Bitcoin and Blockchain
Bitcoin is a digital currency that operates as a decentralized authority. This means it is not government operated as other currencies, like the US dollar. Bitcoin is kept in check by blockchain, a public “ledger” that keeps records of all transactions. Bitcoin mining in the simplest of terms is people searching through transactions, verifying them and being rewarded with bitcoin for it. Since the launch of bitcoin, it has inspired many cryptocurrencies like ethereum, dogecoin, NFTs, and even virtual real estate.
An important detail about Bitcoin is that it is backed only by those who partake in it. As opposed to the US dollar, which is backed by the government, bitcoin is backed by nothing nor is the conversion to USD 1 to 1. Other cryptos known as “stable coins” have real monetary backings. Bitcoin is fully digital and until it can become liquid, which would go against what it is as a cryptocurrency, it will not become stable.
El Salvador and Bitcoin
El Salvador recently adopted Bitcoin as a legal currency accompanying the US dollar. For all businesses and people that means you are forced to accept bitcoin for payments if that is what is offered. This move has cost the National Treasury of El Salvador close to $22 million. The International Monetary Fund urged El Salvador to abandon bitcoin, as its instability is too great. The Salvadoran government stability rises and falls with the price of bitcoin. An $85.5 million investment by the Salvadoran government in bitcoin has lost roughly 23 percent of its value.
Applications of Blockchain
• Money transfers - currently, transfers between accounts take days, whereas blockchain only takes minutes.
• Insurance - Blockchain would make sure customers do not make multiple claims for the same reason. Smart contracts also seen in lending can speed up the process through which people get their financial support.
• Personal Information - Many are skeptical about this application, but blockchain is safer when compared to other sites used to store personal information used for background checking and identity verification since blockchain is less prone to hacks.
• Voting - Personal info being held on blockchain can make voting faster as no one will be able to vote twice: only eligible voters with verified identity can vote, and their vote cannot be tampered with.
Social Aspect of Cryptocurrency
Currently all money is regulated by the federal government and banks. Cryptocurrencies like bitcoin eliminate this “middle-man” and transactions are able to be facilitated person-to-person. Cryptocurrency reduces the power that government-issued money has with respect to regulations and other personal freedom issues. Anyone can access cryptocurrency and they do not need a bank to tell them they can use their money for a particular purpose.
Summary: My Opinion
Bitcoin and other cryptocurrencies are seeing unprecedented growth, followed by dramatic declines in value. Bitcoin is a good investment if you have the money, but I personally would not invest in it. bitcoin holds no real-life value, and it's only value is determined by those who engage in trading bitcoin. It is not backed by anything and if you lose your money, it is gone. You can compare this to a stock, but stocks are backed by tangible things, like companies.
Blockchain has endless applications and can be used for a variety of tasks previously stated in the article Blockchain can become one of the most secure ways to make transactions. Reduction in time is the name of the game for blockchain. Not only will this technology save time, but it will also save money.