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What is the purpose of Bitcoin? – Blockchain homeland

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If you have been active in the cryptocurrency market, you must have thought about the question, what was the purpose of creating Bitcoin? In response to this question, Satoshi Nakamoto stated in 2008 with the publication of the Bitcoin White Paper that the problem with all fiat currencies is that people must trust central banks to use them; But the history of banks’ performance shows that trusting them has not had good results and has always caused the value of money to decrease. Indeed The main purpose of creating Bitcoin It has been to provide a way to transfer money over the internet without the need for control by an intermediary entity and to preserve the value of money. In this article we will discuss that What is the purpose of Bitcoin?, how it is achieved and what challenges are associated with it. Stay with the country of blockchain.

Important points of the article:
• The main purpose of creating Bitcoin is to show the ineffectiveness of banks in controlling inflation.
• The ease of storing Bitcoin is one of the most important factors for its greater use in order to carry out global exchanges.
Among the goals of Bitcoin, we can mention the elimination of intermediaries, transfer of value, preservation of value, change in monetary policies, use in global transactions, use in everyday exchanges and ease of storage.

What is Bitcoin?

The reasons for the improvement of the crypto market and the price of Bitcoin in recent days. Bitcoin BTC price

Before The purpose of Bitcoin to examine it, we must get to know what it is and how it works. Simply put, Bitcoin is a peer-to-peer (P2P) digital currency. This blockchain network operates without any central control or supervision by banks and governments, and transactions are carried out by users. One of the most important features of Bitcoin is its limited supply. The total supply of bitcoins is 21 million. New coins are mined by Fried Mining and given to miners as a reward.

What is the purpose of Bitcoin?

Bitcoin sidechains

At the time of mining the first Bitcoin block, Satoshi recorded this message The Times 03/Jan/2009 Chancellor on brink of second bailout for banks. This message referred to the Times newspaper news that was published 6 days before the production of the first Bitcoin block. In the news published in New York Times, it was stated that the representative of the Crown of England in the Parliament of this country has decided to inject money for the second time to solve the financial crisis of this country. Next, we will examine the goals of Bitcoin.

1. Removal of intermediaries

It can be said Bitcoin’s first goal It shows the inefficiency of central banks that can easily print money and cause inflation and loss of value of people’s assets. Also, since Bitcoin is not controlled by governments and central banks, they practically cannot access Bitcoin transactions and block them. Therefore, many actions such as sanctions, which governments use to try to control people, will not be possible.

2. value transfer

another one of Bitcoin goals Becoming a peer-to-peer way to transfer money. In fact, Bitcoin was supposed to be the first electronic money and an alternative payment system that would be anonymous and eliminate the need for third-party intervention. More than a decade has passed since the creation of the Bitcoin network, and the debatable issue is whether Bitcoin has been able to achieve its initial goal?

The Bitcoin network still suffers from scalability issues and high transaction fees, which is why many people believe that Bitcoin is more of a store of value than an alternative to cash. The Bitcoin network currently cannot process more than seven transactions per second. While the Visa Card network can process more than 24,000 transactions per second. For this reason, it is not possible for Bitcoin to become a global payment method at the moment.

3. value retention

As mentioned earlier, there will be a total of 21 million Bitcoin units. Since the value of an asset is directly proportional to its scarcity, the price of Bitcoin is expected to rise dramatically in the future. Therefore, it can be said that Bitcoin, in addition to being a method of payment, can also be used to store value at the same time.

Currently, gold is the most popular method of storing value. Many people consider Bitcoin to be a form of digital gold. The remarkable thing about these two assets is their price correlation. Looking at Bitcoin’s price history, one could argue that the world’s first digital currency has performed well as a store of value.

The price of Bitcoin was initially less than $1 and has slowly increased in value every year since its inception. In 2010, the price of Bitcoin could not even reach one dollar. In 2013, the price of BTC increased to $220, and by 2017, it reached the level of $20,000, and in 2021, its price reached more than $64,000. The current price of Bitcoin (February 3, 1401) is in the range of $23,000.

4. Changes in monetary policies

By providing a new financial payment system without the need for banking systems in the world, Bitcoin allows all people to enjoy a relative equality by playing a role in this network. In simpler terms, the Bitcoin network takes the concentration of power and wealth away from the rich and allows everyone to participate in the distribution of wealth.

Currently, the US dollar is known as the most powerful exchange currency around the world. For this reason, different policies of the United States will have a direct impact on the economy of other countries; But by using Bitcoin and other digital currencies, the traditional form of economy and money can be changed. In simpler words, with Bitcoin replacing the dollar, the economic decisions of one country will not affect all countries.

5. Use in global transactions

Despite Bitcoin’s constant volatility, it can be used for Conduct global exchanges used. Since it only takes one volt to store Bitcoin and it can be transferred 24/7, using Bitcoin is one of the easiest ways to transfer money in the world. Bitcoin holders do not need a bank account or a controlling third party to use it. Merchants can easily complete their transactions by paying minimal fees.

6. Use in everyday transactions

Currently, users can buy the goods and services they need from many different sites using BTC. They can also make purchases from local businesses in many countries using Bitcoin. Also, many countries around the world are regulating the cryptocurrency market to become a payment method. For example, El Salvador was the first country to recognize Bitcoin as legal tender in September 2021. The country’s president believes that Bitcoin will help 70% of El Salvador’s people who do not have access to proper banking.

But using Bitcoin has problems due to its high price fluctuations. For example, suppose the price of a coffee is 0.00034 Bitcoins on Tuesday and 0.000012 Bitcoins on Thursday, in this case both customers and retailers will have a hard time valuing their products. Considering the difficulty of pricing products based on Bitcoin and also considering the ease of use of current financial systems around the world, it seems unlikely that the use of Bitcoin can become one of the main payment methods.

7. Ease of storage

One of the important features of Bitcoin It is easy to maintain. All valuable goods such as gold, jewelry, etc. must be physically stored; But Bitcoin can be stored in a wallet and used without restrictions around the world when needed just by holding the wallet’s private key.

Next, we will compare the features of Bitcoin against gold and dollars.

Asset type gold Dollar Bitcoin
Legislation Down Top Down
Exchangeability Top Top Top
Usability Top Top Top
Ability to move medium Top Top
Durability Top medium Top
divisibility medium medium Top
security (fake) medium medium Top
Ability to exchange Down Top Top
security (total supply) medium Down Top
Decentralization Down Down Top
Programmable Down Down Top

FAQ

Questions and answers of the blockchain homeland
  • What is the purpose of Bitcoin?
    Bitcoin was born with the aim of eliminating middlemen and enabling peer-to-peer financial exchanges between people. Among the important goals of Bitcoin, we can mention things like taking power from banks and governments and handing it over to people around the world, maintaining privacy in transactions, transparency in transactions, maintaining the value of money and facilitating transactions in the world.
  • Is Bitcoin a form of money?
    Bitcoin has the basic characteristics of money, but economists and lawmakers are still not convinced that Bitcoin currently functions as money. The reason for this is that the number of transactions in the Bitcoin network is still low and most of the exchanges in the world are done with fiat currencies. Also, due to the limited supply of BTC and the high demand for it, it can be said that Bitcoin is currently a commodity to hold value.

Conclusion

The main purpose of Bitcoin providing a platform for transparent transactions without the need for a third party; But over time, Bitcoin became a means of maintaining the value of money. One of the characteristics of Bitcoin is that its number is limited and no entity can print more Bitcoins; But its limited amount can make millions of people unable to maintain a unit of it. This problem makes Bitcoin stop from one of its main goals, which is to establish justice in the way wealth is distributed. In this article, we discussed that What is the purpose of Bitcoin? And to what extent he was able to achieve his goals. To what extent do you think Bitcoin has been able to achieve its goals? Share your thoughts with us.

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