The increasing use of bitcoin in global commerce can profoundly change how we think about money and payments. First, Bitcoin is a form of digital currency that uses online peer-to-peer networks, rather than central authorities like banks, to issue their own money. However, if you are thinking of trading bitcoin, then you may start by choosing the right trading platform such as BitAlpha AI.
Second, Bitcoin is an emerging technology whose potential applications are not fully understood yet. It could significantly impact how financial transactions are conducted globally in the future. At first sight, digital currency and its use as a medium of exchange may appear very similar to any other conventional currency. Yet digital currencies, in general, and bitcoin, bring together a blend of characteristics that are somewhat different and potentially disruptive to traditional financial services.
Bitcoin is not a physical currency (unlike coins or notes) but can be used as ‘money’ online. It exists in an electronic form on the internet, and users can make transactions without an intermediary like a bank. The most prominent characteristic of bitcoin is that it uses peer-to-peer networks rather than central authorities to issue their own money, and in this respect, it is unique and revolutionary.
Most people consider bitcoin merely as an investment asset and are unfamiliar with another use case of bitcoin. But the use case of bitcoin goes beyond just being an investment asset. Let’s discuss how.
1. Bitcoin- A powerful monetary system:
Bitcoin is a digital cryptocurrency that can be used as money, governed by its decentralized monetary policies. It has its distinct value system and a complex network of nodes who verify the transactions and maintain all the bitcoin records, just like a global central bank.
In the current banking system, when you pay for something with your debit card, the transaction is stored in your bank account governed by your country’s central bank or private banks. Regarding bitcoin, it utilizes a peer-to-peer network model that eliminates third parties. It means that all transactions are stored on blocks of computers worldwide that have all agreed on what is true and what isn’t for whoever sent the transaction.
2. Bitcoin can bring a decentralized ecosystem to many industries:
Bitcoin has a lot of advantages over the traditional banking system. It gives you direct control over your money, which is stored on your ‘bitcoin wallet’, and no one can take it away from you. Because of this, bitcoin is not subject to any country’s central bank policies or controls like inflation and incurs deflationary attributes. The network works 24x7x365 and ensures that transactions are made effectively and efficiently without downtime or disruption.
3. Bitcoin- A global payment network:
Bitcoin allows you to store value and payments without going through a third party or middleman like banks, credit card companies, etc. If a merchant accepts bitcoins for payment, he receives money from many different users worldwide. Similarly, getting paid in bitcoins will increase the demand for bitcoins, increasing their price and serving as a medium of exchange.
4. Bitcoin- Avoiding inflation caused by centralized banks:
Inflation is a problem faced by almost all fiat currencies due to government policies or central banks. Once the government makes a policy change to increase money, the value of currency decreases, and those with low to zero inflation rates will benefit from this. The extreme benefits for people in developed countries like India or Switzerland, where their command over money is much higher than in developing countries like Bangladesh.
Bitcoin has no central bank or authority that can create new bitcoins according to their need for monetary circulation. It has a finite supply of twenty-one million bitcoins. Currently, its rate is increasing by about 4% per year, meaning fewer Bitcoins are available with growing user demand. With bitcoin, this problem will be solved by its network, and even if there is a need for more money, all bitcoin investors can vote for an increment in bitcoin’s finite supply. New coins can be created later, which will keep their value intact.
5. Bitcoin’s blockchain can become the utmost robust supply chain:
The blockchain is the technology that powers cryptocurrencies like bitcoin; it is an innovative way of storing and recording transactions and data involving the transfer of digital currency from one entity to another. People can use blockchain technology to keep track of physical assets like shipping containers, aircraft parts, or paintings. It can also be used for digital assets, like music files or other media, in a similar way that we currently use torrenting and peer-to-peer file sharing networks.