What Is Bitcoin?
By: Rada Media
Tags: Bitcoin, Blockchain, Bitcoin News, Cryptocurrency, Satoshi Nakamoto

Team

Bitcoin is an open-source project built by a global community of developers with 600 contributors on Github currently. The first bitcoin came into existence in 2009 by someone or some group of people that goes by the name of Satoshi Nakamoto. Satoshi Nakamoto left the project in 2010 without revealing himself or themselves. The community has since grown exponentially with many developers working on Bitcoin.

Use cases

Peer-to-peer payment system

Bitcoin allows you to transfer funds to other people at low cost and high speed. It probably takes a few minutes to settle transactions with Bitcoin, while it takes a few days for banks to transfer funds for you. One can send and receive payments directly from another person, without the need for a bank to process the transaction. Therefore, bitcoin is a decentralized peer-to-peer payment network.

Store of Value

Fiat currencies lose value over time because central banks issue money as one of their monetary policy tools. This breeds inflation. Bitcoin has a finite supply, and thus, contains inflation. This asset is deflationary in nature. When you store your funds in cryptocurrencies, they can potentially gain value instead of losing value over time.

Digital Gold

Bitcoin resembles gold in many ways as they both resist inflation. And bitcoin is a better alternative to gold as they are more divisible (up to 8 decimal places!), portable, and durable.

Banking the unbanked

In many countries in the world, especially underdeveloped regions, a great number of people still lack access to financial services at traditional banks. Bitcoin and cryptocurrencies can provide access to financial services for these people for the first time, as an increasing number of people in these regions have access to or own mobile phones. Cryptocurrencies like Bitcoin can foster economic development and bring higher living standards and prosperity for many developing nations across the globe.

Competitors

Bitcoin competes with fiat currencies, other long-term stores of value like gold, and other cryptocurrencies that came into being after the introduction of bitcoin. Bitcoin’s reliability and immutability, among other unique properties, have made alternative coins unable to compete. Bitcoin’s resistance to inflation makes it a superior alternative to fiat currencies and other long-term stores of value like gold.

Bitcoin is more portable and divisible than gold

Central bank digital currencies lack the decentralization, scarcity, and trustlessness features of Bitcoin

Liquidity: Bitcoin is arguably one of the most liquid investment assets due to the worldwide establishment of trading platforms, exchanges, and online brokerages. Bitcoin has higher liquidity compared to other cryptocurrencies

Lower inflation risk: Unlike fiat currencies, bitcoin is immune to inflation

Diversification is an investment strategy: Digital currencies, including bitcoin, offer an alternative investment asset to traditional assets such as stocks and bonds. Bitcoin has historically performed as an uncorrelated asset, which means its price movement is independent of those of stocks and bonds.

Conclusion

The reputation of bitcoin has grown considerably over the past year making it the beta of the cryptocurrency markets. Institutions such as hedge funds and the ultra-rich have increasingly become interested in bitcoin and cryptocurrencies. Mainstream adoption of bitcoin may not be too far behind.

Key takeaways