Why do people use Bitcoin?
Despite being practically useless to buy things in regular bricks-and-mortar shops, Bitcoin has become a technological and social phenomena over the last ten years. Since its 2008 white paper, Bitcoin has evolved from a theoretical protocol into a widely accepted mechanism of transacting and storing value with market capitalisation of over $17 Billion. Which begs the question, if it’s difficult to spend, why are people using it?
Foreign Remittance: Sending money overseas via commercial banks is slow with high fees. Wire transfers are fast but even more expensive. Bitcoin costs a tiny fraction in comparison and takes about an hour to send.
Cashless Cash: Bitcoin combines the privacy of cash with the freedom of the internet. India’s recent withdrawal of high denomination notes from circulation caused a spike in the price of Bitcoin.
Privacy: Bitcoin is pseudo-anonymous. The entire history of transactions is visible but do not map to organisations or people. For those that require enhanced anonymity, tumbling services are used to allow the sender and receiver to remain obscure.
Investment & Speculation: Bitcoin, with a few notable blips, has continued to rise in value.
Reference Value: Similar to the way that the dollar was the global reserve currency for fiat currencies, the bitcoin is the global reserve for crypto-currencies. Movement of capital to other crypto-currencies often passes through Bitcoin.
Freedom from banks: The rate of money creation is controlled by math and not politicians or central bankers. With new European bail-in laws, Bitcoin may be a safe haven for savings when banks are too big to fail.
Trade: Bitcoin is well known for use on Tor based dark markets, where goods vary in legality and legitimacy. However you can purchase anything from t-shirts to consultancy and a lot more on the regular web.
Micro Payments: At the moment it is still practical to use bitcoin for tiny payments, however, this may change in the future as transactions costs are increasing due to vested interests moving toward Bitcoin as a settlement medium. You can still tip writers though 18Mncbjvg6JRyz6MT6ftQkwrw4wJnAUruv ;)
Since bitcoin emerged, it’s revolutionary protocols have inspired a whole new wave of innovation - which we will be exploring in future posts.