferWise have sprung up to reduce this friction, Bitcoin is also there. Can this currency create even more competition?

There is also global access. A huge percentage of the world's population is bankless, which contributes to the huge income disparities between the "haves" and "have-nots." Bitcoin is completely without permission. You don't need anyone's blessing to own Bitcoin and this allows for user acceptance. In a world with more than five billion mobile phone users, it is easier for people in third world countries to own Bitcoin than to open a bank account.

Network effects

Combined, the above use cases create network effects that make Bitcoin even more valuable. This will increase usage and accelerate Bitcoin's growth. Let the simple thinkers discuss Bitcoin's price changes. Those who have a long look at Bitcoin understand what kind of transformation this digital currency will bring. They will understand the real value of this digital currency in our economy.

My articles:

Resources

https://youtu.be/qlAhXo-d-64

Cryptocurrency Bitcoin (BTC) Crypto Blockchain BTC

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MichDon

Crypto entousiast, father, taekwondo

MichDon

Crypto-enthousiast dad with an aim to try to inform readers of new and interesting projects, upgrades and updates to projects and of course any news of interest on the Crypto spectrum.

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