Unless you spent the better part of this year on a desert island, you've undoubtedly encountered Bitcoin. This seemingly ubiquitous digital payment system may, on the face of it, look as radical and revolutionary as it does ethereal, but it goes without saying that it's got tremendous disruption potential.
To be sure, Bitcoin polarizes; some deride it as a wannabe financial instrument that's only good for dark web applications, whilst others go so far as to declare Bitcoin the absolute future of finance, lobbying for supplanting the current fiat monetary system that they claim is too centralized and run by pernicious central bankers in order to sustain inequitable wealth.
What is Bitcoin
But what actually is Bitcoin? Clearly, it's an electronic kind of internet cash. Intangible and only kept on electronic devices, Bitcoin does actually meet all of the criteria of what money is. It is divisible, fungible and verifiable. All this in spite of its much maligned digital nature.
Best of all, Bitcoin is decentralized and finite. Not only do these two features distinguish it from fiat money, but these very traits are what render Bitcoin so appealing, amongst believers anyway. Non-believers, not so much.
But if Bitcoin is so awesome, why are there still so many non-believers at all? The problem with Bitcoin is that it's a purely digital currency that is difficult to conceptualize, without a doubt. Even the most basic and simplistic explanations for Bitcoin seem to invoke images of dodgy dealings, a kind of scam, much like the pyramids schemes promoted at "get-rich" seminars.
Meanwhile, those that took a long hard look under the hood and subsequently managed to wrap their head around Bitcoin's workings invariably went down the rabbit hole, to emerge with a clarity rarely seen. Bitcoin truly is
awesome, and it does have the power to change the world of finance and even the lives we live, going forward.
Of course anyone from any financial outfit will always continue to vehemently deny Bitcoin's prowess, regardless of Bitcoin's ever-increasing momentum and recent arrival into the mainstream. Banking incumbents simply have too much to lose.
Ok, time to take a closer look at what makes Bitcoin tick.
Under the Bitcoin Hood
As stated above, Bitcoin is decentralized and its numbers are absolutely finite. It's also extremely resistant to fraud and hacking, on account of its algorithm, the Blockchain. This Blockchain is what validates and records Bitcoin transactions, propagates them to all other nodes on the network, which number in the thousands, and ensures Bitcoin is fully hack-proof, censor-proof, as well as immutable and fully transparent to boot.
Bitcoin payments are peer to peer, which means that intermediaries like banks, PayPal, VISA, Western Union, and the like, are shut out of the loop. The result? Cheaper and faster money transfers. Whereas a telegraphic bank transfer may take "up to 5 working days" and cost up to $100 or more, depending on the size of the amount, a transfer of a commensurate Bitcoin sum takes several minutes and should cost $1 or less.