Is Bitcoin and digital currency the future of money transfers? Here's what they don't tell you..
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Since people started keeping records, they've been using different ways to pay for stuff.
In ancient Egypt and Greece, folks paid with horses, sheep, and cows. Eventually, that changed to gold and silver coins. Nowadays, people can pay with credit cards or automatic bank transfers.
In 2008, a new payment method called Bitcoin was introduced. In this article, we’ll give you a quick overview of what it is, how it works, and some important things you should know about it.
What is Bitcoin?
Bitcoin is basically "digital money." It's a system designed to let people make payments just like regular money.
Regular money is made up of coins and bills that have a value - for example, a $50 bill is worth $50, and a penny is worth a penny.
Similarly, 1 Bitcoin (or "BTC") has a value too. When it started in 2008, 1 Bitcoin was worth less than half a cent, but now it’s worth more than $10,000 as we write this.
The price went up because there’s a lot of excitement around Bitcoin investments, with many articles and even financial news praising it. This created a huge demand for people to invest. It follows the basic supply-and-demand rule: when something is in high demand, its value goes up. That’s been the trend for the last decade.
Before you rush to invest in Bitcoin, we’ve gathered some important facts about this digital currency that aren’t often mentioned, but you should know before buying any Bitcoins.
Where is Bitcoin accepted as a payment method?
The first question you might have is: "Can I actually use Bitcoin to buy things?"
Yes, you can buy some items with Bitcoin, but the number of places that accept it is pretty limited. Most regular stores don’t accept it at all.
You can use it at specific places, and here’s a list of those places. But keep in mind that these lists aren’t always updated, and many shops that tried accepting Bitcoin have stopped because it didn’t work well for them. Why didn’t it work? We’ll explain that soon.
Most people DON'T use Bitcoin for payments!
While you can make some purchases with Bitcoin, most people who own it just bought it as an investment. They don’t plan to use it for payments; they just think it’s a good investment because they’ve heard its price keeps going up.
So, while Bitcoin can technically be used to buy things, for most people, it’s just another way to invest their money.
Bitcoin transfers are SLOW and not practical for real transactions
When Bitcoin was first introduced, it promised to replace regular cash someday. But the reality is quite different.
Every minute, millions of transactions happen worldwide through cash, credit cards, and bank transfers. Bitcoin transactions are grouped together and must be approved by a large part of the community before they go through.
What this means is that any Bitcoin transfer you make will be delayed until it’s approved to confirm it’s valid. Bitcoin can only handle a limited number of transactions in each batch; if 100,000 people try to send money with Bitcoin at the same time, only about 3,000 might get approved in the next 10-15 minutes. The rest will have to wait, which isn’t practical for everyday purchases. This likely explains why many businesses have stopped accepting Bitcoin.
Bitcoin transfers can be anonymous and non-refundable!
Anyone can open a Bitcoin wallet without needing an ID, phone number, or credit card. You just need some software or to sign up with an email for an online wallet.
This allows people to use Bitcoin anonymously, which has its pros and cons. The Bitcoin system works on a one-way model — money goes from person A to B. There’s no governing body, so once a transfer is approved, it can’t be canceled.
This creates opportunities for fraud, as payments can be made without delivering anything in return, which is basically stealing. Since there’s no authority overseeing it, it relies entirely on trust. If you're dealing with someone you know or a reputable company, that’s one thing; but if it’s a stranger, it can be risky.
The majority of the Bitcoin economy is owned by very few people
Here’s something most people don’t know: a small number of individuals own most of the Bitcoin economy.
Check out this chart:
There are about 800,000 unique Bitcoin addresses today, according to blockchain.info, a key resource for Bitcoin information.
According to the data, 0.00088% of addresses hold 17.49% of all Bitcoin, 0.01% hold 20.47%, and 0.10% hold 21.90%. Together, this means that just 0.11088% of addresses control nearly 60% of the entire Bitcoin economy.
We don’t know when this data was collected, and since the number of Bitcoin addresses keeps growing, these numbers might have been based on when there were only 600,000 or 700,000 addresses. That means it’s likely that just a tiny fraction of addresses — around 665 to 776 — control 60% of the Bitcoin market. That’s a lot of influence in the hands of just a few people!
Are there any other "digital currencies" besides Bitcoin that could be better?
As of now, there are over 200 different digital currencies available. Some well-known ones include Bitcoin, Litecoin, Ethereum, Dash, Monero, and Ripple.
Some of these currencies have better technology for handling large numbers of transactions and might be more practical for everyday use, like Litecoin. Others, like Ethereum, require all parties to sign a "contract" to complete a transaction, which helps protect against fraud. Some, like Monero, offer better anonymity and hide the source of the transaction.
Conclusion
Digital currency could be the future of money transfers, and interest in this area is growing among both individuals and governments. If you want to learn more about how the technology works, we recommend reading Satoshi Nakamoto's original white paper PDF that explains the ideas behind Bitcoin.
And if you’re looking to buy or invest in any of these currencies, you can use this exchange to purchase them with a credit card.
We hope you found this article helpful, and if you did, please share it with others so they can learn too!
