Bitcoin is a currency. I often hear and read opinions that it is merely a commodity which might be used as a means of payment since it does not meet some parameters which define the currency. Plus ça change… (i.e. “the more it changes, the more it’s the same thing”). The textbooks of biology are being re-written, theoretical physics constantly brings new interpretations of how does the universe look like and how does it work, … It is time to realize that no system is permanent (not even the financial which “a few world banks” try to save it at all costs). Dominik Stroukal and Jakub Jedlinský states that every generation experienced a form of currency reform; a bitcoin, blockchain and cryptocurrencies are the reform of the present generation. The change is already taking place.
The success of our society is measured and caused by the technological progress. It all began when the iron weapons smashed the bronze ones, then there was the gunpowder, antibiotics, vaccines, bills, computers… the progress is constant. One invention enables to create a whole new branch, new market, new space for the growth. Computer, internet, telephone (a mobile phone), video, internet payments, social networks, games and game economies, …
Bitcoin is currency of people who appreciate their liberty. Why should I use a bank and wait for the money transfer to abroad for few days if I do not need to – the standard bitcoin payment is performed in 10 minutes (or in couple of hours, tops). And why should a private entrepreneur pay the bank the fee of the amount of several percent for the thing that somebody pays with a card in their store when it is not necessary to pay this fee? The difference is large while the fee of bitcoin payment is one per cent and the fee for a card payment is from two to five per cent; the difference is paid by either the trader or by you – the result, however, always changes the prize of the final product for the end user. The potential of companies which are based on the usage of blockchain technology belongs to the area of FintTech; the payment gate based on the usage of btc/CZK alone may profit tens or hundreds of millions annually within four years and save their users billions as well – in the Czech Republic alone. It is possible to name Alza store as an example and its bitcoin acceptance.
Thanks to the fact that bitcoin and the majority of cryptocurrencies are de-centralized, they are easily transferred and some other cryptocurrencies enable more anonymity that the bitcoin. At the same time, it provides people a support in countries where the financial crisis is currently under way, e.g. in Cyprus (in the past) or in Argentina (now).
Apart from working as a currency, bitcoin also works as a stock index, or an index of blockchain economy.
Index analogy: this week, we came across some news that the indexes have reached new historic minimum… These indexes will (in a long-term period) be growing all the time since they are based on stock of individual companies or commodities – therefore, you can look at an index and you can select an index according to its focus, e.g. US Tech 100, S&P 500, Dow Jones, etc.
A very simplified example of how the index works: it is nothing else than just a numeral expression of how was a specific field doing. It is really simple: you have a successful company which has an opportunity to get a foreign contract in the neighbouring country. When the company is successful, it issues bonds (or shares) by which it gets additional capital into the company which might be spent on machinery or workforce which might be used for the foreign contract. If it is successful, the company is growing and by that the shares are growing as well. Vltava Found published an article which describes the way how to calculate an index.
The enter of a new company onto the stock exchange IPO is the first public offering of the shares. Mostly, it is accompanied by a rather high volatility when the investors speculate of how much and if they trust this company at all. As an investor, you know who found this company, who is in its management and what are their experience – i.e. all of the strategic sources (including the annual accounts). It is really up to you if you just accept the value of the share or if you speculate about its buy or drop.
In the case of bitcoin, everything is done at once. Every ten minutes, one block is mined and the reward is divided. At the same time (every ten minutes), the transactions from those ten minutes are performed (since the new block is mined) – from and to anywhere, rather anonymously.
The first valuation of bitcoin was 10000btc for two pizzas. Afterwards, the support of WikiLeaks which were cut from financial means, the Silkroad market (yes, bitcoin was used and might be used to buy illegal goods, however, the proportion of bitcoin grey economy and grey economy based on crowns or dollars is totally minority). The first well- known exchange office was Mt. Gox. Since then, bitcoin and the related community walked a long way and a tremendous job was done. After the fall of Mt. Gox, some stock markets asked for a safety audits, new services emerged as well as new ways of security. The situation and happenings in Mt. Gox would be enough for a whole new article.
Every crisis and every problem is being solved. The resolution was always found. However, the more you restrict the freedom (in order to ensure safety due to the threat of terrorism), the bigger is (at least among some people) the need to be really independent. Bitcoin and cryptocurrencies resolve this problem. Both bitcoin and blockchain are usable in currently popular Smart Cities while they might be used as elements of e-government (as an instrument in the elections, to pay the fees even for the public transport and parking). I think that it is great for a city to save half of the fee from SMS-based tickets.
I am thirty and I know that the thing that is called “pension” would be in thirty years rather a pittance. However, the situation with a bitcoin is different. It does not belong to any government, it The thing I was talking about for several years to happen really happened – some of the stock market companies already trade with bitcoin regularly while some financial derivatives are being prepared (e.g. CFD). There is no way back.
does not belong to anybody and to everybody at the same time. The reason why I consider it both a currency and an index of cryptocurrencies is that if you want to buy e.g. ethereum or monero, in 90 percent you would buy it for bitcoins.
Bitcoin is considered a standard in the field of cryptocurrencies. European Court of Justice recognized bitcoin and other cryptocurrencies as currencies, In Japan solely, 250,000 businessman accept bitcoin, the UK and Russian federation are interested in the usage of blockchain technologies. The Winklevoss brothers showed a possibility that despite the fact that it is not possible to found a fund in the USA, it is possible to found it in other countries. In the Czech Republic, it is possible to use bitcoin to buy food, accommodation, experiences, you can pay for the internet and we will see, maybe in some time, bitcoin might be used for common payments and bitcoin investments will be a reality.
