What Is Bitcoin and what was the Aim Behind Bitcoin Invention? Is Cryptocurrency Good For A Business To accept As Payment? Why?

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Bitcoin is a name that is used to refer to a digital money or currency which is known not to have any particular administrator or central controller or bank. It is operated on a peer-to-peer network that does not require the interference of third parties or intermediaries and can be directly exchanged between users. Normally, the transactions that occur on the network are recorded in a sort of public distributed ledger after being verified through the activities of the network nodes that utilizes the security feature of cryptography to hash and record transactions on the blockchain.

This particular digital currency was known to have been invented in 2018 by a person (or a group of persons, as far as we know) called Satoshi Nakamoto. It was released later in 2019 as an open source software and, consequently, began being used. The cryptocurrency is known to have a supply limit of 21 million which can never be exceeded. Usually, this cryptocurrency is created through a process called cryptocurrency mining. Then, it is given out as a reward to miners and can be exchanged for other services, currencies or products.

THE HISTORY OF BITCOIN

Bitcoin has had its own interesting trajectory from the time it was created up till now. First of all, on the 18th of August 2018 bitcoin.org was registered as a domain name. This was followed by publication titled Bitcoin: A Peer-To-Peer Electronic Cash System that was written by a certain Satoshi Nakamoto being mailed to a cryptography list on the 31st of October 2018. This eventually constituted the groundworks that formed the historic origination and creation of what is now known as Bitcoin.

The adoption of the cryptocurrency equally followed an interesting path. Over the years bitcoin had assumed different outlooks and historic implementation as chronicled below:

• Between 2011 to 2012: the coin witnessed some basic level of adoption. Essentially, Bitcoin was first adopted by black markets. One of such was the Silk Road that accepted this as payment for the first 30 months of its creation from February 2011.
• Between 2013 and 2016: it gained more traction. Its price had moved from $13.30 in 2013 to $770 by the beginning of January, 2014. Again, it witnessed a temporary splitting of its blockchain in 2013.
• Between 2017 and 2019: there was an experimentation with its witnessing protocol. An upgraded version of the Segregated Witness was approved. It witnessed some thefts and hacks from exchanges and its price finally settled at $13,000 by 2019.
• From 2020 till now: it has been broadly adopted as a means of exchange in several platforms and is now being traded on exchanges.

IDEOLOGY AND AIM BEHIND BITCOIN

In understanding the aim behind Bitcoin as well as its ideology then we should realise that as was pointed out in the white paper by Satoshi Nakamoto, it was meant to replace the conventional system of monetary exchange which involved having to trust whoever you had to deal with in any financial transaction. Again, it was meant as an answer to the ugly situation that had often been witnessed in cases where central banks were trusted to work effectively as not to debase regional currencies; unfortunately this trust has always been betrayed or breached in some cases.

So, some aims and ideology can be associated with the creation of Bitcoin apart from the fact that it is also a major means of monetary exchange of digital value. Some of these aims and ideology include:

• It's nature of decentralization can be traced back to the Australian School of economics system in which the management, distribution as well as production of financial value was advocated to be carried out in a free market without any form of monopoly.
• The philosophical idea and concept behind it seems to promote libertarianism and anarchism. As a result, it enjoyed the support of those who believed that one of its aims was to separate from the state the production, management and distribution of money.

THE ECONOMICS OF BITCOIN

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The economics of Bitcoin has been witnessed in several ways in that it has come to function as a digital asset which is operated over a distributed ledger technology that is peer-to-peer based. Equally, they are known to be "hard to earn, limited in supply and easy to verify" and is rather recognised to work more as a system for payment. Consequently, the economics of Bitcoin is such that:

• It is now being accepted by different merchants and has witnessed a lot of trading volumes on different cryptocurrency exchanges and typically delays in processing in up to about 10 minutes.
• In different financial institutions it is now being accepted. For instance, it started being traded as bitcoin futures by the Chicago Board Options Exchange on the 10th of December 2017.
• Bitcoin has become a source of investment and the Winklevoss twins had been reported to hold about 1% of all bitcoins that existed as at 2013.
• Venture capitalists have invested greatly in the bitcoin project with one notable example in Tim Draper who is said to hold one of the largest auctions of bitcoins amounting to up to 30,000 bitcoins.
• Bitcoin is known to have gone through a series of bubbles and busts which have been used to describe its different periods of ups and downs with its value rising from $0.30 in 2011 to as much as $1,242 in 2014 and now at its current price of about $48,000 in 2021.

ANALYSIS OF BITCOIN

An in-depth and systematic analysis of the entire concept of Bitcoin and its existence reveals some important findings which include:

• It has been quite difficult to regulate bitcoins and to implement taxation of its holders due to the fact that it is majorly traded on exchanges and transmitted online. Some countries have even banned it's trading.
• There have been some regulatory warnings from agencies that believe and posit that its regulation against hacks, fraud and scam investments could reach tremendous levels.
• It has been posited by some agencies, like the Journal of Monetary Economics, that there is the possibility of price manipulation and this was said to have been the case in the Mt Gox theft that involved huge amounts of bitcoins.
• There have been some economicj concerns as has been expressed by some important financial personalities like Eric Posner of the University of Chicago and James Heckman who have expressed their misgivings in the likelihood of its potential economic downsides.
• There have been concerns on the adverse carbon footprint and energy consumption that is required for its mining which cost a very huge amount of electricity which reached as high as 4 gigawatts of electricity and a total consumption of global electrical energy of 6% by 2018.
• Equally, there have been major concerns on the use of Bitcoin for criminal and illegal transactions which involve money laundering and illicit transfer of untracked assets.

THE GOOD SIDE AND BENEFITS OF CRYPTOCURRENCY

Actually, I believe cryptocurrency is very good and ideal for businesses to accept as a mode of payment. This is due to the fact that it comes with a lot of inherent benefits that would serve the interest and purpose of the financial world and even disrupt the financial systems of the world in a largely positive way.

If cryptocurrency is accepted as a means of payment and embraced globally it would be of benefit in so many ways as discussed below:

GOOD SIDE OF CRYPTOS ON THE TECHNOLOGICAL WORLD

Actually, in the beginning it started out as something that was rather suspicious. However, in the world of technology this suspicion is gradually fading out as a lot of cryptocurrency advantages in tech world now make them very good as a mode of payment. Such advantages include:

• In technology, cryptocurrency creates a new world of business and work opportunities such as blockchain buildings and cryptocurrency mining which involve technological know-how.
• Different tech companies can now benefit from the very fast rate of fees transaction as well as the much securer transactions which can also be distributed as intended with the use of cryptocurrencies for payment
• Cryptocurrencies as a mode of payment can improve the technological world by ensuring the safety and security of information since it does not have to pass through a third-party thereby preventing the theft of sensitive data

BENEFITS OF CRYPTOS WITH THE BLOCKCHAIN INNOVATION

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One of the major areas where accepting cryptocurrencies as a mode of payment can really be of great benefit is in the application of blockchain technology which cryptocurrencies underpin. This technology is disrupting our conventional system of doing things in a very rapid way and is now gaining so much adoption in e-commerce, industries and even healthcare systems.

Some of the potential benefits that will come with cryptocurrency being accepted as a mode of payment in line with the fact that it is hosted on blockchain includes:

• When cryptocurrencies are adopted as mode of payment and their underlying blockchains equally adopted it can be deployed in the area of even distribution of energy grids to track the consumption of electricity more easily
• Adopting cryptocurrencies for payment and its underlying blockchain technology can also be used in the tracking of carbon footprints on products for commensurate taxation
• Adopting cryptocurrencies for payments and, hence, blockchain can also help in making manufacturing companies monitor environmental-related situations and stimulating actions can be tracked.
• With the adoption of cryptocurrencies for payment we can benefit from blockchain technology which would make it possible to send funds directly to organisations without any form of bureaucracy.

GOOD SIDE OF CRYPTOS ON BUSINESSES

Adopting cryptocurrencies as a mode of payment equally has a lot of substantial benefits for the business world generally. Some of these benefits spread across financial, e-commerce, healthcare and even environmental related businesses the benefits include:

• The use of smart contracts which is common in the cryptocurrency world can help businesses reduce a lot of processes involved in ensuring secure transactions, keeping record of invoices, payroll and inventory since all these can be automated.
• Adopting cryptocurrencies as mode of payment can help in ensuring privacy and confidentiality of records which can even be transferred from one generation to another as in medical records
• The use of cryptocurrency for payments can help in making real estate agencies function faster with quicker verification, approval and payment four spaces.

GOOD SIDE OF CRYPTOS ON THE ECONOMIC WORLD

Generally, the adoption of cryptocurrencies as a mode of payment could be a game-changer when it comes to the economic world globally. This is because there are quite a good number of benefits that can be derived from them to that effect. Such important benefits include:

• In the financial world a great shift is being experienced in that central authorities are no longer required in the operation of financial services. E-commerce traders and businesses can become autonomous without having to be afraid of payment gateways tampering with funds meant for the exchange of services and products
• In commerce and industry the use of cryptocurrency for payments can reduce potential credit card scams and fraud and blockchain technology can be used to fight against counterfeit products and this has been deployed by Alibaba.
• Cryptocurrency as mode of payment can greatly improve the banking sector as the unbanked 2 billion people on earth can transfer and access payments by simply opening cryptocurrency accounts. Also, countries with unstable banking policies can have their citizens benefit greatly from this current move of cryptos.
• Cryptocurrencies as mode of payment come with much lower fees when compared to some traditional bank charges especially for countries like Kenya where over 50% of monetary transactions come with higher charges associated with mobile transaction fees.
• The use of cryptocurrency as mode of payment would eliminate middlemen thereby strengthening electronic commerce while offering faster and more secure transactions that can even be automated with smart contracts
• Cryptocurrency as mode of payment can be accessed from any part of the world and payments can equally be sent out without borders
• The high cost involved when funds are to be transferred internationally would be greatly minimised and thereby making for more efficient moving of assets as cryptocurrency payments are regardless of terrains.
• Some cryptocurrencies like Monero offer the benefit of high level of anonymity and pseudonymity which may become necessary in the transfer of assets

CONCLUSION

The invention of Bitcoin as a mode of transfer of assets and as a means of business transactions comes with quite a huge number of issues. Upon its introduction by Satoshi Nakamoto, it was received by mixed reactions. However, over the years it's important and possible applications have become more evident to all.

Therefore, it has gained more traction and acceptance and this is actually due to the fact that more of its economic benefits have been unraveled. Again, it can be seen that its philosophical idea and concept makes for decentralization and libertarianism in the management of one's resources. Nonetheless, an analysis of Bitcoin opens up some of the major issues associated with it which can include carbon emissions in the process of its mining.

Cryptocurrencies as a mode of payment is actually a welcome development which should even be given more serious attention. In the world of technology, it comes with so much benefits that can include the safety of information and use of blockchain technology to track production processes. Equally, a lot of good benefits have been derived in the business world as smart contracts can be deployed for the keeping of records and tracking of payrolls.

Finally, even in the economic world cryptocurrencies come with quite a huge number of benefits which can help traders reach out to the unbanked without any related high cost of transfers thereby increasing efficiency when it comes to moving funds both locally and internationally.

Cc:

@dilchamo
@nane15
@sapwood