What Does Bitcoin Do?

I still hear this a lot “but what does Bitcoin actually do?” or “what purpose does Bitcoin serve?” or “isn’t Bitcoin’s value going up just because more people are buying it, not because it’s useful?”

Bitcoin was designed to address every single problem with our financial system.

Centralization

Traditional currencies are controlled by central banks. This gives them the power to manipulate the money supply, potentially leading to inflation and economic instability. Bitcoin, on the other hand, is decentralized. No single entity controls it, making it resistant to censorship and manipulation.  

I'm wary of the centralized nature of traditional currencies. The fact that central banks have the power to manipulate the money supply concerns me greatly. They can essentially print more money at will, which inevitably leads to inflation and erodes the value of my hard-earned savings. This lack of control over my own financial destiny is a major drawback. Bitcoin, on the other hand, operates on a decentralized network. No single entity, whether it's a government or a powerful institution, can control it. This distributed nature appeals to me because it means my investments are less susceptible to the whims of centralized authorities and the risks associated with their monetary policies.

Lack of Transparency

In traditional systems, it can be difficult to trace where money is coming from and going to. This can facilitate illicit activities like money laundering. Bitcoin transactions are recorded on a public ledger (the blockchain), making them transparent and traceable.  

I value transparency in my financial dealings. I want to know where my money is going and how it's being used. Traditional financial systems often lack this transparency, making it difficult to trace the flow of funds. This opacity can facilitate illicit activities that I want no part in. Bitcoin's public ledger provides a refreshing level of transparency. Every transaction is recorded on this ledger, which is accessible to anyone. While my identity isn't directly linked to my Bitcoin address, the movement of my funds is traceable, ensuring accountability and deterring fraudulent activities.

High Transaction Fees

Sending money internationally through traditional channels can be expensive due to various fees. Bitcoin transactions generally have lower fees, especially for cross-border payments.  

We are all frustrated by the high transaction fees associated with traditional financial systems, especially when sending money internationally but even just holding our money and giving us fast access to it. Banks and other intermediaries often charge exorbitant fees for transactions and custody of my assets, eating into my returns and making smaller investments less viable. Bitcoin transactions, on the other hand have lower fees, particularly for international transfers. This is because Bitcoin allows for direct peer-to-peer transactions, cutting out the middlemen and their associated costs. This efficiency is a major advantage for someone like me who invests globally.

The less friction we have in our system the more wealth each of us can capture and use to build even greater wealth.

Limited Access

Many people around the world lack access to traditional banking services. Bitcoin can provide a more accessible alternative, requiring only an internet connection.

It is a sad truth that billions of people around the world lack access to traditional banking services. This financial exclusion limits their opportunities and hinders economic growth. Bitcoin, with its permissionless nature, offers a solution. Anyone with an internet connection can use Bitcoin, regardless of their background or location. This resonates with me (and most freedom lovers) because it opens up investment possibilities for a wider range of people, fostering economic empowerment and global participation.

Inflation

As mentioned earlier, central banks can print more money, potentially leading to inflation which erodes the purchasing power of savings.

Bitcoin has a fixed supply of 21 million coins, making it deflationary over the long term.  

I'm deeply concerned about the erosive effects of inflation. As central banks continue to print more money, the purchasing power of my savings diminishes. Bitcoin, with its fixed supply of 21 million coins, offers a hedge against this inflationary pressure. Its scarcity and decentralized nature make it a deflationary asset in the long term, ensuring that my investments retain their value over time.

What Does Bitcoin Do?

Bitcoin presents a compelling solution to many of the problems that plague traditional finance. Its decentralized nature, transparency, low transaction fees, accessibility, and potential as a hedge against inflation make it an attractive investment opportunity. While I understand that Bitcoin is still a relatively new technology with its own set of challenges including driving adoption in uncertain regulatory environments, I believe its potential to revolutionize the financial landscape is immense.

If Bitcoin becomes a common asset on company balance sheets and a feature in treasury management, as Michael Saylor plans, it will tap into a large channel of very liquid capital that would be able to transition to the Bitcoin strategy rapidly.

Bitcoin is a monetizing store of wealth and because of that monetization process, we see volatility in its price. Bitcoin has the opportunity to become the premier “wealth battery” for the elite and the everyday person — this is the largest opportunity in the history of the world.

Bitcoin is currently a $1.4T market capitalization as of this writing. The grand total of the world’s wealth is estimated at $900T. Bitcoin has the potential to increase in price greatly as adoption increases across individual, corporate and sovereign levels of the economy.

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