Bitcoin

Bitcoin is a decentralized digital currency that exists on the Bitcoin blockchain.

Key innovations of Bitcoin are:

• Using a distributed peer-to-peer database to store financial assets and to protect them via the cryptographic algorithms
• Solving the “trust issue”, where some of the shared database writers would like to modify the history of the data – that’s not possible

The bitcoin blockchain can be compared to a general ledger, where all transactions between the addresses are cryptographically secured and immutable.

Key use cases of Bitcoin are:

• Payments – doing payments from any Bitcoin wallet to any other blockchain address
• Store of Value or “digital gold”.

Gold has served for the last 5’000 years as a store of value. In the last 50 years, the central bankers have tried to discredit the store of value function of the gold. Gold has been called economic “relict” or Warren Buffet declared having gold pointless because gold does not pay any dividends or interest. It seems that the critics of gold have missed the last 5’000 years of history.

Bitcoin is digital gold, it has the same store of value and payments properties as physical gold. But, as it exists in the digital form only, then this adds much easier handling of Bitcoin versus the gold.

A monetary system has two parts – base-money, in rather a stable amount, and credit-money, which amount is elastic and fluctuating up and down in alignment with the economic activity.

The issue in our current monetary system is that the base-money, which should be un-manipulatable, is continuously issued in significant quantities by the central banks. The amount of credit-money, which should be aligned with economic activity, is growing much faster than the economic activity. This leads to exponential asset price inflation and continuous losses for the middle class.

Gold has served for 5’000 years as a base-money. Bitcoin has all capabilities to take over this role of gold and to become a new un-manipulatable base-money.