What makes Bitcoin sound money?
Updated: Nov 25, 2021
Bitcoin is a payment system, a store of value, a means of exchange, a smart money. But what makes Bitcoin sound money is its limited supply that cannot be tampered with. 21 million Bitcoin is all there will ever be. This is why Bitcoin is sound money.
Bitcoin is a decentralized p2p (person to person) payment network, and a new form of money that is scarce, censorship-resistant, and an undilutable store of value (SoV). There will only ever be 21 million Bitcoin, the last of which will be mined in the year 2140. Bitcoin is the world’s first successful decentralized cryptocurrency and payment system, launched in 2009 by a pseudonymous creator known as Satoshi Nakamoto. The word “cryptocurrency” refers to a group of digital assets where transactions are secured and verified using cryptography – a scientific practice of encoding and decoding data. Those transactions are often stored on computers distributed all over the world via a distributed ledger technology called blockchain.
Bitcoin can be divided into smaller units known as “satoshis” (up to 8 decimal places) and used for payments, but it’s also considered a store of value like gold. This is because the price of a single bitcoin has increased considerably since its inception – from less than a cent to tens of thousands of dollars. When discussed as a market asset, bitcoin is represented by the ticker symbol BTC.
Bitcoin is a decentralized digital currency that you can buy, sell and exchange directly, without going through an intermediary, like a bank. Bitcoin’s creator, Satoshi Nakamoto, originally described the need for “an electronic payment system based on cryptographic proof instead of trust.” Cutting the middleman (banks) out of the money transfer equation has of course created a backlash from the legacy finance world, as together with Ethereum and the newer DeFi protocols, cryptocurrency slowly proceeds to eliminate the financial middleman out of the industry.
Until yesterday, if A wanted to transfer value to B, there was a banking intermediary eating into that payment, without adding any value to the process. Decentralized cryptocurrency eliminates the middleman. Hence, Bitcoin is a revolution. Bitcoin has revolutionized the financial and legal landscape and each successive day that Bitcoin works as designed, proves that this industry is not going anywhere.
“You can't stop things like Bitcoin. It will be everywhere and the world will readjust.”
- John McAfee
Read the Bitcoin whitepaper here.
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