Bitcoin versus banking

It is only natural that with the advent of Bitcoin, the traditional world of money has gradually begun to worry about its foothold. Several articles have been published on Bitcoin as a pyramid scheme, claiming that money creation is incomprehensible, the owner of the scheme cannot be identified, the currency is unstable and the user is helpless.

We first analyze the different systems. There are roughly 3 types of systems known to mankind. Centralized systems, decentralized or hierarchical systems. Centralized systems are better known in history as slavery, where power and control over information and rules are concentrated at one point. This system is also the most uncertain because if something happens to the center, the whole system will collapse.

Mankind today is largely bound by decentralized or hierarchical systems. The truest example is the workplace where we work. Relationships are generally hierarchical. Larger systems such as the state, the military, the economy, finance, etc. work in the same way. Power and control are again concentrated at one point through the interfaces. In other words, we live right in the middle of pyramid schemes. The third type of system is distributed systems. For example, the reproduction of species and cells in the wild and the different communities in the organization of society. The Internet itself is also a distributed rather than a decentralized system. In the last 10 years, good innovation has been made in the information movement and a fully distributed system in the form of a torrent network has been created. Bitcoin’s network is built on the same foundations, making it significantly less of a pyramid scheme than any banking system today.

The operation of the Bitcoin network is based on the users who use it, their customers and the miners who maintain the network. The reliability, complexity and value of a network depend on the users. However, when users join the system, they automatically accept the rules set in the system. Changes to the rules can only be made with the consent of more than 50% of users, ie the principle of democracy. This is where we come to the process of creating money, which is much clearer and more transparent than the process of creating money in the banking system. Money is created through mining, which means processing and confirming transactions. As this is a high-energy, computationally intensive activity, the system automatically rewards the miner with new Bitcoins. It is important, however, that the mining of Bitcoins and the complexity of mining are firmly regulated over time. The last Bitcoin can only be mined in 2140. The Bitcoin protocol and code are all open, so anyone can do it and find out exactly how money is generated. Everything works on a mathematical basis. On the other hand, the creation and regulation of money in the banking system seems to be one big secret that few people know.

Scheme owner not identifiable? But why identify him? Bitcoin can also be called a social system, where the owners and creators of the system are the users themselves.

Currency is unstable? True. However, this is because the number of users is still so small and therefore the network is sensitive. The more users, the more secure the course. An important difference from regular currencies is the system’s automatic exchange rate adjustment every 10 minutes by the system itself. This makes it a much more responsive and dynamic currency.

User is helpless? That is not quite the case now. Yes, there is no third party, the relationship is only between the giver and the recipient, but that means more freedom, and that freedom automatically comes with more responsibility. Therefore, the consumer needs to know what he is doing. Today, Bitcoin is already very convenient and easy for consumers to use, and usability is improving every day through application development. However, everyone keeps talking about Bitcoin, but very few have tried it themselves. Own eye is king. I invite thinking people to download and experiment with Bitcoin wallets on smartphones :).

Android wallets: Bitcoin wallet , Blockchain wallet

iPhone Web Wallet