Bitcoin is a Crypto Currency.
It exists in a Digital format only and has no physical properties. You cannot hold it in your hand or see it but you can buy things and services with it and make money by leveraging it.
It was created in 2009 as a mathematical experiment to create a truly secure way to trade “value” on a Pier to Pier basis. That means from one person or company to another without a middleman. In our modern world today almost every financial transaction that occurs goes through a third party and is subject to a fee for service. Credit/debit cards, bank transfers chequing accounts, bank accounts and especially any transfer from one country location or currency to another incur fees paid to a bank.
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Bitcoin has gone from a little known, new technology to a mainstream currency option in just 10 years. It used to be difficult to purchase, but now there are plenty of people and digital platforms that can help you make the purchase and get you an electronic wallet to hold your Bitcoin.
Yes, as a straight investment, Bitcoin is a good choice. There are even speculations that it could one day go as high as $1M per coin.
But that’s for investment purposes. What about Bitcoin as Money today?
Unlike regular currency, the number of Bitcoins that can be mined is set. The number of Bitcoin coming online will decline over time until the total reaches 21 Million Bitcoins, sometime in 2140. The governments and central banks of the world are not able to inflate the supply and weaken the value of Bitcoins.
However, the value of your paper dollar continues to drop as governments continue to print more Fiat money. Bank account interest rates remain very low. Some countries even have negative interest rates, meaning people pay their banks to hold their money. Wow.
Gone are the days of watching your money grow in a savings account. Fiat currency (regular paper money) and its electronic version are still the best way to make purchases day to day, but Bitcoin is slowly making inroads particularly where bank transactions are expensive and cumbersome.
International Money Transfers
Have you ever tried sending a wire transfer? It’s a process of sending money internationally to a business or to a person in a foreign country. It takes time and is expensive. When receiving one, you rarely receive the amount expected because some intermediary bank takes out a fee – maybe. Plus, it takes several days to receive your money.
The wire transfer system is long overdue for an overhaul.
How Bitcoin will revolutionize International transactions
Andreas Antonopoulos (search YouTube) is a preeminent Bitcoin expert who thinks the first things to take off with Bitcoin will be trans-border transactions:
- Businesses paying international subcontractors and partners. These payments are horribly expensive, very slow and extremely cumbersome.
- Basic Import/Export. Transnational trade using a transnational currency like Bitcoin makes a lot of sense. Wire transfers fall into this category.
- Foreign remittances. There are maybe 100 million people working as immigrants in developed countries. They send $560B home every year through MoneyGram, Western Union and other money transfer companies. An average of 9% of that goes to transaction fees.
Plus, Bitcoin is based on blockchain technology. Companies are using blockchain technology to:
- Create digital voting to prevent voter fraud
- Make Real Estate title transfers paperless
- Trace food from their origins, for food safety
- Improve medical record keeping
- Track prescription drugs
- and a whole lot more.
This is a technology that is helping us move to a paperless society. Something the computer was supposed to do, but didn’t. Blockchain technology is taking us from old, untrustworthy paper-based business, data storage and organizations, to quicker, more robust and safe systems. And Bitcoin is part of that.
Reducing their waste, labor, costs and security risks are great incentives for companies to develop blockchain technologies.
As they create more uses for blockchain systems in government, health, property and finance, Bitcoin could become the go-to currency for those and other transactions. As its number of users and uses go up, so will its value.
Until it becomes more mainstream as a currency, there’s nothing wrong with using Bitcoin’s investment potential to save for that new house or for your retirement. And it will hold its value better than your Fiat dollar or a gold bar.
Accumulate now and by the time Bitcoin becomes as easy to use as your dollar is now via debit or credit card, you’ll have a lot more to spend than those who didn’t invest now.
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