Bitcoin is a unique and fascinating experiment, one that could change the financial landscape as much as any invention or innovation ever has. However, it’s also not without its flaws, and some of them are pretty big. The most obvious one is that Bitcoin can’t scale to the needs of a modern financial system, but it’s not just this that holds Bitcoin back; there are others too. Namely, the very fact that its money supply is supposed to be limited.
One of the most significant problems holding cryptocurrency back is its limited money supply. Bitcoin has been designed to replace fiat currencies, and in that sense, it certainly seems to have a lot going for it. It’s decentralized, which is a major advantage not enjoyed by any national currency on earth. There are no banks involved, no government control, and no central authority whatsoever; transactions are completed between parties directly and anonymously. Banks and governments worldwide have been unstable for decades and have failed to stop the bankster-created economic calamity, which has not only devastated millions but threatens the very existence of our species. Bitcoin as a replacement for fiat is promising because it solves many of the problems that come with fiat money.
History of Bitcoin:
The first Bitcoin specification and proof of concept were published in October 2008 in a cryptography mailing list by an unknown individual under the alias “Satoshi Nakamoto.” The identity of Nakamoto remains unknown, but many have speculated that it is the programmer behind the Bitcoin cryptocurrency. Nakamoto implemented bitcoin as open-source code and released it in January 2009 on SourceForge. The identity of Nakamoto remains unknown, though many have speculated that it is the same person as the author of the paper. Nakamoto left the project in late 2010 without revealing much about himself.
In early 2009, Nakamoto handed over control of the source code repository and network alert key to Gavin Andresen, who later became the lead developer at the Bitcoin Foundation. Nakamoto subsequently disappeared from any involvement in bitcoin. But others moved to fill the void left by him. The first major use of Bitcoin was on the bitcointalk forum, starting in December 2010. The early users discussed many issues, such as transaction fees, limitations on supply, and future improvements to Bitcoin. Let’s take a closer look at this new form of money and how it works. Explore bit-indexai.io if you want to gain proper information about bitcoin trading.
The Early Days:
In much the same way that e-mail has proven to be a useful addition to the postal system, Bitcoin can provide an alternative funding mechanism that supports a whole new range of monetary applications. The technology is still in its infancy, and so it’s difficult to predict exactly how things will evolve, but its potential is currently difficult to underestimate. Bitcoin has been around since 2009, but it’s only recently that mainstream interest has started to develop. We’ve seen a huge surge in recent months as more and more people are starting to realize that there is something different about it.
The introduction of the peer-to-peer payment system in 2009 was a major step forward for the cryptocurrency community. However, it wasn’t until early 2012 that Bitcoin received mainstream attention and became something more than just a curiosity. The sheer number of articles and news stories dedicated to digital currency has resulted in a growing amount of interest. Since then, its value has fluctuated wildly, but it’s suffered few, if any, serious setbacks along the way.
What is Bitcoin useful for?
- Decentralization:
The single biggest advantage that Bitcoin has over traditional models is its ability to be used as a currency. There is no central authority involved, so Bitcoin allows for complete and total trustlessness. This means that no one can stop you from spending your Bitcoins as you wish. Removing the need for trust makes commerce far more efficient and cheaper, which can be a big benefit in many situations.
- High-risk speculative investments:
A big advantage of Bitcoin is that it can be used as a vehicle for high-risk speculation. The fact that the supply is limited and known in advance allows investors to feel more secure about their investments. This reduces risk and makes Bitcoin attractive for those who may not feel comfortable using other vehicles for investment purposes.
- Remittances:
An obvious advantage of Bitcoin is that it can be used as a vehicle to send money across borders at a low cost. It’s not often that you come across an application like this, and it is certainly a very interesting one indeed. With the lack of overhead, Bitcoin makes international money transfers much cheaper than they are with traditional methods of transfer. This can make a huge difference for those who need their money quickly and don’t want to pay exorbitant fees.
What is Bitcoin not useful for?
- Buying Pizza:
Although it’s not intended to replace traditional currencies, many people see Bitcoin as a replacement for cash. It can be anonymous, can’t be counterfeit, and the supply is limited to 21 million bitcoins. So far, so good. However, it’s not designed to be used this way, and its technology isn’t really suited for micropayments. The fee structure makes it uneconomical to do so, which is essentially why Bitcoin was created in the first place. Despite some interesting initial experiments, it doesn’t appear that Bitcoin will ever be acceptable in the same way as cash.
- Legal tender:
Even though Bitcoin is being used for everyday transactions, it’s not legal tender yet. This means that merchants don’t have to accept Bitcoin as a form of payment and that law enforcement can still prosecute people for using it. The most likely situation is that Bitcoin will continue to be used on the black market or underground economy, where fiat currencies are generally not accepted.
- A hedge against inflation:
While Bitcoin is an excellent hedge against inflation in some countries, it’s not perfect. As demand increases and the supply remains fixed, the value of Bitcoin declines. This was a big concern for many people prior to 2012, but it has been largely dispelled at this point. The value of Bitcoin is now based on demand factors and opinion oversupply, making it less likely to drop significantly in price even if the supply remains fixed.
Conclusion:
Bitcoin is the most exciting and creative new development to come along since the introduction of the Internet. It’s definitely a game changer, and we could see it change how we buy, store and exchange money forever within a few years. It has a bright future ahead of it, but it’s important to understand that it doesn’t solve any problems today. Whatever problems you think might be solved with Bitcoin will probably be better off with something else anyway. That being said, people are using it for some very interesting purposes.
