What
is
Bitcoin?
What is Money?
Before jumping into the what & why of Bitcoin let us take some time out & understand a few things about money.
The value of today's money is backed by our trust in the Govt. Earlier we used to trust things such as gold or silver as a medium of exchange, now we trust the Govt backed paper bills.
The fiat money we use is centralized i.e. controlled by a central authority (Central Bank or the Govt.). Earlier the fiat currency or the paper bills were backed by an equal amount of gold held in the central bank. This meant that the Govt. could only print a finite amount of paper bills.
But with time, Govt. removed the necessity to back paper bills with physical gold. Since the physical currency is not backed by any physical asset, the Govt. can print unlimited paper bills leading to inflation and a decrease in your purchasing power.
The above chart shows the bitter truth of decline in the value of 1 $ since 1913 due to unlimited printing of money
How Does Money Work?
When we transfer money to one of our friends through apps like PayPal or Google pay, the money from our bank account is transferred to our friend's bank account. In reality, the money is moved within the bank. Actually, it is not with us but with the bank. The bank approves the transaction and updates its central ledger.
Bitcoin - The Decentralized Money
First, let us understand what is centralization & decentralization. Centralization is where the processes and decision-making are controlled by a central authority. On the other hand, decentralized removes a central authority and gives decision-making power to all the independent units in a system.
How is our money Centralized?
Central Bank & Govt. control the money supply
The Govt. has the authority to freeze your bank accounts
Banks & the Govt. control our money
Owning a Bitcoin means having the private key of a space on blockchain which contains a Bitcoin
Buy Bitcoin on the world's largest exchange by volume- Binance.