Bitcoin is rapidly establishing itself as a viable store of digital value both now and for the future.
Prices are rocketing and interest in the currency and the underlying blockchain technology are at all-time highs.
It’s an exciting time to be in cryptocurrencies for sure!
Debates are still ongoing about the role bitcoin and its transaction protocol will have in the world, but below are 10 reasons why we think bitcoin’s useful right now:
1. It’s Speedy
Transferring money in the “real world” can be a real slog…
While internet banking has made things easier than they once were, there are still parts of the banking system which are painfully slow, e.g. paying in cheques (where funds are often held for days until they’re cleared) and international wire transfers which can take an age, too.
Bitcoin, on the other hand is far quicker.
For “zero-confirmation” transactions (the merchant accepts the risk of accepting a transaction that hasn’t been verified by the blockchain), the transfer is instantaneous. With confirmed transactions, they can take in the region of 10-minutes to clear.
2. It’s Cheap
Yep, credit card transactions are instantaneous too – fair point. But the difference here is that the merchant you’re transacting with (and often times you) are paying for the privilege…
You’ve probably been in a shop where the merchant adds a fee for debit card transactions too. They’re just passing on the “swipe fee” they’re charge for allowing the card. Bitcoin’s fees are often times a handful of pennies or in many cases totally free.
3. Chargebacks? What Chargebacks?
If you send a bitcoin, it stays sent.
There is no method of retrieval without the person on the other end authorising it. This means that credit card fraud where people buy stuff and then call the issuer to make a chargeback (reversing the transaction), can’t take place.
This is yet another reason why merchants in particular stand to gain a lot from bitcoin adoption.
4. It’s Government-Free
For those of you who’ve paid attention to the global economy since the financial meltdown of 2008, you may have heard of some of the events that went down in Cyprus in 2013.
As the Cypriot economy teetered on the brink of devastation, the country’s Central Bank enacted an audacious plan to take any uninsured deposits of over $100,000 to help fill their empty coffers.
This, unsurprisingly, caused huge bouts of civil unrest. Who wants their irresponsible government taking money away from their family?
This kind of scenario is not possible with bitcoin, as the currency is decentralised – you are in total control of that which you own. No bank or government holds the keys so they can’t take it from you.
5. Payment Deets Protected
Payment detail protection is one of bitcoins biggest selling points.
With the shift to online purchases with debit/credit cards moving ever closer towards becoming the norm, securing our data has never been more important. We’re asked to enter all the private information of our card into forms and just trust that it’ll be secure. As Equifax and many other companies like it have proved – we aren’t that safe…
With bitcoin, on the flip side, transactions are anonymous. Instead, a public key is used. A public key is essentially a delivery address you can send and receive bitcoin from, which is accessible by you only through a private key which should never be shared.
When your bitcoin is sent, you “sign” the transaction by combining your private and public keys via a maths algorithm to create something called a hash. This certificate validates the transaction as having come from you. As long as you keep your private keys exactly that – private – you should be safe.
6. It’s Deflationary by Design
Once governments took themselves off the gold standard, they were able to print as much fiat currency as they desired in order to fund wars, expansion and any other thing they wanted, really.
If they run out of dollars to pay off the national debt? No problem! The Federal Reserve can just run the printing presses and voila, problem solved.
If the economy’s sluggish? No problem! That’s right, create more money and push it into the economy (they call this Quantitative Easing).
The bottom line of this process, however is that this flood of cash causes the purchasing power of a dollar to fall. With more dollars chasing the same number of goods and services, we get inflation, where prices go up to factor in the increased monetary circulation.
As proved by Zimbabwe, at a certain point a government can lose control of inflation and it can run rampant, with that destroying the wealth of the country’s people.
Bitcoin was designed to be inherently deflationary, because there will only every be 21 million coins in circulation at the maximum. Once they’ve all been mined (by approximately 2140), that’s it. As such the value of an individual coin is likely to rocket up, but the prices of goods and services should fall.
7. It’s Private
Sometimes you just don’t want everyone knowing about that cream you bought for that suspect rash…
While part of bitcoin’s appeal is its transparency due to every transaction having been recorded on the blockchain, you don’t actually know who owns the wallets behind either side of the transaction.
An analogy might be having a clear wallet which you can see the money inside of, but there’s no nametag letting you know who owns it.
That said, it’s not impossible to figure out who owns things if, for example, you always use the same address or combine coins from multiple address into one.
8. It’s Free From “Trusted Third Parties”
In the current ecosystem, we rely on external companies like banks or PayPal, to handle and look after our money.
The price we pay for their guarantees of security are giving them all our most sensitive data (and paying excessively high fees…)
Bitcoin is decentralised, and as such no middleman is needed. In cryptography alone, do we trust.
When the transaction’s sent, it’s signed and secured digitally. A random miner will check it and then it’s done. The merchant needs none of our details if we don’t want to give them.
9. It’s Yours!
If you use any form of electronic currency that isn’t a cryptocurrency, it’s actually owned by the company you use. For example, PayPal can decide that your account isn’t being used how they like and deactivate it. Access to your money is gone and you have no say in the matter.
Of course you can argue with them, but who wants to expend all that time and effort?
Bitcoin belongs to you and you alone. If you’re in control of your private key, no one can take your money from you.
10. It’s Mineable (and You Don’t Need a Shovel)
You can create your own money. Unlike with fiat currency where you’re thrown in jail for running your own currency printing enterprise, with bitcoin this process is actively encouraged!
Let me explain.
While you can buy bitcoins in the open market, another way to acquire them is by the process of mining it with a powerful enough computer.
Once you’ve covered the amount you spent to buy equipment and paid for electricity, you can simply leave that machine and the software running to mine in your sleep.