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What Problems Did Bitcoin Solve?

It's not just the technology that increases numbers.

Ilustrasi Bitcoin
Ilustrasi Bitcoin (Foto: Shutterstock/)

Bitcoin is often said to be just a speculative asset with no real value or use case.

You can argue that quantum physics is a useless subject, but what do you know? increase.

Everyone thinks they are money experts. However, the reality is very different. Making and spending money is one thing, and understanding the basics of monetary policy is another.

To understand Bitcoin, you must first understand money. Next, you should be able to understand the strengths and weaknesses of your current system and what you can do to improve it. Here are some of the problems that

Bitcoin solved brilliantly.

1 Payment Networks

Building a global payment network is an expensive intermediary business that only giants like Visa and Mastercard can tackle.

Bitcoin has achieved this with a fraction of the infrastructure, cost and staff while far exceeding what banks have done.

How can you do that?

Instead of building a trust-based network that is costly and unreliable, Bitcoin uses a transparent, immutable and trusted protocol. Anyone can access the blockchain from any device to see all transactions that have occurred and verify the integrity of the transactions.

Instead of a centralized database with high security and maintenance costs, the Bitcoin network relies on a decentralized protocol where nodes and miners verify each transaction more securely and efficiently.

Anyone, anywhere can receive and send payments over the phone. This is a big deal and a problem that no one has remotely solved.

2. Storing value

There are many ways to store value, some of which are excellent.

The worst would be legal tender.

Inflationary currencies can print endlessly, depreciate rapidly, and eventually collapse. It's the opposite of value.

Everyone is aware of this and that is why most people invest in alternative assets. Real estate, gold, stocks and bonds are the typical options, but Bitcoin offers superior qualities in many aspects.

Scarcity is important and it is one of the superior qualities of gold, The 21st century requires more than scarcity.

Bitcoin is not only scarce, but  also predictable thanks to its halving, which occurs every four years. Easier to store, send, review and back up than  yellow bricks. You can hide across borders with just  a few words. It has an inelastic and predictable supply.

For all these reasons, it can be argued that there is no easier and more effective way to store value than Bitcoin. Naysayers will be quick to argue that this is too volatile, but since when did upward volatility become a problem?

Amazon, gold, and even real estate can be volatile, but these He is one of the best investments ever made.

Adoption will continue to grow as the market finds more use cases. With such  limited supply, the only way out is up. Buy bitcoin, put it in your cold wallet, forget about it and wait 10 years. that's it. You don't need to take out a mortgage, find a tenant, find a safe place for your gold, or become a trading expert.

No other store of value is maintenance free and extremely secure.

3. Double spending

The same money cannot be spent twice when used as a reliable medium of exchange. 

Cash solves this problem very easily. When you pay, you part with the cash and can't repay it back.Maybe this is one of the things Fiat is good at.

Banks and electronic payment systems rely on  central databases to track the flow of funds.

However, all attempts to solve this problem in the digital world failed until Satoshi Nakamoto put the pieces together. The solution is born out of a decentralized network and  public ledger known as  blockchain. All transactions are immutably recorded  and verified by  miners without the need for expensive centralized structures with all  security loopholes.

Bank money may be spent twice by him due to human error or system error. Bitcoin can only be used once.

4. Digital Scarcity

In a world of free and infinite copies of everything, it is difficult to reconstruct digital scarcity.

But this is the solution to the scarcity of digital assets.

How can you do that?

It's too easy to copy a song or  movie millions of times and send it anywhere for free. Hence the piracy problem.

Cannot copy bitcoin. The protocol stipulates that there can only be 21 million people, and that is fixed. But the reason  Bitcoin is always in short supply is the verification process run by a network of thousands of miners who have tracked each coin from the beginning to ensure the integrity of the system.

5. Corruption

Centralized systems controlled by humans are or are corrupting. It's just human nature.

Bitcoin is an automated protocol based on automatic verification by machines, not humans, and operated by consensus.

Blockchain is a public ledger that permanently stores all transactions  for everyone to see. Nothing is as transparent as Bitcoin, and transparency is the scammer's kryptonite.

Can you imagine a world without corrupt politicians and bankers?

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