So let’s look at 3 things
- U.S. Dollar
The only reason the U.S. dollar is considered a store of value is it is the reserve currency for all the world and global transactions. This is only because it is backed by the economic and military might of the United States of America.
This brings me to the topic of Gold
A lot of people believe the biggest strength of Gold is that no single entity, be it a Sovereign State or financial institution, can control it. Some people think of Gold as a store of value, a tangible asset they can touch and hold. However this idea just shows a lack of understanding of when people say gold is not affiliated to any Sovereign State or institution, many governments are large holders of Gold and are rumored to suppress the price for their own benefit. As far as practical uses you cannot eat a bar of Gold and you cannot easily spend in a store. Granted you could have a credit card and spend your stores gold fractionally in theory same as with bitcoin.
Which leads us to the final topic.
The real or intended use of Bitcoin
Bitcoin was originally intended to be a P2P protocol payment system. According to many internet sources and wikis Bitcoin is the first decentralized digital currency as the system works without a central repository or single administrator. It was allegedly invented by an unknown person or group of people under the name Satoshi Nakamoto and released as open-source software in 2009.
The system was intended to be peer-to-peer, and transactions to take place between users directly, without an intermediary. These transactions are verified by network nodes and recorded in a public distributed ledger called a blockchain. Since the scaling of Protocol and increase in block size the intended decentralization is now becoming more centralized and the speed of the network has many latency issues.
The explosion in price has brought on an enormous amount of miners conducting proof of work which essentially through consensys mechanism are acting as third parties in the system. This is totally contrary to the original P2P protocol intention in the original white paper.
This article is for informational purposes only and does not constitute investment advice.
The author may hold Bitcoin and/or Gold.