On May 22, 2010, a programmer purchased two large Papa John’s pizzas for 10,000 bitcoins which was worth about $30 at the time. Less than a decade later, on 17 December 2017, a single bitcoin was priced at $19,891.00, meaning 10,000 bitcoin would get you over 13 million pizzas and was worth close to $200 million dollars.
It’s widely believed the pizzas were the first purchase of a product with bitcoin, proving the then-nascent cryptocurrency’s potential as a means of payment.
Bitcoin and some 4000 other cryptocurrencies today are now making waves in global finance with a market cap of almost half a trillion dollars. However, the global financial industry and regulators have been understandably reticent to embrace this monetary phenomenon and new asset class for the main reason that it is difficult, if not impossible, to regulate as the core technology, blockchain, is distributed and global.
There is no doubt that cryptocurrencies are here to stay.
The Bitcoin Fortress team says that now it can be used as a commodity to buy the basic requirements of the people and the team believes that cryptocurrency is eventually going to take the place of normal traditional currency. Apart from the conventional use of the digital currency as a traditional currency, it is also used for investing.
Cryptocurrency is most effective as it removes the need for ‘middlemen’ — the finance industry in general and bankers more specifically. Today, Bitcoin has evolved to the point where it’s being used as a currency, storage of wealth and as a commodity.
How about we See from Where It All Started
Cryptocurrencies, also known as tokens, crypto or digital currencies — were first created in 2008 and fully developed in 2009. The innovator of the world’s first and most successful cryptocurrency, Santoshi Nakamoto, was an enigma… he was a mystery and unknown to anyone and disappeared in 2010.
Satoshi Nakamoto is the name used by the pseudonymous person or persons who developed bitcoin, authored the bitcoin white paper, and created and deployed bitcoin’s original reference implementation.
It is believed that Santoshi Nakamoto is likely a pseudonymous software developer but other speculated he or she could even be a group of scientists or even a government agency.
How is Bitcoin different from any Traditional currency?
The Bitcoin Fortress team believe that bitcoin will be able to do as much as that of any traditional currency but the reality is bitcoin means much more than just normal traditional currency. It can be used to pay in any trade if both the parties agree to pay using it. Bitcoin can be used as a traditional currency which means that any dollar or any such currency is equivalent to bitcoin.
Supply of Bitcoin
The supply of bitcoin has always been questioned hence there is a reason why a bitcoin is sometimes called digital gold. The bitcoin protocol specifies a limit of 21 million bitcoins will be reached by 2140 then the record keeping will then be rewarded solely by transaction fees.
It’s capped. Finite. Scarcity is built-in by design, making inflation virtually impossible. Traditional fiat-centric monetary theory risks massive inflation.
The supply of bitcoin is very limited, whereas all traditional currencies have unlimited flow in the economy. The central bank regulates all the currency and the flow of currency in the economy, if it feels that there is a lack of currency then it will print some more.
During the ongoing Coronavirus pandemic, the US Federal Reserve admitted recently it essentially can print as much money as it needs as the country went off the gold standard in the early 70s under President Nixon.
Why do you think the value of bitcoin increases with the passage of time? There are only so many, the supply is fixed and the demand can only go up — increasing day by day and driving up the price of the bitcoin day by day.
Decentralized
In the old fiat currency world, governments and the banking authorities decide how much money to have in circulation, when to institute quantitative easing etc.
In the new cryptocurrency world, thousands of computers around the world keep transition ledgers in-sync, immutable and accurate. In the case of bitcoin, it is like an individual funnel system, not anyone funnel is disturbed because of the other, each and every funnel functions separately. The bitcoin is a digital currency which is maintained by some software developers and some group of coders who run the bitcoin network.
It also means that bitcoin supply and the technology behind bitcoin is very different from our traditional currency. And people want change, as they have always had problems with the rules of the banks like how much money you are allowed to send, how often you can send it, how much you can take from the ATM etc. Banks are also notorious for understaffing resulting in long lines, odd opening times in brick and mortar buildings. And the fees can be crazy along with transfer times of days… sometimes even weeks with archaic methods like cashier’s checks.
Also published on Medium.
Kastelein has an Honorary Ph.D. and is Chair Professor of Blockchain at China’s first blockchain University in Nanchang at the Jiangxi Ahead Institute software and Technology. He has over a half a decade experience judging and rewarding some 1000+ innovation projects as an EU expert for the European Commission’s SME Instrument programme as a startup assessor and as a startup judge for the UK government’s Innovate UK division. Kastelein has spoken (keynotes & panels) on Blockchain technology at over 50 events in 30+ cities.
