August 13th, 2019 | Updated on June 17th, 2020
Bitcoin came, saw our ways of life, and started conquering. There is no denying Bitcoin is here to stay – the only question remaining is how much impact is it going to have?
Buying goods and services with a single scan, using your virtual (and unlimited size) wallet, in any part of the world. All we need is an internet connection – this sounds like science fiction. But so did the whole concept of the internet, computers as well as the radio.
All major technological advancements sound like magic at first, only to become essential just a few generations later. This is progress and we have to embrace it because without it we would most likely still beat two rocks together.
Bitcoin is a form of cryptocurrency and like all forms of currency, it leverages power. Purchasing power being one of them. Currency allows us to materialize our dreams and ambitions. The only difference between cryptocurrency and traditional currencies is that one requires significantly less physical space than the others. Instead of banks, there are servers and online clouds.
We are in the epicentre of the next financial transformation. Traditional financial institutions are fighting against it, while consumers are fighting to get more of it. It will still take some time for cryptocurrencies to reach their full potential, though.
1. What Is Bitcoin And What Are Cryptocurrencies
Bitcoin was the first to emerge – the original pioneer. Being decentralized and guarded with blockchain technology, it promised the world. But all major changes take time. This is why Bitcoin’s popularity and price are both so volatile. It is not backed by anything physical. This makes it both scary (because it is so new) and fascinating (because it has so much potential).
To break it down, each bitcoin is made up of 100 million satoshi. They are the equivalent of cents per dollar. Most transactions are made with satoshi since almost everything costs less than a single bitcoin. Cryptocurrency is no more than a line of code, secured with the best available cybersecurity – the blockchain. A very complex system designed to protect all its data. At the same time make it accessible anywhere.
While many learn more about cryptocurrencies, most people will never bother with that. They believe it will not affect them, so why learn it? They are also the ones growing gradually older and more distant from innovation.
The world will simply pass them by.
2. Where We Are Today
Bitcoin did make its debut in 2011 (yes, this long ago), but it did not just bring digital currency to the table. It brought the realisation that government objects (such as currencies) can be decentralized. This is huge. Not only because this was practically unimaginable, but also because it is the beginning of something even bigger. It is the beginning of a new era in finance.
Already we are seeing more and more shops and restaurants adapting to digital currencies. Today, we can buy coffee with Bitcoin in most cafés in San Francisco. International tourists do not have to pay any forex exchange fees. This is because we are all using the same decentralized currency.
- The first real-world Bitcoin purchase was to buy two pizzas for 10 000 Bitcoin (117 million USD by August 2019).
- Bitcoin has already been legitimately accepted on Wall Street and Facebook is considering to launch their own digital currency – Libra. This would allow Facebook to have its own insider currency for all transactions.
- It is no secret that Bitcoin is also a widely used instrument for money laundering. This is thanks to its easy learning curve and straightforward transaction methods.
- The world’s largest Bitcoin wallet is actually owned by the U.S. government, making them one of the major players.
- While many governments have publicly banned the use of Bitcoin, most of the largest digital economies are increasingly gaining traction. Because cryptocurrencies are so new, many governments do not even have any laws or regulations for this.
- For governments, adapting to changes takes longer. Companies can successfully implement changes much faster because they do not have that much bureaucracy. This is why some governments temporarily banned Bitcoin – they took the easy way.
3. Dollars Or Bitcoins
While this choice might seem obvious for some, it is the very opposite for others. Since 1970 the U.S. dollar has no longer been backed by gold. Unbacked by any physical asset, actually. Very similarly to Bitcoin, the U.S. dollar has also no backing. Except what the U.S. government promises to back. Bitcoin is decentralized, while U.S. dollars are state-controlled.
For many, this creates a false sense of security. They believe their money is safe and well looked after. In reality, it is losing value every day to inflation while their governments are only printing more bills.
Bitcoin cannot be manufactured, there are supposedly only a fixed amount available. We cannot be certain what the future holds for us. But we can be certain that things will always keep developing.
It is up to us to either adapt or get comfortable staying behind.