People seem to lack an understanding of what Bitcoin is. In short, it’s effectively a trustless rapid international settlement system. Of course the dominant international settlement system is in USD which suffers from – you guessed it – financial sanctions. This is the underlying subtext for many of those who support Bitcoin or not in my observation.
There’s however also Ethereum and similar systems based on smart contracts. These also work as a form of settlement system if needed, but do much more than that. In some ways they’re less secure than Bitcoin which does only one thing well. These days this is where most of the innovation is taking place such as various derivatives using stable coins, play-to-earn games and other developing applications using NFTs which have provable uniqueness as building blocks.
It may well be an ‘international settlement system’, however that’s not why people buy and sell it, they are merely trading tokens relying on greater fool theory for profitability.
Bitcoin is now big enough to be its own viable financial system. And given its distributed open ledger system, it has much less the character of “greater fool” than all the fiat currencies such as the US Dollar whose relentless creation benefits the first recipients of the new money at the expense of those down the line.
The ponzi nature of our fiat system (as it has evolved since 1971) is masked by the size of the transaction base. The real question is how will the pain of unwinding the fiat ponzi be distributed in our society?
Unwinding Bitcoins is of course very easy. Without new buyers the funds available are zero so everyone gets zero and it really does not matter if the computers are turned off and there is no one to check you Bitcoin is valid. With fiat money you can at least vote for a Government that acts to limit inflation and tries to control the risks banks take.
Unwinding Bitcoins is of course very easy. Without new buyers the funds available are zero so everyone gets zero and it really does not matter if the computers are turned off and there is no one to check you Bitcoin is valid. With fiat money you can at least vote for a Government that acts to limit inflation and tries to control the risks banks take.
I don’t disagree with that. I typically see two types of buyers. Libertarian types who like the idea that it gets rid of fiat money (and by implication unlimited funding of social justice causes by leftwing governments), and greater fools chasing the shinier coins while the speculators make money.
Bitcoin is now big enough to be its own viable financial system. And given its distributed open ledger system, it has much less the character of “greater fool” than all the fiat currencies such as the US Dollar whose relentless creation benefits the first recipients of the new money at the expense of those down the line.
The ponzi nature of our fiat system (as it has evolved since 1971) is masked by the size of the transaction base. The real question is how will the pain of unwinding the fiat ponzi be distributed in our society?
I don’t disagree with that. I typically see two types of buyers. Libertarian types who like the idea that it gets rid of fiat money (and by implication unlimited funding of social justice causes by leftwing governments), and greater fools chasing the shinier coins while the speculators make money.
For trustless you must read there is no one to trust. As with most articles on crypto currencies the risks are not spelt out. Your risks depend on how you participate.
The least risk of participation is as a node with your computer using the bitcoin software to hold the entire blockchain. Your risk is that the miners are motivated to validate transactions and add them to the blockchain with the new bitcoins they mine in return for a transacion fee and the sale of the new bitcoins. Plus of course, as Robbie K points out, a ready supply of “greater fools” buying bitcoins to fund the miners and pay you out when you want real money. You also take the risk that the community of miners do not intentionally or inadvertently change the rules by changing the coding.
One removed from this is to have a private wallet that holds your private key to claim your bitcoin in the blockchain when you want to sell it. You have the additional risk of relying on someone to give you a valid key and the risk of it being copied, so do not keep it online, or lost, eg in a hard disk failure, so even you cannot spend it.
For ease of use you can increase your risk by keeping your bitcoins in a wallet held by a broker. Then you add all the risks of a third party being honest with you. They took your money but did they buy a bitcoin for you, can you claim it if they go bust.
Then for small amounts you can open an account with an intermediary such as Paypal, but you will not own any identifiable bitcoin that you could take away from them.
A bitcoin is a bearer token, whoever has it can spend it, so the blockchain has to hold the data for every bitcoin in existence and when it was last traded. In theory they are divisible to ten decimal places so if everyone participated directly the blockchain would have to hold a vast amount of data. Magnitudes greater than its current size of less than half a terrabyte (thanks to Emre S for correction).
In practise very few people actually deal directly in bitcoins, A quick search suggests circa 15 k addressable nodes and another 30k that cannot be addressed. The reported number of transaction is low with a high average value – essentally the direct participation is a wholesale market.
It might be a neat idea but it is far too cumbersome.
As the article shows people in El Salvador rely on fiat money.
Don’t see why miners adding new transactions is a risk, that’s how it normally works, also the ledger size today is about a half terabyte, but other than that I’d mostly agree with what you say.
Given its expensive proof of work mechanism and very specialised secure nature, personally I see bitcoin more reserved for large transactions. Proof-of-stake systems have much lower transactions costs and are more suited for more widely spread activity.
Visa today processes on the order of a few 1000 transactions per second as it handles a large chunk of every day payments in the world. Current two main crypto systems can’t do that at this point, but there are several other available cryptos that can do that, and more. Furthermore Ethereum itself will likely be able to do that in the near future as well.
The risk is the reliance on miners being motivated to keep their computers on. At the current price the new bitcoins mined, if sold, require new buyers to invest $8 billion of new money pa to keep the price where it is. Next year the number of new bitcoins halves. Mining has changed radically moving from China to the US. It seems to have required a sizeable new investment in new chips. It is now very concentrated – two pools account for 50% and five pools for 80%. The new miners in pools with new chips have economies that have ousted the old miners – do they have high profit margins or does the competition between them push the diffficulty up and therefore the operating costs up to limit the margin. The difficulty has gone up but how much is that due to new chips? Can the need to have new chips and a large pool mean that future mining will be even more concentrated? If the price drops will the pools just scale down and lower the difficulty or will they withdraw or will it squeeze out the remaing old miners? Are the miners motivated by the mining or sustaining the value of holdings? There must be sizeable holders who have limited sales to avoid prices falling. It would not be difficult to make trades that manipulate the price – has that happened? Are there co-ordinated forces to keep the show on the road to attract the new money in that keeps the price up? Is there a scandal brewing that will scare of new investors enough to convince holders to try and get out while they can, which of course they cannot without new investors.
Thanks for pointing out error in blockchain size.
The risk is the reliance on miners being motivated to keep their computers on. At the current price the new bitcoins mined, if sold, require new buyers to invest $8 billion of new money pa to keep the price where it is. Next year the number of new bitcoins halves. Mining has changed radically moving from China to the US. It seems to have required a sizeable new investment in new chips. It is now very concentrated – two pools account for 50% and five pools for 80%. The new miners in pools with new chips have economies that have ousted the old miners – do they have high profit margins or does the competition between them push the diffficulty up and therefore the operating costs up to limit the margin. The difficulty has gone up but how much is that due to new chips? Can the need to have new chips and a large pool mean that future mining will be even more concentrated? If the price drops will the pools just scale down and lower the difficulty or will they withdraw or will it squeeze out the remaing old miners? Are the miners motivated by the mining or sustaining the value of holdings? There must be sizeable holders who have limited sales to avoid prices falling. It would not be difficult to make trades that manipulate the price – has that happened? Are there co-ordinated forces to keep the show on the road to attract the new money in that keeps the price up? Is there a scandal brewing that will scare of new investors enough to convince holders to try and get out while they can, which of course they cannot without new investors.
Thanks for pointing out error in blockchain size.
Don’t see why miners adding new transactions is a risk, that’s how it normally works, also the ledger size today is about a half terabyte, but other than that I’d mostly agree with what you say.
Given its expensive proof of work mechanism and very specialised secure nature, personally I see bitcoin more reserved for large transactions. Proof-of-stake systems have much lower transactions costs and are more suited for more widely spread activity.
Visa today processes on the order of a few 1000 transactions per second as it handles a large chunk of every day payments in the world. Current two main crypto systems can’t do that at this point, but there are several other available cryptos that can do that, and more. Furthermore Ethereum itself will likely be able to do that in the near future as well.
True enough – its fine if i get an offer to buy say a Porsche fender from a breaker in Bremerhaven for 0.00578579 BTC at 10:00 hrs CET. 10 mins later he’s paid and posts the goods.The vender – a tax shy Turk, used to keep the coins for a while when the market was rising – now he buys € or $ right away having been been caught with his $135 part now only worth $90 to him. That is the future of BTC. it will always appeal to the tax shy & the sex, drugs or other “cash” economies. The only reason FIATs stand up is they are backed by states who are ready to dole out violence, sometimes lethal, to anyone who opposes them or their financial system. As if the Salvadoreños needed any thing else to worry about!
I see a big push to tax crypto transactions today in UK at least, and why not. To be a serious technology for finance, taxation needs to happen.
The interesting thing about the first generation crpto (ie. Bitcoin) in my view is how it managed to create a form of money that’s both convenient (e.g. not gold) and not fiat (e.g. not printable out of thin air). Other things like tax etc are not impossible problems to solve.
I see a big push to tax crypto transactions today in UK at least, and why not. To be a serious technology for finance, taxation needs to happen.
The interesting thing about the first generation crpto (ie. Bitcoin) in my view is how it managed to create a form of money that’s both convenient (e.g. not gold) and not fiat (e.g. not printable out of thin air). Other things like tax etc are not impossible problems to solve.
It may well be an ‘international settlement system’, however that’s not why people buy and sell it, they are merely trading tokens relying on greater fool theory for profitability.
For trustless you must read there is no one to trust. As with most articles on crypto currencies the risks are not spelt out. Your risks depend on how you participate.
The least risk of participation is as a node with your computer using the bitcoin software to hold the entire blockchain. Your risk is that the miners are motivated to validate transactions and add them to the blockchain with the new bitcoins they mine in return for a transacion fee and the sale of the new bitcoins. Plus of course, as Robbie K points out, a ready supply of “greater fools” buying bitcoins to fund the miners and pay you out when you want real money. You also take the risk that the community of miners do not intentionally or inadvertently change the rules by changing the coding.
One removed from this is to have a private wallet that holds your private key to claim your bitcoin in the blockchain when you want to sell it. You have the additional risk of relying on someone to give you a valid key and the risk of it being copied, so do not keep it online, or lost, eg in a hard disk failure, so even you cannot spend it.
For ease of use you can increase your risk by keeping your bitcoins in a wallet held by a broker. Then you add all the risks of a third party being honest with you. They took your money but did they buy a bitcoin for you, can you claim it if they go bust.
Then for small amounts you can open an account with an intermediary such as Paypal, but you will not own any identifiable bitcoin that you could take away from them.
A bitcoin is a bearer token, whoever has it can spend it, so the blockchain has to hold the data for every bitcoin in existence and when it was last traded. In theory they are divisible to ten decimal places so if everyone participated directly the blockchain would have to hold a vast amount of data. Magnitudes greater than its current size of less than half a terrabyte (thanks to Emre S for correction).
In practise very few people actually deal directly in bitcoins, A quick search suggests circa 15 k addressable nodes and another 30k that cannot be addressed. The reported number of transaction is low with a high average value – essentally the direct participation is a wholesale market.
It might be a neat idea but it is far too cumbersome.
As the article shows people in El Salvador rely on fiat money.
True enough – its fine if i get an offer to buy say a Porsche fender from a breaker in Bremerhaven for 0.00578579 BTC at 10:00 hrs CET. 10 mins later he’s paid and posts the goods.The vender – a tax shy Turk, used to keep the coins for a while when the market was rising – now he buys € or $ right away having been been caught with his $135 part now only worth $90 to him. That is the future of BTC. it will always appeal to the tax shy & the sex, drugs or other “cash” economies. The only reason FIATs stand up is they are backed by states who are ready to dole out violence, sometimes lethal, to anyone who opposes them or their financial system. As if the Salvadoreños needed any thing else to worry about!
Last edited 1 year ago by mike otter
Emre S
1 year ago
People seem to lack an understanding of what Bitcoin is. In short, it’s effectively a trustless rapid international settlement system. Of course the dominant international settlement system is in USD which suffers from – you guessed it – financial sanctions. This is the underlying subtext for many of those who support Bitcoin or not in my observation.
There’s however also Ethereum and similar systems based on smart contracts. These also work as a form of settlement system if needed, but do much more than that. In some ways they’re less secure than Bitcoin which does only one thing well. These days this is where most of the innovation is taking place such as various derivatives using stable coins, play-to-earn games and other developing applications using NFTs which have provable uniqueness as building blocks.
Last edited 1 year ago by Emre S
Anton van der Merwe
1 year ago
Bitcoin was developed to enable settlement of transactions without a centralised database. That is an incredibly difficult problem to solve and the solution, proof of work, means that it is hugely inefficient and slow. So slow and energy intensive it can never replace regular money as we would need all the energy we have just to process transactions. What can’t happen won’t happen.
Regular people don’t need a payment system with a decentralised database. Unless you are a criminal and/or want to evade government control. That is why authoritarian countries like China just ban bitcoin.
The only positive thing about bitcoin is that it has persuaded central banks to develop central bank digital currencies, which will make international pay settlements cheap and fast.
Anton van der Merwe
1 year ago
Bitcoin was developed to enable settlement of transactions without a centralised database. That is an incredibly difficult problem to solve and the solution, proof of work, means that it is hugely inefficient and slow. So slow and energy intensive it can never replace regular money as we would need all the energy we have just to process transactions. What can’t happen won’t happen.
Regular people don’t need a payment system with a decentralised database. Unless you are a criminal and/or want to evade government control. That is why authoritarian countries like China just ban bitcoin.
The only positive thing about bitcoin is that it has persuaded central banks to develop central bank digital currencies, which will make international pay settlements cheap and fast.
People seem to lack an understanding of what Bitcoin is. In short, it’s effectively a trustless rapid international settlement system. Of course the dominant international settlement system is in USD which suffers from – you guessed it – financial sanctions. This is the underlying subtext for many of those who support Bitcoin or not in my observation.
There’s however also Ethereum and similar systems based on smart contracts. These also work as a form of settlement system if needed, but do much more than that. In some ways they’re less secure than Bitcoin which does only one thing well. These days this is where most of the innovation is taking place such as various derivatives using stable coins, play-to-earn games and other developing applications using NFTs which have provable uniqueness as building blocks.
It may well be an ‘international settlement system’, however that’s not why people buy and sell it, they are merely trading tokens relying on greater fool theory for profitability.
Bitcoin is now big enough to be its own viable financial system. And given its distributed open ledger system, it has much less the character of “greater fool” than all the fiat currencies such as the US Dollar whose relentless creation benefits the first recipients of the new money at the expense of those down the line.
The ponzi nature of our fiat system (as it has evolved since 1971) is masked by the size of the transaction base. The real question is how will the pain of unwinding the fiat ponzi be distributed in our society?
Unwinding Bitcoins is of course very easy. Without new buyers the funds available are zero so everyone gets zero and it really does not matter if the computers are turned off and there is no one to check you Bitcoin is valid. With fiat money you can at least vote for a Government that acts to limit inflation and tries to control the risks banks take.
Unwinding Bitcoins is of course very easy. Without new buyers the funds available are zero so everyone gets zero and it really does not matter if the computers are turned off and there is no one to check you Bitcoin is valid. With fiat money you can at least vote for a Government that acts to limit inflation and tries to control the risks banks take.
I don’t disagree with that. I typically see two types of buyers. Libertarian types who like the idea that it gets rid of fiat money (and by implication unlimited funding of social justice causes by leftwing governments), and greater fools chasing the shinier coins while the speculators make money.
Bitcoin is now big enough to be its own viable financial system. And given its distributed open ledger system, it has much less the character of “greater fool” than all the fiat currencies such as the US Dollar whose relentless creation benefits the first recipients of the new money at the expense of those down the line.
The ponzi nature of our fiat system (as it has evolved since 1971) is masked by the size of the transaction base. The real question is how will the pain of unwinding the fiat ponzi be distributed in our society?
I don’t disagree with that. I typically see two types of buyers. Libertarian types who like the idea that it gets rid of fiat money (and by implication unlimited funding of social justice causes by leftwing governments), and greater fools chasing the shinier coins while the speculators make money.
For trustless you must read there is no one to trust. As with most articles on crypto currencies the risks are not spelt out. Your risks depend on how you participate.
The least risk of participation is as a node with your computer using the bitcoin software to hold the entire blockchain. Your risk is that the miners are motivated to validate transactions and add them to the blockchain with the new bitcoins they mine in return for a transacion fee and the sale of the new bitcoins. Plus of course, as Robbie K points out, a ready supply of “greater fools” buying bitcoins to fund the miners and pay you out when you want real money. You also take the risk that the community of miners do not intentionally or inadvertently change the rules by changing the coding.
One removed from this is to have a private wallet that holds your private key to claim your bitcoin in the blockchain when you want to sell it. You have the additional risk of relying on someone to give you a valid key and the risk of it being copied, so do not keep it online, or lost, eg in a hard disk failure, so even you cannot spend it.
For ease of use you can increase your risk by keeping your bitcoins in a wallet held by a broker. Then you add all the risks of a third party being honest with you. They took your money but did they buy a bitcoin for you, can you claim it if they go bust.
Then for small amounts you can open an account with an intermediary such as Paypal, but you will not own any identifiable bitcoin that you could take away from them.
A bitcoin is a bearer token, whoever has it can spend it, so the blockchain has to hold the data for every bitcoin in existence and when it was last traded. In theory they are divisible to ten decimal places so if everyone participated directly the blockchain would have to hold a vast amount of data. Magnitudes greater than its current size of less than half a terrabyte (thanks to Emre S for correction).
In practise very few people actually deal directly in bitcoins, A quick search suggests circa 15 k addressable nodes and another 30k that cannot be addressed. The reported number of transaction is low with a high average value – essentally the direct participation is a wholesale market.
It might be a neat idea but it is far too cumbersome.
As the article shows people in El Salvador rely on fiat money.
Don’t see why miners adding new transactions is a risk, that’s how it normally works, also the ledger size today is about a half terabyte, but other than that I’d mostly agree with what you say.
Given its expensive proof of work mechanism and very specialised secure nature, personally I see bitcoin more reserved for large transactions. Proof-of-stake systems have much lower transactions costs and are more suited for more widely spread activity.
Visa today processes on the order of a few 1000 transactions per second as it handles a large chunk of every day payments in the world. Current two main crypto systems can’t do that at this point, but there are several other available cryptos that can do that, and more. Furthermore Ethereum itself will likely be able to do that in the near future as well.
The risk is the reliance on miners being motivated to keep their computers on. At the current price the new bitcoins mined, if sold, require new buyers to invest $8 billion of new money pa to keep the price where it is. Next year the number of new bitcoins halves. Mining has changed radically moving from China to the US. It seems to have required a sizeable new investment in new chips. It is now very concentrated – two pools account for 50% and five pools for 80%. The new miners in pools with new chips have economies that have ousted the old miners – do they have high profit margins or does the competition between them push the diffficulty up and therefore the operating costs up to limit the margin. The difficulty has gone up but how much is that due to new chips? Can the need to have new chips and a large pool mean that future mining will be even more concentrated? If the price drops will the pools just scale down and lower the difficulty or will they withdraw or will it squeeze out the remaing old miners? Are the miners motivated by the mining or sustaining the value of holdings? There must be sizeable holders who have limited sales to avoid prices falling. It would not be difficult to make trades that manipulate the price – has that happened? Are there co-ordinated forces to keep the show on the road to attract the new money in that keeps the price up? Is there a scandal brewing that will scare of new investors enough to convince holders to try and get out while they can, which of course they cannot without new investors.
Thanks for pointing out error in blockchain size.
The risk is the reliance on miners being motivated to keep their computers on. At the current price the new bitcoins mined, if sold, require new buyers to invest $8 billion of new money pa to keep the price where it is. Next year the number of new bitcoins halves. Mining has changed radically moving from China to the US. It seems to have required a sizeable new investment in new chips. It is now very concentrated – two pools account for 50% and five pools for 80%. The new miners in pools with new chips have economies that have ousted the old miners – do they have high profit margins or does the competition between them push the diffficulty up and therefore the operating costs up to limit the margin. The difficulty has gone up but how much is that due to new chips? Can the need to have new chips and a large pool mean that future mining will be even more concentrated? If the price drops will the pools just scale down and lower the difficulty or will they withdraw or will it squeeze out the remaing old miners? Are the miners motivated by the mining or sustaining the value of holdings? There must be sizeable holders who have limited sales to avoid prices falling. It would not be difficult to make trades that manipulate the price – has that happened? Are there co-ordinated forces to keep the show on the road to attract the new money in that keeps the price up? Is there a scandal brewing that will scare of new investors enough to convince holders to try and get out while they can, which of course they cannot without new investors.
Thanks for pointing out error in blockchain size.
Don’t see why miners adding new transactions is a risk, that’s how it normally works, also the ledger size today is about a half terabyte, but other than that I’d mostly agree with what you say.
Given its expensive proof of work mechanism and very specialised secure nature, personally I see bitcoin more reserved for large transactions. Proof-of-stake systems have much lower transactions costs and are more suited for more widely spread activity.
Visa today processes on the order of a few 1000 transactions per second as it handles a large chunk of every day payments in the world. Current two main crypto systems can’t do that at this point, but there are several other available cryptos that can do that, and more. Furthermore Ethereum itself will likely be able to do that in the near future as well.
True enough – its fine if i get an offer to buy say a Porsche fender from a breaker in Bremerhaven for 0.00578579 BTC at 10:00 hrs CET. 10 mins later he’s paid and posts the goods.The vender – a tax shy Turk, used to keep the coins for a while when the market was rising – now he buys € or $ right away having been been caught with his $135 part now only worth $90 to him. That is the future of BTC. it will always appeal to the tax shy & the sex, drugs or other “cash” economies. The only reason FIATs stand up is they are backed by states who are ready to dole out violence, sometimes lethal, to anyone who opposes them or their financial system. As if the Salvadoreños needed any thing else to worry about!
I see a big push to tax crypto transactions today in UK at least, and why not. To be a serious technology for finance, taxation needs to happen.
The interesting thing about the first generation crpto (ie. Bitcoin) in my view is how it managed to create a form of money that’s both convenient (e.g. not gold) and not fiat (e.g. not printable out of thin air). Other things like tax etc are not impossible problems to solve.
I see a big push to tax crypto transactions today in UK at least, and why not. To be a serious technology for finance, taxation needs to happen.
The interesting thing about the first generation crpto (ie. Bitcoin) in my view is how it managed to create a form of money that’s both convenient (e.g. not gold) and not fiat (e.g. not printable out of thin air). Other things like tax etc are not impossible problems to solve.
It may well be an ‘international settlement system’, however that’s not why people buy and sell it, they are merely trading tokens relying on greater fool theory for profitability.
For trustless you must read there is no one to trust. As with most articles on crypto currencies the risks are not spelt out. Your risks depend on how you participate.
The least risk of participation is as a node with your computer using the bitcoin software to hold the entire blockchain. Your risk is that the miners are motivated to validate transactions and add them to the blockchain with the new bitcoins they mine in return for a transacion fee and the sale of the new bitcoins. Plus of course, as Robbie K points out, a ready supply of “greater fools” buying bitcoins to fund the miners and pay you out when you want real money. You also take the risk that the community of miners do not intentionally or inadvertently change the rules by changing the coding.
One removed from this is to have a private wallet that holds your private key to claim your bitcoin in the blockchain when you want to sell it. You have the additional risk of relying on someone to give you a valid key and the risk of it being copied, so do not keep it online, or lost, eg in a hard disk failure, so even you cannot spend it.
For ease of use you can increase your risk by keeping your bitcoins in a wallet held by a broker. Then you add all the risks of a third party being honest with you. They took your money but did they buy a bitcoin for you, can you claim it if they go bust.
Then for small amounts you can open an account with an intermediary such as Paypal, but you will not own any identifiable bitcoin that you could take away from them.
A bitcoin is a bearer token, whoever has it can spend it, so the blockchain has to hold the data for every bitcoin in existence and when it was last traded. In theory they are divisible to ten decimal places so if everyone participated directly the blockchain would have to hold a vast amount of data. Magnitudes greater than its current size of less than half a terrabyte (thanks to Emre S for correction).
In practise very few people actually deal directly in bitcoins, A quick search suggests circa 15 k addressable nodes and another 30k that cannot be addressed. The reported number of transaction is low with a high average value – essentally the direct participation is a wholesale market.
It might be a neat idea but it is far too cumbersome.
As the article shows people in El Salvador rely on fiat money.
True enough – its fine if i get an offer to buy say a Porsche fender from a breaker in Bremerhaven for 0.00578579 BTC at 10:00 hrs CET. 10 mins later he’s paid and posts the goods.The vender – a tax shy Turk, used to keep the coins for a while when the market was rising – now he buys € or $ right away having been been caught with his $135 part now only worth $90 to him. That is the future of BTC. it will always appeal to the tax shy & the sex, drugs or other “cash” economies. The only reason FIATs stand up is they are backed by states who are ready to dole out violence, sometimes lethal, to anyone who opposes them or their financial system. As if the Salvadoreños needed any thing else to worry about!
People seem to lack an understanding of what Bitcoin is. In short, it’s effectively a trustless rapid international settlement system. Of course the dominant international settlement system is in USD which suffers from – you guessed it – financial sanctions. This is the underlying subtext for many of those who support Bitcoin or not in my observation.
There’s however also Ethereum and similar systems based on smart contracts. These also work as a form of settlement system if needed, but do much more than that. In some ways they’re less secure than Bitcoin which does only one thing well. These days this is where most of the innovation is taking place such as various derivatives using stable coins, play-to-earn games and other developing applications using NFTs which have provable uniqueness as building blocks.
Bitcoin was developed to enable settlement of transactions without a centralised database. That is an incredibly difficult problem to solve and the solution, proof of work, means that it is hugely inefficient and slow. So slow and energy intensive it can never replace regular money as we would need all the energy we have just to process transactions. What can’t happen won’t happen.
Regular people don’t need a payment system with a decentralised database. Unless you are a criminal and/or want to evade government control. That is why authoritarian countries like China just ban bitcoin.
The only positive thing about bitcoin is that it has persuaded central banks to develop central bank digital currencies, which will make international pay settlements cheap and fast.
Bitcoin was developed to enable settlement of transactions without a centralised database. That is an incredibly difficult problem to solve and the solution, proof of work, means that it is hugely inefficient and slow. So slow and energy intensive it can never replace regular money as we would need all the energy we have just to process transactions. What can’t happen won’t happen.
Regular people don’t need a payment system with a decentralised database. Unless you are a criminal and/or want to evade government control. That is why authoritarian countries like China just ban bitcoin.
The only positive thing about bitcoin is that it has persuaded central banks to develop central bank digital currencies, which will make international pay settlements cheap and fast.