This article ‘What’s the big deal about Bitcoin and Blockchain?” is an opinion piece about why Bitcoin is such a big deal. It’s a simple explanation about how Bitcoin’s value proposition is such a huge deal and may change the world as we know it.
I had this conversation with a nocoiner – he found out that I was involved in trading and investing in cryptocurrencies, and so he asked, what’s the deal with Bitcoin?
What’s the big deal about internet money? Isn’t internet money just another form of cash? And if its internet money, can’t it be hacked, stolen or frauded?
Most nocoiners are in this stage right now – they’ve heard about Bitcoin, they’ve heard about the crazy price rises and about how it was the latest craze with investors, but they don’t know why.
Without the fundamental knowledge of why Bitcoin works, most people see it as a Ponzi scheme – someone buying the coin and hoping that someone else will buy it at a higher price off him.
I spoke to him and offered him three simple points that make Bitcoin and the blockchain such a valuable innovation in the coming decade. After the talk, he got interested and wanted to explore further, before our conversation got interrupted.
Here are the three points:
No need for centralised institutions
With the advent of blockchain technology and cryptography, it means that value can be transferred over the internet without needing a central trusted institution.
Right now, if you were to move money across the internet, you have to go through a bank or go through a centralised institution like PayPal or Stripe. Someone has to be there to ensure that there is no fraud and the money is transferred properly.
The downside of having these centralised institutions is that they can control your funds. Paypal has frozen the accounts of many users on the suspicion that there is fraud or misuse of funds – and this was done without proof. This move by Paypal left many people frustrated and angry but helpless.
Centralized institutions like banks have the power to freeze your funds too or watch every single of your transactions. And it has happened already. Some years ago, the people of Cyprus had a rude shock when the governments declared they could not withdraw their money from the bank accounts. Still, think the money in the bank is yours? Think again.
No Money Printing
With blockchain, open source coin protocol and cryptography – Bitcoin is a currency that cannot be printed at will. Its supply is limited to 21 million. Even coins with unlimited supply growth are open about it.
Currently, governments are printing money without any accountability just to keep the game going. It’s how they take money from citizens – it’s the hidden tax that everyone is paying – via inflation. Think about it, in what world does it make sense that governments have the moral right to take away value from the currency you hold? Most people have accepted inflation as a way of life, as if it was the way things were meant to be from the start.
Bitcoin is one escape for people wh0.hate what the governments are doing. By storing their value in a limited, digital asset like Bitcoin, these people can escape the claws of the government who print currency like there’s no tomorrow.
Can’t Bitcoin be printed? Some may ask. No, it can’t. Its code is open sourced to be scrutinised by everyone, and if any rule on the code is to be changed, enough people in the ecosystem must agree to it. If you want to change the rules on Bitcoin, sure you are allowed to, but you will create a new coin that nobody wants!
This is how Bitcoin and the blockchain preserve integrity in value – in an environment where governments have little or no integrity in dealing with its citizens.
Borderless Transfer of Value
To me, this is the most exciting thing about Bitcoin. Right now, to transfer money across countries, we have to use institutions like SWIFT and Western Union. The former takes anyway from a day to a few days to settle and requires stringent checks on customers. The other, Western Union, charges a high fee for not doing any checks.
Bitcoin beats both hands down. Even at its slowest, Bitcoin took only about 4 hours to transfer from one address to another. At its fastest, Bitcoin transfers can be almost instantaneous.
Now, the amazing thing is this: You are now able to move ANYWAY in the world, and all you need is your Bitcoin private key or password. From there, you can access all your Bitcoin and withdraw it to a local exchange for fiat!
This means that you are free to move anyway in the world without considering how to move your money or set up a bank account! Or better yet, you can transfer Bitcoin to your family’s address, and 40 minutes later, they’re spending it in a shop somewhere in downtown Tokyo!
Yes. No need to bring illegal cash across customs, or hoard gold in your vaults and try to move them to another country via expensive methods. With Bitcoin, you practically just have to move with your hardware wallet.
How awesome is that?
These are three simple points you can share with nocoiners. But there’s much more than this. With the preservation of integrity over the internet and trustless networks, this means that other commodities can be traded over the internet.
Things like storage space, computing power, processing power, and more can now be transacted over the internet with full assurance of the integrity of the system.
As I told my friend, Bitcoin and blockchain are still young. But the day will come when they may potentially change the world as we know it. I’m willing to invest a little of my portfolio to stake on this possibility.
What do you think are the compelling arguments for Bitcoin? Share them in the COMMENT box below!