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Bitcoin is a decentralised, peer-to-peer currency. This means that central monetary authorities have no control over the Bitcoin network and no financial institution or bank acts as the middleman in a monetary transaction between individuals.
Let that sink in for a moment.
No central control. No banks. No middleman.
It’s not an easy situation to imagine. We’ve been born into the traditional financial system which dictates the flow and value of money. And we’re more than accustomed to it.
But let’s stretch our imaginations a little. What would the effect of a unified currency be? How would it change the economic environment and our individual lifestyles? What doors would open in the absence of centralised control of finances?
Allow us to paint that picture for you.
The concept of an exchange rate becomes redundant in a world of unified currency, where currency is valued the same whether you’re in Britain or Bhutan, Vietnam or Venezuela. Currency equality is realised and power moves from government to individuals.
Little to none, in fact! A completely decentralised payment system, means transactions don’t need to pass through banks, governments or payment administrators who add on bloated fees for each step of the process; the process they have created and insist on. As the Bitcoin network only sees data and not monetary value of a transaction, fees are determined by the data being carried around the network and not the monetary value.
Unlike economic inflation, where the increase of our money supply decreases the currency's purchasing power, bitcoin is deflationary. Due to its finite supply (keep in mind the 21 million cap), it’s inevitable the demand for, and as a result the value of, bitcoins will increase over the long term, increasing the currency’s purchasing power.
Considering the absence of central financial institutions and the excessive transactions fees tacked onto transactions, we can expect a rise in intercontinental trade and expenditure. This opens up employment opportunities across the globe as businesses currently limited by importing and exporting restrictions are able to easily accept and send payments across borders.
Anyone with access to the Internet has the ability to buy, sell and transact with bitcoin. There are minimal logistical and administrative barriers and as a result this opens up financial control and accessibility to currency to a horde of people currently restricted by financial institutions’ bureaucracy.
Another element of accessibility relates to the instantaneous nature of cryptocurrency transactions. Funds are processed and available within a matter of minutes. This quality has enabled quicker reaction times in cases of natural disasters where relief funds are set up and accessible almost immediately. This allows charities and disaster management to mobilise in a much shorter time frame than with traditional systems.
Potentially the most seismic effect of a unified currency is the eradication of classism on a global scale. Linked to the accessibility factor and reduction in transactional fees, a unified currency has the potential to elevate individuals and groups currently side-lined and disadvantaged as a result of government control. There are already stories of homeless people being able to pull themselves from poverty thanks to the ability to collect and spend bitcoin, emancipating themselves from the shackles of a central system that has failed them.
Centralised currencies are directly impacted by fluctuations in the economy and money policies. Corrupt governments, wars and financial meltdowns have caused the collapse of many financial institutions and currencies, leaving the individuals who rely on them for financial stability destitute. Decentralised currencies aren’t influenced by these same forces and therefore aren’t at risk of destabilisation in the wake of these events. Their resilience to external pressures and internal corruption allows for confident utility and boosted security.
Bitcoin is a prime example of a viable unified currency considering it has no central control: no central repository of information, no central management, and, crucially, no central point of failure. Its decentralisation means that fees are considerably lower, accepted in every country, your account can’t be frozen and there are no administrative prerequisites or arbitrary limits to usage.
As Bitcoin continues to increase in value and central banks continue to disappoint, it is our belief that this cryptocurrency and its decentralised nature will pave the way to economically healthier societies, global financial success and empowered individuals.
Photo credit: zcopley