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Becoming a Bitcoiner - Why Bitcoin matters? | How Bitcoin Works

Becoming a Bitcoiner – Why Bitcoin matters?

Already in 1999, the legendary economist Milton Friedman predicted Bitcoin:

One thing that’s missing but will soon be developed is a reliable e-cash. A method whereby on the Internet you can transfer funds from A to B without A knowing B or B knowing A. The way I can take a $20 bill and hand it over to you, and you may get that without knowing who I am.

Milton Friedman

However, Bitcoin has been created 10 years later, in 2009.

Why is Bitcoin special?

In a nutshell: Bitcoin at its most fundamental level is a revolutionary breakthrough in human history, in new money development, and computer science. It is the result of decades of research in cryptography. And it’s the most natural next step in the development of a digital store of value.

Bitcoin opens huge new opportunities. It gives humanity, for the first time, a possibility for an internet user to transfer value (digital money) to another internet user. This without a third party involved (banks). Such Bitcoin transfer is guaranteed by the blockchain network to be safe and secure. Everyone can confirm that the transfer has taken place, and nobody can stop it or challenge the legitimacy of the transfer.

Why Bitcoin has value?

Bitcoin is a digital currency, whose value is based directly on 2 potential use cases: 1) store of value that cannot be diluted by governments and 2) use as digital money/value transfer. The money transfer cannot be stopped, does not require banks or governments approval.

Indirectly the value of Bitcoin is based as well on speculation on the potential future value and trading.

Bitcoin price significantly relies on the network effect of people, traders, investors, companies accepting it as the digital money standard. But like all new technology, Bitcoin used to be very cheap (Only a few Cents and below 1 USD) at the very beginning. Today Bitcoin is trading around 10.000 USD and it proves again, that new technology is not worth much until it’s worth a lot.

Why Bitcoin matters and how it protects your wealth from dilution

Bitcoin like every other store of value (e.g. Gold) to maintain its value, it must be scarce. Above all, the total amount of Bitcoin that will ever exist is limited to 21 million BTC. Nobody can create more.  

Fiat money (like US Dollar, Euro, Yen, etc) can be printed and created unlimitedly. Governments and the Central banks of this world are “printing” huge quantities of new incremental money every day. Consequently, the US Dollar is loosing dramatically value (purchase power).

See the chart below. The purchasing power of 1 USD in the year 1913 is equal to roughly 0.04 USD today (below 4 cents) today.

why bitcoin matters - how bitcoin works - purchasing power of us dollar

Based on its scarcity, Bitcoin behaves like digital gold. You cannot make more of it.

Bitcoin matters for the world’s money development, because it’s on a path to become a serious store of value (hard money). Secure and decentralized, it has the best chance to become a new “gold standard”.

Due to its scarcity and limited supply, Bitcoin will be dis-inflationary. In other words, it will not lose purchasing power over time. Today only Gold can offer you this protection.

Bitcoin is the hardest money ever invented. Growth in its value cannot possibly increase its supply. It can only make the network more secure and immune to attack.

Saifedean Ammous author of The Bitcoin Standard

Bitcoin matters because your money should be really yours

Decentralization makes Bitcoin to a self-sovereign unit. Because the money you own today is only yours if you hold it cash in your pocket. However, the government can devalue it (see above). If you hold money in your bank account, credit card, in stocks, bonds, etc. it is not really yours.

Bitcoin is always yours and never belongs to a bank or a government. Therefore most people underestimate how important this concept is until they understand how governments or FED’s are diluting their wealth or seize/block accounts.

Become a Bitcoiner

Just start to invest in some Bitcoin or start to earn some. Don’t waste your time with “shitcoins” or “altcoins”. They do not have the network effect of Bitcoin, the history, the security, and the scarce monetary policy.

To be a Bitcoiner doesn’t mean you have to become a Bitcoin maximalist. Go with a balanced approach and learn everything you can about Bitcoin. Chances are however very big, that you are going to lose value and real money with Altcoins / Shitcoins in comparison to Bitcoin.