Bitcoin has grabbed the headlines plenty of times over the last twelve months. Meteoric BTC/USD price rises, ETF rejections, Chinese legislator crackdowns – you name it, Bitcoin’s seen it!
What really is Bitcoin, though? Sure, it’s that internet money that drug dealers used to operate with and is worth somewhere between $0 and $20,000. That hardly explains why some of the brightest minds on the planet are so excited about the potential of Bitcoin, does it?
Since few people truly understand the importance of some of the key features of Bitcoin, here are five of the most groundbreaking qualities that the king of the cryptos possesses!
Bitcoin is Permission-less
Bitcoin is the first electronic payment system that is entirely permission-less. With every other payment system, a trusted third party is involved. Think about it. If you want to send a vast amount of money from your current account to another current account, questions will be asked. You might not even be able to receive such a large amount of money in the first place. Banks get suspicious of large amounts of money (when they belong to their customers). This is just one way that traditional banks are not permission-less. Likewise, if you were deemed to be funding a group or individual that the institution or government disagreed with, your chances of doing so through your regular bank account are slim.
Unless transacting completely in cash, permission-less transactions are impossible. Bitcoin changes this.
Bitcoin is Borderless
Bitcoin doesn’t respect borders. It doesn’t matter whether you want to send a payment to the person on the other side of the table from you or to a far-off country across the globe. Bitcoin doesn’t care about the distance. The cost of the transaction and the time it will take is the same.
This opens huge potential for the innovation to be used in the almost half a trillion-dollar global remittance market. The speed and efficiency of Bitcoin transactions, when compared with legacy institutions, is simply incredible. As the network scales, this will become even faster and cheaper too.
Bitcoin is ‘Unconfiscatable’
If you know how to store your Bitcoin correctly, there is no one on the planet who can take it from you. With physical cash or gold, you can be incarcerated, and the funds can be simply taken by the “men with guns”, which many libertarian types fear. Likewise, governments can freeze bank accounts, stop transactions, and confiscate funds directly from them.
Once stored properly (on a hardware device or paper wallet), the user can simply remember a list of 12 or 24 words. If these are committed to memory, there is nothing that someone can do to take the Bitcoin from the user. The best they can manage is to torture them until they give up their seed words. A person’s incarceration or even death is not enough to take their Bitcoin from them.
You Can Buy Less Than One Bitcoin
Many people see the Bitcoin price and think that they can’t afford to buy a speculative asset at $6,400 (or whatever the current price is). This is a very common misconception. You can buy as much or as little Bitcoin as you like.
Each coin is divisible down to eight decimal places. You can literally send and receive as little as 0.00000001BTC ($0.000064). This means that if you want to own some Bitcoin, but the current price volatility makes you fear dropping a large sum of money on it, you can buy a little each week or month. If you think you have even $10 spare each week, you can buy that amount if you want. This approach allows you to average your buys across a long period and reduce the impact of volatility. Using a buying strategy like this is known as dollar-cost averaging.
Bitcoin is Not Just a Currency
All the qualities of Bitcoin we’ve addressed so far relate to its use as a currency. However, perhaps the most exciting thing about Bitcoin is that it’s so much more than just digital money. It’s software at the end of the day. This means that it can be upgraded (if consensus allows it). Just like the internet evolved from its early days as a pretty one dimensional, hardly usable network into a technology that impacts just about every corner of the modern life, Bitcoin will scale and become more functional as developers continue to work on it.
The very base layer of the network is fixed and there are some hard and fast rules. However, on top of this many exciting and innovative layers can be constructed. An early example of one such layer is the Lightning Network for microtransactions. However, just like the internet, many of the innovations that will make Bitcoin a completely disruptive technology are yet to be imagined.
As a concept gets more popular, the number of people working on said idea grows exponentially. Each of these developers will improve small aspects of the network and infrastructure gradually. Bitcoin will evolve just as the internet has. When it does, the legacy institutions that belittle it today will have nowhere to hide from the reach and potential of the groundbreaking innovation.