Bitcoin is revolutionary and has an incredible technology: this is what we are going to explain at large in the Bitcoin Guide of Bit2Me (soon in english) but it is likely that you will feel overwhelmed and wonder…

What is all this incredible technological heap translated into? What is the people’s perception of the results?

After the completion of the initial explanation about Bitcoin in the first chapter of the guide, in this chapter we want to translate Bitcoin into “English”, therefore we will explain this technology in concrete terms, what are the advantages of Bitcoin that make it the best form of money.

Why people like Bitcoin

There is continuously more talk about Bitcoin, therefore why do people like Bitcoin so much?

Here are the 13 keys to understanding it:

1. Fast

Sending any amount of money takes a matter of minutes. Regardless of the amount and regardless of the destination.

2. Cheap

The transfer cost to any part of the world through your bank can add up to a lot of money. When using bitcoins, the cost is a few cents or free. Micropayments: using a bank, paying 0.30 euros to someone from chile in gratitude for a tweet or something similar is unthinkable, but with Bitcoin it is a reality.

3. Global

You can send bitcoins to any country in the world. Bitcoin, like internet or Email has no borders. This, with the guarantee of respecting the freedom of its users, makes Bitcoin the first global currency that really works

4. Decentraliced Emission

No government or central bank can control or interfere in the valuation of bitcoin, neither in its creation nor distribution. With the use of Bitcoin, the money is depoliticized, it is made by the people, thus eliminating the control that the FIAT money exerts on the population.

5. Yours

Your bitcoins are only yours. The money belongs 100% to you; it can not be intervened with by anyone, there are no corrales or accounts that can be frozen (see wikileaks case). With Bitcoin you can be your own bank.

6. Programmable money

Bitcoin is easy to implement and lends itself to an entire programming language, which allows you to create pieces of code that will be executed in the transaction. Previously unthinkable, this allows any programmer to monetize all types of services. Even payments between completely autonomous machines are made possible, by simplifying complex and slow manual processes.

7. Encryption and Distribution

Bitcoin is very safe. It has at its core and in each of its operations, one of the most powerful cryptographic systems in existence, more so than those used by banks or crucial services in our day to day lives. Its distributive nature makes it resistant to network drops or attacks: No other computer system has been operational 24 hours a day, 365 days a year for more than 8 years.

Even in the face of a solar storm, Bitcoin, unlike other systems, would survive. This is due to the fact that some of its nodes are in bunkers of the Second World War, protected underground with triple perimeter security.

8. Transparent

All transactions are public, as they are visible in real time under pseudonyms in the form of a Bitcoin address. Anyone can reveal their Bitcoin address and show, with absolute transparency, where it goes to the very last cent. Imagine governments, town halls, NGO’s, foundations, associations, companies, … anyone can take advantage of this functionality in seconds.

9. Open Code

Bitcoin is a completely open and free software. Anyone can see its source code, study it, audit it, or improve it (here you have it, propose your improvements). Hundreds of people improve it every day: some of the smartest brains on the planet do it better every day under a democratic consensus environment.

In Github you can see how hundreds of people from all over the planet are collaborating without receiving anything in return. If you want you can even copy it and start a new cryptocurrency (there are thousands of clones with interesting changes, and some copies without any innovation)

10. Based on consensus

From the development of the code to the shape of its blockchain, consensus operates as a fundamental axis. In its development, the ideas and improvements of the most voted codes are those that end up being implemented: Bitcoin changes if the majority accepts this change. The same applies to the accounting book that manages the blockchain: only if the majority of nodes consider a new transaction valid is it accepted and registered in the account book.

11. Limited issuance

No one can use Bitcoin to generate thousands of bitcoins in one morning because they suddenly want to be a politician or a banker. There will never be more than 21 million bitcoins and they will all appear for mining, under rules that are completely public.

12. Without barriers

In Bitcoin you are your own bank. But in doing so, you do not pay an account opening fee, monthly maintenance fees, or false charges as if it were in a bank . You do not pay for possessing credit cards (in fact you do not need them, it’s an outdated technology) … Having a wallet is free and with it you can store all the bitcoins you want, as well as send bitcoins to any part of the planet without anyone preventing it.

Nobody is going to charge you a subscription, no contracts, no terms, no withholdings, nor your data in exchange for cutlery … These things in Bitcoin sound like chinese!

13. Private

In times of constant information theft, industrial espionage, a society with governments and computer criminals, and even more, with the emergence of advanced Big Data techniques, it is more important than ever to take care of our privacy, by upholding it to the highest level.

 

Why Businesses like Bitcoin

In Bitcoin, unlike the credit card, a payment can NOT be reversed (“chargeback”). The “chargeback” generates an annual cost of 40 billion euros in frauds: anyone can make a payment and call his bank saying that it was not him.

In addition, Bitcoin is free to implement, and has negligible transaction costs.

With this and more, many businesses offer a discount on the price of the product if a customer pays with Bitcoin.

We leave you the 6 keys to understand why the stores are enjoying Bitcoin so much.

1. Savings in transactions

They will decrease the spending on commissions. The fees of a gateway payment range between 2 and 3% and include a minimum cost per transaction. This is triggered even more with Paypal, with figures like 3.4% + 0.5 euros per transaction. Unlike this, with Bitcoin the transaction costs border on the gratuity not how much you send.

2. No Fraud

A business no longer needs to add the extra costs produced by multiple and variable credit card scams to the price of its products. In exchange for this you can get a discount for paying with Bitcoin. In addition, unlike cash, there is no way to falsify a bitcoin.

3. Greater conversion

A business no longer needs to add the extra costs produced by multiple and variable credit card scams to the price of its products. In exchange for this you can get a discount for paying with Bitcoin. In addition, unlike cash, there is no way to falsify a bitcoin.

4. Reduce the risk of thefts

No one can access money without your consent, reducing the risk of theft. In addition, you will save costs (since you do not need a safe, or a company to transport your money to a bank), speed up the payments, and improve the quality of work of employees. They will not have to waste time counting money, nor will they be burdened with tasks dedicated to management and maintenance.

5. Marketing

It is perceived well by the target audience when a trade includes novelties. The more technologies and improvements provided, the more the customer will see value and visit the site. Bitcoin makes the businesses make a difference.

6. No human errors

There will be no errors of any kind when verifying payments, as it is done automatically and quickly.

7. No returns

No more “chargebacks”, a type of fraud that drives businesses crazy.

Companies that already support Bitcoin and its technology

Although there are tens of thousands of businesses and businesses of all sizes that already accept Bitcoin, below we will highlight some of the most well known across a range of sectors:

WordPress, Soundcloud, Reddit,
Namecheap, Playboy, OkCupid,
Shopify, Name.com, Klout, 4Chan,
Neteller, OKPay, Fiverr,
Ustream, Steam.

Tesla, Badoo, Zynga, Uber,
Destinia, Microsoft, IBM,
Cars.com, Ali Express,
Overstock, Virgin, Expedia,
Foodler, Orange.

BBVA, Banco Santander, Barclays,
Bank of America, Goldman Sachs,
J.P. Morgan, Royal Bank of Scotland,
Wells Fargo, ING, Nasdaq, VISA,
MasterCard, Verizon,
CISCO, Rakuten.

bitcoin-brand-map

Like regular money, but better

However, is Bitcoin reliable money? To understand if it is, we must first understand what money is.

We are far from the years where your money was a “contract” of ownership over a certain amount of gold in a vault far away. The current money is FIAT, an invention of banking that allows the application of politics to money.

The current form of money represents nothing, it is only paper that is based on “the faith”. We aren’t talking about something religious, we are talking about “pseudo guarantee” in which you are be able to to exchange this paper for goods or services because the government (therefore your police forces) assures you of it.

Let’s go to the base of it, what do we mean by money? What does something need to have to be money? And what makes money a reliable form of money?

Money must have the following three things:

1. Medium of exchange

A more efficient way of exchanging goods or services than bartering

What makes a medium of exchange good?

2. Unit of account

Standard measure to value goods, services, economic activities, assets, and liabilities. The unit of account does not necessarily have to be the same as the medium of exchange but it usually is.

3. Reserve of value

Mechanism that allows wealth to be stored and recovered in the future with a certain degree of predictability over its projected value over time.

It is not an exclusive feature of the currencies, but of the goods in general.

All assets have a greater or lesser degree of unpredictability when there is no reserve of perfect value.

The most typical example is precious metals such as gold or silver.

However, there are other characteristics that define what makes up good, reliable money and we have summarized these in five points.

1. High durability

It can not be degraded (it’s code) and the blockchain is backed up by hundreds of thousands of computers globally.

2. Highly transportable

It is transferable worldwide in seconds without the need of intermediaries, requiring a confirmation of the transaction in about ten minutes and making it irreversible in about an hour..

3. High fungibility

The protocol treats each unit and subunit in the same way

4. High divibility

Each Bitcoin can be divided into 100 million units.

5. High resistance to falsification

To date, no one has been able to come up with a solution, even theoretical and reasonable, to break the cryptographic mechanism that underlies Bitcoin. In fact, it uses encryption systems that are superior to the global financial infrastructure and if falsification did occur, its open and collaborative nature would allow for a solution in a matter of hours while banks, governments, and all kinds of companies around the world would take months to reach a solution.

Next we have provided you with a summary table that compares Bitcoin with two types of traditional money.:

As you can see, Bitcoin is the best form of money in existence. However, from our point of view this is not because it is fast and has low transaction costs. All of that is beneficial, but Bitcoin is better because it gives you freedom. The euros can also be digital (in fact a large part are) and the cash also provides privacy, but this form of money is known as FIAT, and that’s the difference with Bitcoin, Bitcoin is not issued by a central entity that follows economic policies that unite politics and create money.

Meanwhile, Bitcoin grows by millions of new users every month and, as you can see, the constant noise surrounding Bitcoin and the increase in users is a result of more than one reason.

If you still do not understand how the price of Bitcoin is determined, we recommend that you visit the Bitcoin Bit2me Guide chapter called; How much is a bitcoin worth? How and who determines its price?

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