Bitcoin as Money
When bitcoin launched back in 2009 and the cost increased over the first 5 years (from $0 to $1145, with a 2 year decline back down to $200) , most people forget that bitcoin wasn’t really (and isn’t really) money, yet. You could buy illegal items on the silk road, you could gamble online from countries with laws outlawing it, you could transfer the “digital store of value” from China to America, anywhere with internet access without anyones permission as promised. But the amount of people using/valuing/requiring bitcoin at the time was few and far between.
The same is true after the next 5 years of bitcoins existence, in the $1000 – $10,000 area of bitcoins life. Holders of bitcoin today still need a reason (or use) for bitcoin, rather than expecting to use the magical internet money immediately after purchasing it. The ability to “easily” use bitcoin as MONEY is still over 5 years, most likely more than 10 years away.
Bitcoin itself is still used as a “store of value” by many people and still speculated on by many people.
Primary uses we have seen and used ourselves with bitcoin:
1. As a “store of value.” Transfer any national currency into bitcoin and sell that bitcoin in a different country for another currency at a later date
The foreign exchange market requires holders of USD, Euros, Pounds, Yuan to buy and sell their currencies for the current “rate” plus fees. Foreign exchanges (similar to the bitcoin exchanges) are the biggest rent seekers in finance, Trillions move through forex markets daily because this rent seeking behaviour is applauded in finance.
BISQ is one of the few non-rent seeking exchanges for buying bitcoin. Since they’ve launched a platform to connect the users and not have access to users funds, the decentralized bitcoin exchange is one of the most applauded ones in the space.
If a bunch of bitcoiners can offer bitcoin (and “crypto”) for next to nothing globally, how long will banks be able to have those big buildings that have ATM’s people walk to withdraw funds in every city? It’s all digital people! We aren’t going back into analog with money, just like we didn’t with television, movies, radio or audio.
2. Sending funds internationally without bank fees or permission
International students in America and Canada, that have family in China or India have always had capital control issues with receiving or sending funds back and forth. The Asia banking system and the Western banking system do not connect easily or cheaply. Look at Western Union and similar money transfer services that are known to charge high fees for examples of payment transfer services that over going to be disrupted by technology.
Moving digital “data” costs ZERO now, look at popular file sharing sites for proof of this, the fact they charge people for this and call it a service will be laughed at in the future.
Bitcoin sends to a receivers bitcoin address based on two people having internet access. Not your nationality, age, financial situation, spending habits, debt or anything other than having a bitcoin wallet, finding your “receive address” and giving it to the person sending you bitcoin. From their bitcoin address they will “send” to your address and the rest is internet money magic.
3. Speculation in the First New Asset Class in a Century
Cash, Stocks, Bonds, Real Estate, Futures, Commodities have been available to people for decades, with the exception of gold and precious metal, all existing assets were created by the financial industry with the approval of different governments.
Bitcoin was created as an alternative to the existing financial industry by cypherpunks, that wanted a fair way to create and distribute digital money. As “money” bitcoin is slow because if the mining protocol making mined bitcoin secure and fair to everyone on the protocol.
All miners try to solve math problems, and confirm which miner solved the increasingly difficult math problem every 10 minutes, when the transfers of everyones bitcoin is done. The mining requires “work” to acquire some of the fixed supply of bitcoin over 100 years. Central banks just add a few zeros if they want to create more digital money in a national currency.
There is no way to audit a national banks money supply, the famous “bitcoin sign guy” was at the Feds meeting with Congress not to audit the Fed. We like bitcoin sign guy.
Bitcoin is an open source protocol, anyone can check the source code or blockchain for transactions to see what is going on with certain wallets or bitcoin transfers. This is also why the slow, secure transactions through mining are required. Nobody has ever had a way to do open source digital money, to make it “faster” could remove some of the features bitcoin holders value.
4. Selling Bitcoin to Friends
If they can’t easily transact with an anonymous exchange to buy bitcoin, sometimes we have to take our friends cash and send them some bitcoin for the first time. These aren’t terrible ways to use bitcoin as most of us have a hodl stack after a certain amount of time and a “play” stack after the price has become irrelevant. Its best to help out the new people and make sure nobody gets ripped off by the few dodgy sites that pop up now and then.
Bitcoin as Money Today
The second layers available currently to bitcoin holders are Lightning Network and Liquid, both have different technology, developers and trade offs to use these with bitcoin as “faster” digital money. We aren’t even adding details about what they are because frankly we don’t care about faster payments with bitcoin now or 5 years from now.
We have paid for translated content on this site with bitcoin to people in China, South America, Mexico and Germany. Translators in these countries received $100 – $500 in bitcoin for various projects requiring different translations with ZERO problems.
Nobody complained that it took a day or that they didn’t receive money (it is on the blockchain after all) and everyone involved likes the internet money we all call bitcoin.
In 10 years, we believe there will be 4 – 5 solutions for faster payments with bitcoin that people have more options, bitcoin in its current form does exactly what we want it to do today.