Which means that no authority can change or destroy it. This is perhaps the most important feature of this currency. The problem with centralized organisational structures is that they are prone to corruption. As Baron Acton said: Power tends to corrupt and absolute power corrupts absolutely.
History has many examples of what can go wrong when individuals enjoy positions of absolute power. Bitcoin is an experiment in how we can cooperate and build organisations without corruptible central authorities. For this reason, it stands to become an important milestone in the evolution of our society.
Now, lets take a look at some of the less abstract advantages of Bitcoin. Because there is no intermediary, no bank, no payment provider, Bitcoin aims to be more secure. No one can devalue your money by creating more of the currency, or confiscate and withhold it. Theoretically, Bitcoin transactions are also much faster and cheaper than traditional bank transfers, because they dont have to go through a third party. There are also no arbitrary limits: You can transfer very big amounts or very small amounts without any problems, for the same price.
There are no prerequisites for using Bitcoin. You dont need a physical address, an ID or a bank account to make this digital payment. Roughly a third of all adults in the world dont have a bank account, while many of them do own mobile phones. For them, Bitcoin is a great way to participate in the world economy and escape poverty.
Data is power. Payment providers, banks and governments already know a lot about each of us. Bitcoin makes it possible to issue digital payments without having to reveal your identity. Bitcoin is opensource software, so its very transparent.
Anybody can review the code and see how the software works, or even build their own version.
Everyone can now build financial instruments or value exchange systems tailored for their specific needs, without the need for difficult and expensive bank connections. But of course, Bitcoin also faces its own challenges. Currently, the Bitcoin network can not process a big amount of payments at the same time without them becoming very slow and expensive. But a lot of people are working on solutions to solve this problem.
It is also not quite clear how governments will react to Bitcoin. While some are embracing it others are banning it. How and when to pay taxes on bitcoin transactions is also still very complicated in most countries. Currently, Bitcoin is very volatile, which means that the value of bitcoin is varying by a lot, sometimes from hour to hour. This doesnt make it a very practical currency in these beginning stages.
It is important to remember, as Adam Smith said, All money is a matter of belief. Bitcoin, just like any other currency, is just worth what people think it is worth. We as people decide to use them and to exchange our labour for these currencies.
In just 9 years, people have invested more than 120 Billion dollars in Bitcoin. Of course, rapid accumulation of investments in this way can lead to negative issues such as economic bubbles. Because of its disruptive potential, Bitcoin is often compared to the Internet. The Internet, in its current form, has existed since the 1980s. peculations about its potential led to the dot.com bubble that burst in the year 2000. Fortunately, internet companies recovered.
Now of the top 3 most valuable companies in the world, two are internetbased companies. Bitcoin is still very young, but its underlying technology should be watched and understood. Bitcoins ability to enable cooperation without centralized authorities might just transform our lives, much like the Internet did, in ways we cant yet imagine.p