The beginner’s guide to bitcoin.

Part 2

Why bitcoin is so valuable, and common misconceptions.

Why is bitcoin so valuable?

Bitcoin is more provably scarce than other stores of value.

As discussed in the previous thread, bitcoin has a controlled inflation rate, and only 21 million will ever exist.

Fiat money has unpredictable inflation that is controlled by a government.
This makes it much more risky to hold government issued currency.

While it may not seem like a risk if you’re in a first world country,

hundreds of millions of people live in hyperinflationary environments.

These people have consistently been turning to bitcoin for an escape.
For example, in Venezuela, where inflation is 100+%, people have been buying bitcoins as fast as they can.

Activity in peer to peer exchanges is higher than anywhere else in the world.

Other high inflation countries, such as Zimbabwe and Nigeria, have seen similar effects.
What about gold?

Although most think of gold as a hard asset, we don’t know exactly how much exists.

Bitcoin also holds many advantages over gold, including it being:

- Impossible to counterfeit
- Easier to store/transport
- Divisible into smaller units (up to 1/100,000,000)
Another benefit of bitcoin?

It cuts out the middleman.

In the legacy finance system,

you need to rely on a third party (such as a bank or PayPal) to transfer your money.

This creates problems for the 1.7 billion people that don’t have access to these institutions.
Third parties also make international transfers difficult,

and you have to trust them to handle your money properly.

Bitcoin removes the need for this.

You can send money to anyone in the world instantly without trusting anything but the code.
Now that we’ve discussed the investment case for bitcoin,

I’ll address some common questions and misconceptions.
But bitcoin isn’t backed by anything?

Bitcoin is backed by the same thing as fiat money; the faith of the people that use it.

The difference is that bitcoin is far more transparent and predictable (in terms of policy, not price right now).
What if governments ban it?

Since bitcoin is decentralized, the only way to truly ban it is to shut down the internet.

If that happens, we’ll have far greater problems than the bitcoin price going down.

Many countries have also shown increased adoption after a ban.
After Nigeria banned crypto, the bitcoin price on peer to peer exchanges rose 36% above the global average, indicating strong demand.

While bans can hurt the network in the short run, it has not slowed long term adoption.
Additionally, bitcoin has become quite popular with many politicians.

There are several senators, governors, and house representatives in the United States that support crypto.

This government support makes a ban very unlikely.
But isn’t bitcoin bad for the environment?

Mining bitcoin uses a lot of energy, even eclipsing the output of some countries.

However, this energy usage pales in comparison to that of the current global financial system.
Also, a coinshares study found that 74.1% of bitcoin is mined using renewables.

Miners (mainly in China) that still use coal are rapidly switching to renewables as well.

Energy use is not an issue as long as it comes from sustainable sources.
This concludes part 2 of the beginner’s guide to bitcoin.

If you found value in this thread, please give the first post a like and retweet.

I truly believe that bitcoin (and crypto in general) is going to change the world.

Now is the time to get in.
You can follow @ModernAgeWealth.
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