A GLANCE IN BITCOIN WONDERLAND
Marco Caviola, Crypto Trader
Date of Publication: 22/10/2022
From its birth back in 2008 Bitcoin is of use more as a speculative asset or as a store of value often recalled digital gold. But what are the fundamentals? What is the intrinsic value? Why do people think it is harmful for the environment? In this article we are going to discuss all these issues.
A key for freedom
Bitcoin appeared as an instrument of freedom. Freedom to detain wealth without anyone that can confiscate it. Freedom to transfer such value at once around the world without third parties that can freeze your bank account and censor transactions. Thus, you decide what you can do with your money and what not. Freedom from the wicked monetary policies of those countries that whip savings of their citizens in a battle of hyperinflation. During the Russian war, Ukraine permitted them to send donations in crypto. The result was mind-blowing: tens of Millions in counter value were sent from all over the globe with almost instant reception. No currency exchange, no reversed transactions, no working days to be waited for official authorization and no commission of various intermediates. All the world had the possibility to participate concretely including the citizens of a third world country who doesn’t have access to banking services.
A secure Protocol
In Canada, during the pandemic crisis another assault to individual freedom took place. Protests against government Covid counter measures, had their bank accounts frozen as for those, like friends or relatives, who made transfers to those accounts. This proves that financial circuits are always more used as an instrument of control. A good example is the ejection of Iran from the SWIFT system. This was sanctioned by the USA, which disrupted the Iranian market with foreign financial institutions as they could not amass Iran crude oil industry. For these reasons it is vital to have an alternative solution that enables us to rescue from the monopolised financial systems.
However, Bitcoin is a powerful instrument which if fallen into wrong hands may foster illegal activities. For this reason, it is fundamental that regulations have to take action accordingly, minimising evil and criminal use. In fact, there is a need to maintain the privacy and the rights of users in good faith. In this case, Bitcoin’s infrastructure is transparent and immutable, and with help with special software can trace all movements performed. For example, a report showed that the number of transactions related to criminal use on all transactions on the Bitcoin network in 2021 is 0.15%. Moreover, the energy consumption of Bitcoin mining is sustainable. Its power usage at the world level is 250 TWh equal to 0.16% of the worldwide energy produced of which 58% comes from renewable sources.
What blockchain technology exploits is to store shared memory of transactions. This is achieved not by people but by highly sophisticated devices, so called “nodes”, supported by a public ledger. Indeed, these provide their computing power to elaborate and verify and then archive every single transaction, which ultimately are rewarded in Bitcoin for their work. That’s where the extraordinary is. The blockchain enables me to send money in a few instants when I want and without an intermediary. No middle identity will have to control the accuracy of the transaction again because in its place any one of these nodes can do it connected to the blockchain. This means taking away power from one central point and redistributing it to the community who operates in the blockchain. Thus, blockchain removes institutions from the flow of money, at the same time relocating the money property to people who own a portion of that blockchain, Bitcoin.
In the end, money was the first and the greatest winner of history for which the worst wars were waged, and wide-ranging economic crises came up. On the other hand, it permitted billions of people to cooperate through exchanges. However, money has no intrinsic value and as you might know are no longer backed by any precious material. Money has value because the individual believes they have. Thus, trust is the engine that moves everything and makes it possible. Therefore, money isn’t necessarily a material reality such as the cash you have in your wallet but an invention of our collective imagination in which everyone places our trust. This doesn’t mean that the future of money might be Bitcoin, but you can agree with me that today the financial system is losing the cornerstone, people’s trust.
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Team, C. (2022, May 20). Crypto Crime Trends for 2022: Illicit Transaction Activity Reaches All-Time High in Value, All-Time Low in Share of All Cryptocurrency Activity. Chainalysis. Retrieved from: https://blog.chainalysis.com/reports/2022-crypto-crime-report-introduction/
Kemp, B., Samaties, P., Sanaulla, F., Vaughan, C., Vaughan, C., Samaties, P., Kemp, B., & Sanaulla, F. (2022, April 4). How crypto mining will transform the energy industry. Roland Berger. Retrived from: https://www.rolandberger.com/en/Insights/Publications/How-crypto-mining-will-transform-the-energy-industry.html