In early 2007, Satoshi Nakamoto started working on an open-source electronic cash system that would be completely decentralized and free from a central server or trusted parties. No one knows the true identity of Satoshi Nakamoto. But what we know is that he (or she, or they) authored the Bitcoin whitepaper to serve as a better alternative to fiat money. He released the original bitcoin whitepaper in 2008. However, Bitcoin launched officially on the 3rd of January 2009 when its software was ready.
Satoshi’s contention with fiat money is the trust that’s required to make it work. On his public webpage, Satoshi wrote: “The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.” So Bitcoin exists to eliminate third-party intermediaries like banks and online payment systems in financial transactions.
Seamless and secure dealings like this will definitely disrupt the finance industry as we know it. So there comes the big question: can Bitcoin become the next global reserve currency? To give a correct answer, we must first understand what Bitcoin is and how it works.
Unlike conventional fiat currency, Bitcoin has no physical form. All Bitcoin balances exist on a public ledger that’s accessible to users around the globe. Nobody owns or regulates this public ledger, not even the inventor. The operations that occur in the ledger are verified by a massive amount of computing power.
One of the fundamental building blocks of Bitcoin transactions is digital signatures. Bitcoin uses an elliptic curve digital signature algorithm (ECDSA) to sign transactions and send Bitcoins. You can generate this signature through your private key; then, you can use it to prove that you own the private key without having to reveal it. After that, you can transfer your Bitcoin as payment to another user through their public key.
After a transaction has been signed, neither the sender nor the receiver can modify it. Therefore Bitcoin works well to secure asset ownership. What makes it even safer is that creating a digital signature is an offline procedure; therefore, there are no cybersecurity risks associated with using them.
Can Bitcoin become the next global reserve currency? While there are speculations around this question, here are four reasons Bitcoin has a great chance of success.
Bitcoin is now a globally recognized medium of payment for both tangible and intangible goods. Giant corporations like Microsoft, AT&T, and Etsy accept Bitcoin as a valid means of payment. But that’s not all. Major e-payment systems like Stripe and Uphold already offer a Bitcoin payment option on their platforms.
A 2020 survey by HSB reveals that 36% of small-medium businesses in the US accept Bitcoin for payments. E-commerce vendors can easily incorporate Bitcoin into their daily business transactions by adding it as a payment option. Brick-and-mortar stores are not left out too. Many local stores now accept BTC payments through hardware terminals, wallet addresses, and touch screen apps.
The rise of supportive technologies is another reason that suggests a bright future for Bitcoin as the next global currency reserve. As the world increasingly relies on Bitcoin to perform daily transactions, more billions of institutional money, retail, and venture funds go into Bitcoin’s network. And with a processing speed of seven transactions per second and a confirmation time of 15 minutes, congestion problems are bound to occur.
But thanks to innovations like the Lightning Network and Bitcoin Cash, Bitcoin’s network speed is only one step away from surpassing our expectations. The Lightning Network is a second layer of Bitcoin’s Blockchain that allows multiple payment channels between Bitcoin users. Without the Lightning Network, you’d be paying higher transaction fees and would have to wait for hours before the validation.
The biggest advantage Bitcoin has over fiat currency is the ability to create a completely transparent trading system. All Bitcoin transactions are public and easy to track. Anyone can see the records and balances of transactions on the Bitcoin Blockchain.
The transparency of blockchain systems makes them applicable across different frontiers: elections, healthcare, and educational databases.
There’s a famous saying: “First they ignore you, then they laugh at you, then they fight you, then you win.” This saying applies to the world’s highest-value currency, Bitcoin.
Bitcoin has come to stay as the leading cryptocurrency and blockchain platform. It has survived dense criticism and political onslaught. Its real-world applications prove to be of immense value in everyday business operations. If you’re interested in seeing more crypto updates like this. Check Invezz for more ideas.
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