The Bitcoin Revolution: Is Conventional Money Doomed?
The possibility of a Bitcoin revolution has been of hot discussion since the currency became a widely sought after commodity. Since cryptocurrency’s conception in 2008 by an anonymous source, Satoshi Nakamoto, mew questions about current legal tender, online transactions, and a universal currency have been in hot debate. In 2009, when the mining software for the cryptocurrency was released, anyone with access to the internet and the computer power to mine the currency has been able to use it in transactions with those who would accept it in trade. Bitcoin is the oldest form of cryptocurrency and since 2009, many other types of currency have been created and joined the crypto market. With Bitcoin being only twenty-two years old, cryptocurrencies have been a fast-growing digital tender, even in its usage and value. Transactions using the currencies have been taking place for years, and its popularity is only growing, so it’s understandable why so much discourse on cryptocurrency’s ability to replace current legal tender is being had.
To understand more of how this could be possible, an explanation of how cryptocurrencies are used, stored, and managed is in order, and why they are so revolutionary.
The lack of need for intermediaries
The largest reason Bitcoin has taken off, and the serious discussions around the coin replacing conventional money is the currency’s lack of need for an intermediary.
An intermediary is essentially the “middle person” of transactions. With fiat money (current legal tender, e.g. British pound, US dollar, etc.), the intermediary is the banks. With current legal tender, there needs to be a gatekeeper to keep track of all the money; who has what amount, who has bought what, who owes who what amount, etc. Banks are the trusted entities that safeguard the population’s money, in theory. In current societies, with current legal tender, these gatekeepers are needed in order for economies to function because without a trusted way (in theory) to managed and keep track of money, there would be no stable economy anywhere and each denomination across the world would lose its value. However, with Bitcoin, there isn’t a need for a middle person because of the inbuilt software of the Bitcoin open source.
Another key difference between many cryptocurrencies and fiat currencies is that there is a finite amount of Bitcoin, and once all of the coins have been obtained from the server, there is no more to add to circulation. This, along with the lack of need for an intermediary is why cryptocurrencies are so popular and so revolutionary.
To explain further why there’s validity in the discourses around Bitcoin becoming the new universal denomination can be explained through why Bitcoin needs no intermediary, and how there is a finite amount of the currency.
Blockchain and Mining
The reason Bitcoin needs no intermediary is because of blockchain. Blockchain is the core of all cryptocurrencies. Depending on the type of software and methods a currency uses, blockchain tracks when people mine it, every transaction that uses its currency, consensus, and many other types of tracking methods. Bitcoin’s blockchain tracks every transaction, every time someone mines currency from the server and stores it forever in order to keep track of the coin. This is very energy-intensive, and there are other, less energy-intensive ways of keeping track of coins, however, this is the method Bitcoin uses.
With Bitcoin’s blockchain tracking each mined coin and each transaction using the currency, there is no need for an intermediary. Computers keep track of the data across many servers and so this information can never be lost, and duplicates of coins can never happen. This ingenious way of tracking cryptocurrencies is one of the biggest reasons people think cryptocurrencies could become the new legal tender in years to come.
Furthermore, having a finite amount of currency means it cannot be devalued by adding more of the currency to the total pot. The value of Bitcoin can change like any other currency, but not because more is being made and therefore decreasing the value of all other Bitcoins. Again, this is one of the biggest reasons for discussions around cryptocurrencies becoming a currency of the future and a new way to revolutionize the way the world exchanges money.
Wallets and Portfolios
To buy cryptocurrencies, you need a wallet. A wallet can be hardware, like a USB stick or other external device, or it can be software, like an app you can download from an app store. However, to own cryptocurrencies, one needs a wallet. Wallets aren’t isolated to single currencies, they can hold as many currencies and amounts as you have (of course if your wallet is external, the amount is confined to the capacity of the hardware).
‘Portfolio’ is a term that describes the total amount of money one has invested across all cryptocurrencies. If one has enough money in their portfolio, and to spend otherwise, it’s possible to find and hire professionals, such as pillarwm, Investopedia, and Projectmanager, to manage them for you. This means if one has disposable income, to possibly loose through investments, you can hire someone to manage this money and invest it into different assets, one form being cryptocurrencies.
While there is still a long way to go before cryptocurrencies are made the universal form of currency, the basic infrastructure, tracking, personal management, and possibilities for economic growth is already there and waiting for the Bitcoin revolution.