I am fairly new to Bitcoin and learning about the various cryptocurrencies in circulation. I wanted to write this article to see how my perspective on bitcoin relates to the seasoned bloggers.
Bitcoin and other cryptocurrencies are a derivative of block chain technologies that settles transactions in real time using a network of computers rather than a centralized database or a select few multiple database centers. The amount of bitcoin transactions each wallet has is kept track through the transactions flowing in and out of wallets on the ledger that is verified and balanced by miners using mathematical functions to authorize transactions. Each transaction builds on each other and is characteristic of blockchain which references previous transactions to the current one in progress. This puts multiple miners in a position to solve the encryption and authorize the transaction. This method of authorizing transactions is more secure because multiple computers are racing towards the common goal of solving the mathematical functions and anyone attempting to insert fraudulent blockchains are beaten by the combined computing power of miners.
Correct me if I am wrong or missing any details, but I believe this is one factor that makes crytocurrencies valuable. Real-time transactions opposed to obsolete traditional bank wires. Even then, third party applications such as Facebook and Venmo allow users to link their bank information to wire funds seemingly instantaneously there are about 2-3 days delay in those transactions being settled.
With a market cap of $278 Billion and deflating circulation, the value of bitcoin benefits on basis of scarcity. This makes bitcoin a contender with fiat currencies and is perhaps regarded as digital gold standard. I've noticed the value of bitcoin is very volatile and I wouldn't feel comfortable transacting in bitcoin other than arbitraging other cryptocurrencies, or holding money in bitcoin because of the perceived value of them. I personally can't imagine for what reason I would purchase anything unless I didn't want it traced through bitcoin. Especially with large amounts of bitcoin, the value could change drastically within couple of minutes. I'm worried about time value of money now. The 24H high USDT-BTC is $16659 while the low is $15118.88 that's a 9% difference, if I purchase something for $500 dollars then I could potentially have a loss of $46. But suppose I wanted to transact in something illegal, that $46 dollars is a tax I'm willing to pay for my anonymity. Although I have to comment that the recent futures market may actually help stabilize the currency as larger players begin hedging. Which now begs the question, what percentage of people are actually transacting bitcoin for regular purchases? What percentage are transacting in illegal activities? and what percentage are just trading out of arbitrage?
My main concern is what does the future of bitcoin look like? I'd like to think that bitcoin is the gold standard that netizens collectively decide to attribute value to. Similarly to how people attribute value to fiat currency like the US dollar, at least bitcoin is deflating and scarce backed by a strong technology. Could we be entering a technocratic future?
I'd like to know what others think about the future and value of bitcoin. I don't know much but am very intrigued and will consider writing more. Especially my views on how modern countries could be adopting or heading towards a technocratic future.