Bitcoin: an independent digital currency thanks to its decentralization
Bitcoin was launched in 2009 and was created by a person or a group of people using the pseudonym Satoshi Nakamoto. The ambition they had for BTC at the time surpassed the potential any currency ever had, and their main goal was to create a digital currency which is blockchain-based and only relied on its network of users to verify and record all the transactions happening on the network.
This was revolutionary at the time, because all the currencies existing, such as the US dollar, relied on a central authority like the government and central banks, which are the main decision-makers. This aspect of digital currencies such as Bitcoin changed the game completely. It is causing a shift in the balance of power from centralized entities to the people that are using the currency, making the whole network independent. The decentralized aspect of Bitcoin gave its users the possibility to avoid intermediaries and any authority when exchanging value, while having greater control over their funds and benefiting from lower transaction fees.
On May 22, 2010, a Florida man reportedly made the first Bitcoin transaction in the real world when he agreed to exchange 10,000 BTC for two Papa John’s pizzas, which were worth roughly $25. In that transaction, one Bitcoin was worth around one-fourth of a penny. This is the reason why the Bitcoin community continues to celebrate Pizza Day on May 22.
Bitcoin: Facilitating online shopping
Bitcoin has developed as a store of value over the past ten years and has undergone updates to enhance its transaction processing capabilities. Many companies now accept Bitcoin (BTC) as a form of payment, both in-person and online, and many other tools now exist, such as a cryptocurrency payment gateway that allows cryptocurrency users to exchange crypto for fiat currency or vice versa. This cryptocurrency saw larger adoption in the past years, proving to the world that Bitcoin can be trusted and used as a store of value that can be exchanged for goods. Here are some online stores in which you can use Bitcoin to purchase goods:
- Shopify – a platform used to create online e-commerce stores.
- Microsoft – one of the world’s biggest tech companies.
- Home Depot – The United States’ largest home improvement chain.
As the world is witnessing a bigger Bitcoin adoption, more companies are starting to accept Bitcoin, which is now considered digital gold, thanks to its limited supply. When it comes to service providers, here are some examples of companies that accept Bitcoin payments:
- NordVPN – a VPN provider.
- WordPress – a free and open-source content management system that lets users build blogs and webpages.
- Bloomberg – allows using Bitcoin to subscribe to their online news outlet.
Bitcoin: why is it considered digital gold?
As mentioned in Bitcoin’s white paper, the maximum supply Bitcoin can have is 21 million coins. This aspect is vital when it comes to projecting Bitcoin’s future potential and value as the limited amount available makes the digital currency scarce. While Bitcoin is gaining adoption and trust, new coins are introduced into the market when the miners, who are responsible for verifying transactions, solve extremely complicated math problems with their equipment. This mining process is getting harder with time because of two main reasons:
- More miners are joining the network, with time increasing the competition for solving math problems and earning Bitcoin rewards.
- The mining rewards are halved every four years to ensure that Bitcoin supply won’t be released fastly, avoiding quick inflation.
The US dollar, for example, has no maximum supply, and new units are introduced to the markets each year, inevitably causing inflation and decreasing its value. Bitcoin has solved some of the reasons for inflation when it comes to a currency, which are:
- Duplication and money falsification.
- Unlimited supply.
Thanks to its limited supply, Bitcoin is becoming a digital currency with a great store of value, thus its appellation: digital gold.
Bitcoin: an investment tool with fully public transaction record helping with tax purposes
The fact that Bitcoin is completely decentralized and is becoming more adopted worldwide is helping us see the value of complete transparency. The simple fact that all transactions are there for the entire world to see helps towards creating a financial ecosystem that is free from corruption, tax evasion, and fraudulent transactions.
A complete record of your transactions can also help you as a user of the bitcoin currency, allowing you to keep track of your transactions, know who you are doing business with, and also where your money went in case of an unintentional or illegitimate transaction.
Overall, thanks to its transparent nature, the Bitcoin network renders duplication impossible, meaning that once bitcoins are transferred, ownership also gets transferred. This is really useful for tax purposes because two people cannot be transacting on the same value, for example.
Bitcoin: the perfect P2P currency with no transfer limitations
P2P stands for peer-to-peer and is one of the most important aspects of Bitcoin. Bitcoin network was initially designed with the primary goal of supporting the peer-to-peer exchange of currency. Now, thanks to the nature of the network and its decentralization, transferring funds from one country to another or sending funds to another Bitcoin user has become a very easy task with no third parties involved. The participants engaged in peer-to-peer bitcoin transactions are typically not required to provide their identity, ensuring everyone’s anonymity. Most P2P exchanges allow users to buy cryptocurrencies using cash or other payment methods that offer privacy protection.
But now, thanks to the development in web 3.0 applications, more individuals are shifting away from the relative simplicity of centralized exchanges like Coinbase and Binance. People are now moving toward entirely P2P exchanges, also known as decentralized exchanges (DEX), as the acceptability and usage of cryptocurrencies have greatly expanded.
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