Why is Bitcoin Important?

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Why is Bitcoin Important?

Overview

For enthusiasts, Bitcoin is the holy grail of the financial world. A new era, a new Internet, a new way to tackle the monopolies and the major corporations. For them, Bitcoin is so important that its value has soared and its user base is enormous. They believe it is the future and will spell an end to the control and corruption of major financial institutions.

But is this true? And why does Bitcoin matter?

Let’s take a look.

Decentralization

The main thing that Bitcoin has brought to the world is decentralization. This is the concept that currency can exist. Transactions can occur without the need for a central controlling authority such as a bank. This is important because banks control not just transaction speeds, but fees and even actual ownership. Make no mistake: if your bank collapses, you could end up losing your money. If a bank gets hacked, it’s the same result.

With Bitcoin and other cryptocurrencies, this isn’t the case. With a distributed ledger, so many live copies exist in so many different locations that it is almost impossible to hack or alter records. This means that your money is safe as long as you uphold your end of the bargain and keep your private key safe.

The other aspect to this is that there is no need for these large organizations to request and store your personal data. With a distributed ledger, your identity is your own. The ledger stores record of transactions, but there is no need to connect them to your identity. Anonymity is valued these days because of the way data is used so obtrusively, but the Internet has also brought about a new wave of digital identity theft. Bitcoin – and by extension, blockchain – could be the answer.

Bitcoin: the world without borders

Traditional banking systems are somewhat restricted by laws governing borders and difficulties around certain types of transaction. With Bitcoin, as long as you have an Internet connection, you can send and receive money almost instantaneously. Bitcoin doesn’t have borders, it doesn’t recognize the political impositions of financial sanctions and it doesn’t take days off.

The prospect of a refined cryptocurrency that functions well enough to be declared a constant model is very real and Bitcoin could be that currency. It has the reach, the power, and the backing to succeed in this regard. At the moment, developers are still working on improving Bitcoin all the time. But a few hard forks down the line and we could be at a stage at which governments start to show real issues.

It is possible that the future could see a global, digital currency that surpasses borders and politics. This would be an enormous moment for globalization and would have massive implications for the way in which the entire financial system works. It could also mean the end of traditional banking – which is part of the reason that major financial institutions and political superpowers are so wary of it.

It goes further than just currency, though. Bitcoin is not just money. It is also an underlying blockchain that has already been developed to such an extent with newer cryptocurrencies like Ethereum, that it has limitless potential applications.

Blockchain

This is the revolution that Bitcoin started and the main reason that it is so important. It isn’t the currency itself; it’s what it represents and what it has brought to the world. Distributed ledger technology has incredible potential. It is faster, cheaper and more secure than traditional, centralized models. It also opens up the possibility of running applications that sit on a blockchain – decentralized applications such as those that run on Ethereum. Suddenly, all manner of immutable record keeping is possible. The future could see an end to supply chain disruption, vote rigging, fraud, and identity theft; all thanks to the underlying technology upon which was Bitcoin was created just a decade ago.

Whether or not you’re a Bitcoin fan, the one certainty is that it has grown enormously in a short space of time. It’s important because it represents a new era – just like the Internet once did. But it’s the potential of its underlying technology that could really change the world and is the main reason that there is a real need for the general public to become better educated, in order to avoid being left behind as the world enters a new technological era.