Have you heard about it?
Most people have heard the word, yet don’t have a clue what it is. That’s why I’m writing this.
At this point, wrapping your head around Bitcoin is like trying to wrap your head around what the internet is in 1994.
And that’s actually a good comparison, because Bitcoin can be concisely described as “the internet of money.”
I’m going to keep this article as simple as possible. And I’ll admit that I’ve barely scratched the surface with my own knowledge. The point here is to BEGIN to understand Bitcoin and cryptocurrencies, as well as the profound impact they are (and will be) making on the world.
To begin to understand all of this and its implications, you need to first familiarize yourself with a few key terms…
What is Bitcoin?
Bitcoin is a digital currency.
But it’s also much more than just currency. It’s really more of a platform or a protocol than a traditional currency as we know it.
Bitcoin really is the “internet of money.”
That phrase was coined by Andreas Antonopoulos, who goes on to explain Bitcoin as, “The concept of decentralization applied to the human communication of value.”
Bitcoin is one of many digital currencies, known as cryptocurrencies.
What is Cryptocurrency?
Wikipedia describes cryptocurrency as, “A digital asset designed to work as a medium of exchange using cryptography to secure the transactions and to control the creation of additional units of the currency.”
So basically, it’s a digital currency that is built upon computer-programming logic that automatically logs and secures transactions through cryptography (secret encryption).
What is Blockchain?
The underlying logic of cryptocurrency is known as blockchain. Blockchain is defined as, “A continuously growing list of records, called blocks, which are linked and secured using cryptography.”
Nick Szabo (aka The Quiet Master of Cryptocurrency) compares blockchain technology to a fly being stuck in amber. The fly getting stuck is the transaction. Then, over time, more and more layers of amber solidify. This is how blockchain works. It solidifies more and more layers of metaphorical amber around transactions, making them more and more concrete and unchangeable over time.
Don’t worry. I know all of this can be overwhelming.
But the point isn’t to know everything. The point is to START TO UNDERSTAND these concepts.
Bitcoin and cryptocurrency are the kind of things that become clearer and clearer the deeper you go, yet always maintains some level of mystery (like the internet).
So now that you are beginning to understand what they are, here are some of the implications of these revolutionary technologies…
5 Ways Bitcoin and Other Cryptocurrencies are Changing the World
1. Decentralization of Power
With cryptocurrency, transactions are peer-to-peer. There is no need for middle men. There is no need for centralized institutions to validate transactions. Central institutions inevitably lead to power accumulation and more and more control.
This is all-too-obvious in our world today. I think everyone can agree that our current centralized financial system is a rigged game that exploits the majority of the population.
Whenever a central third-party becomes an arbiter of a system, that central third-party is in a position to control everything.
With our current monetary system, the central institutions make the rules. Everything has to go through them. This also means that these central institutions, who store everyone’s precious information, are massive “honey pots” for hackers. So they’re inevitably going to be hacked over and over again.
Decentralization spreads the risk and takes away the massive incentives for hackers. Cryptocurrencies are actually built to be used via the internet, while traditional monetary systems aren’t.
Cryptocurrency is a peer to peer exchange of value. And with blockchain technology, everything is logged and validated, while maintaining personal anonymity through cryptography. This means that no centralized third-party is needed and everyone is on equal ground.
What the internet is doing in terms of democratizing information, cryptocurrency is doing in terms of democratizing currency.
2. Non-Authoritarian Currency
Democratization and decentralization naturally leads to more individual freedom. Cryptocurrency inherently gives you more choice. More choice in terms of what currency you want to use and how you want to use it.
Transactions with cryptocurrencies don’t need to go through an authority. JP Morgan can’t deny your purchase. Western Union can’t take 10% of the hard-earned income an immigrant is sending back home.
With cryptocurrency, you are the authority. We’re breaking away from the authoritarian mentality. All authoritarian systems are breaking down – school, work, money, religion – and giving way to new opportunities. Authoritarianism might have worked in the industrial age, but it sure as hell doesn’t work in the information age.
Privacy is a major advantage of cryptocurrency. The underlying cryptography creates privacy for individuals.
With cryptocurrency, you don’t have all of your transactions logged by central institutions. With fiat currency, every transaction you make is tracked (by those central institutions) and traceable to you. This means that if you’re under a totalitarian government, they can shut down your only way of buying food if they believe you’ve spent money on the “wrong thing” (donating to the wrong organization, spending money at an “unauthorized” place…etc.).
Privacy is more than having or not having something to hide. It’s another safeguard against power accumulation and tyrannical institutions.
4. Global Connectivity
Cryptocurrency is the internet of money. It is connecting everyone globally and making borders irrelevant (they’re imaginary lines anyway).
Cryptocurrencies are all global currencies, free of centralized control. And there won’t be one single cryptocurrency that everyone uses. People will always have the option to use what they want, or even to create their own coin. So essentially, there will be an unlimited number of cryptocurrencies available to use for global transactions.
And people can choose which currency they use. Some might be better for larger transactions. Some for smaller. Some better for services. Some better for tangible goods. Some better for geeks. Some better for sports fans. The point is that cryptocurrency allows for options that are inconceivable under our current monetary systems.
And without centralized control, no New World Order type of conspiracy scenario can happen. There will be no one world currency controlled by a small group because cryptocurrency is inherently based upon the decentralization of power.
This creates an even playing field for all of humanity, as well as a way to dynamically exchange value in the most efficient way each individual sees fit.
5. More Freedom For Everyone
All of the above reasons point to this… More freedom.
Decentralization equals more freedom. The collapse of authoritarian systems equals more freedom. Privacy equals more freedom. And dynamic global connectivity equals more freedom.
Cryptocurrency cannot be regulated out of existence by banks or governments. Why? Because the technology already exists. The cat is already out of the bag. Once an idea exists, there’s no going back.
The only way to “stop” cryptocurrency transactions would be to shut down the whole internet. And that’s nearly impossible at this point. Plus, if we had that kind of technological collapse, no country’s monetary system would be able to function anyway.
What to Watch Out For
Though cryptocurrency is changing the world, it’s not all sunshine and rainbows. Like with every emerging technology, there are some things to be aware of…
Don’t bet the farm on one currency – Individual cryptocurrencies might not last (even Bitcoin). And some are still very speculative and relatively volatile (smaller and younger = more volatile). But cryptocurrency itself isn’t going anywhere. Since the technology exists, that means the cat is out of the bag. It can’t be contained.
Scams – Because this is a new space, there are cryptocurrencies coming out that aren’t legitimate. This is to be expected in any new area.
There are also scams involving buying and storing cryptocurrency. Do your due diligence before making any transactions. And as cryptocurrency matures, the general population will adapt and become savvy enough to spot the scams from a mile away. It’s like what we’ve seen with online scams. Back in the day, people would fall for the email scams and click spammy pop-ups. Now, no one falls for that stuff. Because we’ve adapted.
And adaptation is what us humans are great at. Change is the only constant. So embrace it and work with it as it comes.
I hope this article gave you an idea of what bitcoin and cryptocurrencies are, and the world-changing potential of these technologies.
Again, this is a start, not a definitive guide.
I highly recommend looking into this stuff yourself. Because it really is changing the world as we know it.
– Stevie P!
Want To Get Started Investing In Cryptocurrency?
The best place to get your feet wet is Coinbase.
It makes buying Bitcoin really easy and it’s where I started.
Here’s the link: Coinbase