How Bitcoin Beats USD & Other Currencies
Bitcoin is a digital currency. But what makes it special?
1. Finite Supply
Unlike a normal currency where increasing supply is the norm and inflation is unavoidable, the total supply of Bitcoins will not exceed 21 million which makes it deflationary and a good store of value.
2. Distributed Ledger
Unlike a normal currency where central and commercial banks keep an account of who can spend how much money, there is no central authority keeping record. Instead, a record of all transactions is kept with every user. Some users choose to act as accountants (they are called miners), and they update “blocks” for every new set of transactions. These blocks create an immutable record of past transactions.
3. Value Transfer
Unlike a normal currency where 3rd parties (banks etc) transfer money between members, “value” is transferred directly between users. The miners (accountants) update the blockchain to ensure a user does not send more Bitcoins than they own. Bitcoin transfers are final and non-reversible creating an enormous level of trust on the receiver side. As a sender, you have to ensure you’re sending money to the right address to not lose your bitcoins.
4. Custody & Access
While normal currencies are dependent on a 3rd party for verifying their existence and are held with that entity, the blockchain keeps a record of all transactions ensuring that the right amount is connected to the right “public address”. To access these funds, you use a “private key” — think of the public address as your “email address” and the private key as your “password”.
5. True Digital & Global
While normal currencies “appear” to be digital, they require a massive infrastructure at the backend for a transaction to be processed. Crossborder transactions, when possible, have even higher conversion and transfer costs. Bitcoin is truly digital, global and transaction costs are negligible.
You can own Bitcoins and receive payments without revealing your identity. Your public address is not connected to your personal information. While Bitcoin is digital, you can spend it like cash.
Deflationary store of value, truly digital, global and a new asset-class underpinning the future of money — that’s Bitcoin.