Understanding main benefits of bitcoin for beginners
I often hear that bitcoin is worthless, that we don’t need it, that it consumes too much energy, that it’s a “pet rock”, etc. Yes, I hear your arguments and you may not need it. But you don’t need it until the moment you need it. In developed first world countries, where everything works for you, you might think bitcoin is useless.
But imagine that one day “shit hits the fan” you wake up and your bank will freeze your account. The bank will seize your money in an account just because they say so. what are the realistic options? You can transact with cash, you can transact with bitcoin or maybe gold bullion (taking in account that barter trade is not ideal). I don’t want to say it’s all bad, but gold is not good for daily transactions, cash is good but can be confiscated in certain cases and bitcoin is great regardless of who you transact with.
I fully understand that cash may be the best solution for everyone because it’s the easiest way to do it (and I use cash too), but if you want to send money to your friend across the globe, sending cash in an envelope is not the best idea. Let’s dig a bit deeper into bitcoin and what it could solve for you (from the transaction perspective, since I don’t want to talk about “store of value” narrative now).
Bitcoin is a decentralized digital currency that has been gaining immense popularity over the past decade. Unlike traditional currencies, Bitcoin operates on a peer-to-peer network and is not controlled by any central authority. This has resulted in several unique benefits that make it an attractive option for those looking for a free, censorship resistant money.
Privacy:
PROS: One of the most significant benefits of Bitcoin is the privacy it may offer. Transactions made with Bitcoin are pseudonymous, meaning that while they are recorded on the public ledger, the identity of the individuals involved in the transaction is not revealed (if done correctly, more on that in another post because this one is “rabbit hole” itself). This provides a good level of privacy (if done correctly).
CONS: If the on-chain transaction is done without any knowledge about Bitcoin then it is easy to link your identity with the transaction (in certain cases). It is important to learn transaction “hygiene”. However there are simple solutions to that and we will cover some in another posts. One of the simplest options for normal people might be using lightning network (which is Layer 2 on top of bitcoin protocol). This privacy topic will require more articles to describe how it works.
Censorship Resistance:
Another key advantage of Bitcoin is its censorship resistance. Unlike traditional currencies, which are often subject to government control and intervention, Bitcoin operates on a decentralized network that makes it immune to censorship. This means that transactions can be conducted freely, without the fear of interference from external entities. We will get into more details later in another article and what are the potential scenarios for the future.
Decentralization:
One of the defining characteristics of Bitcoin is its decentralized nature. Unlike traditional currencies, which are controlled by central authorities, Bitcoin operates on a network of thousands of nodes (node operators) to validate transactions. This means that there is no single point of failure and the system is far more resilient than centralized systems. We will talk later about decentralization and why it is good to run own bitcoin node (don’t trust, verify) if you are serious about sovereignty.
Inclusion:
One of the biggest benefits of Bitcoin is its ability to provide financial services to anyone with an internet connection. Unlike traditional banking systems, which can be exclusive and often require strict identification procedures, Bitcoin is accessible to anyone with a smartphone or computer. This makes it an ideal solution for those who are unbanked or underbanked and provides a level of financial inclusion not found with traditional currencies.
The speed:
The speed of transactions on the Bitcoin network, especially with the Lightning Network, offers several benefits over traditional financial systems. Faster transactions allow for near real-time transfer of funds, making it easier for individuals and businesses to transfer money quickly and securely. This can be especially useful for businesses that need to make international payments, as the time required to complete a transaction can be reduced from days or weeks to a matter of seconds.
Additionally, the speed of transactions on the Bitcoin network can help to reduce the overall cost of transactions, as users are not required to pay to third parties to process a transaction (they pay just for the space in the block). This can help to make financial services more accessible. Later in another articles I want to cover transaction differences on on-chain bitcoin and lightning network. What are the pros and cons and how to interact with it.
In conclusion:
Are there any downsides? Sure, they always are. It might be volatility for some (but you can use volatility for own benefits). It might be complexity for another group of people (not necessary to understand how it works under the hood to be able to transact). But if you learn how to mitigate downsides and risks then it is a great protocol where you can freely, instantly transact no matter what. Bitcoin offers several unique benefits. Its focus censorship resistance, decentralization, and inclusion make it an ideal solution for everyone who needs to transact instantly and without fear if the transaction will come through or not. It always will. Whether you are an individual or a business, there are many reasons to consider Bitcoin as a viable transacting option.