The most valuable aspect of bitcoin may be the concept behind it. Bitcoin was invented by developer Satoshi Nakamoto. Instead, then trying to design a completely new payment method to overthrow the way we all pay for things online, Satoshi saw several problems with existing payment systems and wanted to address them.
The concept of bitcoin is rather simple to explain: During the financial crisis of 2008, people from all over the world felt its unbearable economic effects. And at the time of this writing (early 2016), many are still feeling the effects in terms of the declining value of their fiat currency (the currency approved by a country’s government). As the global financial system tottered on the brink of collapse, many central banks engaged in quantitative easing or in simple terms, turned on the printing presses. Central banks flooded the markets with liquidity and slashed interest rates to near-zero to avoid a repeat of the Great Depression of the 1930s.
The effect of this was larger-scale fluctuations in fiat currencies and what has since been termed currency wars — a race to competitively diminish so that an economy can become more viable simply by its commodities and services being cheaper than those of its neighbors and global challenges. The response of central banks around the world was the same as it always has been when these things happen: Governments had to bail out impacted banks and they printed extra money, which further devalued the existing money supply.
In bailing out the banks, there was a net transfer of debt to the public squeeze, thus increasing future taxpayer obligations. This created a sense of social inequality among some sectors. Apart from that, no one knows what the long-term effects of quantitative reduction will be. Maybe price increases at some point in the future and a further devaluation of those fiat currencies involved in the schemes? What seemed clear is that central bankers, supposedly acting unbiased of governments, were taking many economies into the unknown and were ready to devalue their fiat currencies at will just to keep the steering wheel changing. In doing so, they bailed out the very same institutions and bankers whose careless behavior had brought about this crisis in the first place. The only other option would have been to let the full system fail and be purged, as for example happened in Iceland. That country fail to pay on its debt and suffered great economic turmoil in the aftershock of that incident.
Therein lies the genesis of bitcoin: a decentralized financial system is taken out of the hands of a little elite global judgment-makers. Satoshi Nakamoto decided it was time for a new monetary system, one so separate from the current financial infrastructure that you could even call it a disrupting force. Whether or not bitcoin was ever intended to completely replace the financial infrastructure continues undistinguishable, but we do know that multiple banks are looking at the technology that powers bitcoin because they see its potential and want to adopt this technological power for their own use. They are free to do so, of course, as the core group bitcoin technology — known as a blockchain —was open resource from day one for everybody to see. Creating bitcoin as open source meant that anyone was allowed to come up with their own developments and build platforms on top of it. Viewed from this angle, bitcoin could be said to have a driving belief. It is about so much more than just using the linked coin as a payment method. It is about using the underlying technology and finding its full potential over time. How you choose to use that technology is totally up to you. It can be adjusted to fit nearly any financial need you can realize. All you really need to do is be open to the technology itself. Even though you may not understand the entire concept from the start, just keep an open mind. Let’s face it: The crossing of finance and technology is plagued with problems.
All of us have been impacted by the banking crises of the 21st century, and quite a few countries are still trying to recover from that financial fiasco. Bitcoin developer Satoshi Nakamoto was a victim of this misconduct by central banks and thought long and hard to come up with a proposed solution. The mainstream financial infrastructure is imperfect, and a viable alternative is more than welcome. Whether or not that different will be bitcoin remains to be seen.
When Satoshi Nakamoto came up with the idea of bitcoin, one important factor was destined to play a major role: decentralization. Decentralization means we are all part of the bitcoin ecology, and we all contribute to it in our own ways. Rather than depend on a government, bank, or intermediary, bitcoin belongs to everyone, in a system called peer-to-peer, and we all make up the bitcoin network. Without individual users, there is no bitcoin. The more people embrace bitcoin, the best it works. Bitcoin needs an ever-expanding society that aggressively uses bitcoin as a payment method, either by buying commodities and services with bitcoins or offering goods and services in a swap for bitcoins?
Due to the digital currency’s free-market nature, anyone in the world can set up their own business and receive bitcoin payments in a matter of minutes. Plus, existing business owners can offer bitcoin as a different payment method, with the potential to grow their customer base on a global scale. It’s easy to do your bitcoin and get involved.