In case you have not heard there is a new currency on the block. The blockchain (or public) ledger is a technology that has allowed us to exchange currency or make transactions with transparency, while reserving the right to share our identity. The blockchain is a global public ledger. We can see all of the transactions on Blockchain.info. But what does this mean in terms of financial freedom? The most popular currency, called Bitcoin is easy to exchange, easy to obtain and accepted more and more everyday.
I first heard of Bitcoin back in 2010 and could not understand the concept of a digital currency. I wish I had, as I would have bought into it much sooner and would be far wealthier by now. Folks started out using their computers to mine Bitcoin and it was easy. Over time it has become more and more difficult to mine Bitcoin and thus other alternative coins have been created. Before I go any further and for those that are not familiar with digital currency let’s talk about that. Currency is nothing more than energy upon which we agree holds a particular value. For instance we have decided that gold and silver hold value. They are shiny and rare and we know that ability to obtain them requires much effort. This inherently contributes to the overall value of the elements. Digital currency is different because you cannot physically hold it. But at the same time much of our currency today isn’t held physically in our hands.
We transfer credits from our bank accounts to other people and companies for goods and services all the time. We have done this for years and it has worked for years. My employer pays me in “credits” that are deposited in my bank account and from there I use my debit card to make most of my purchases. There is never any physical exchange of currency in those transactions. As a society we are comfortable with this. So why is Bitcoin (or any alt-coin) any different? Bitcoin is not backed by any one government or bank. The United States used to back the dollar with gold and silver. Today the dollar is not backed by anything except the promise of the U.S. government. Bitcoin is a currency that can be exchanged privately between two parties in any place in the world and without the intervention or governance of any government or bank. For example, imagine that you go to a garage sale and want to buy an item. Typically you would use cash to make this transaction. With Bitcoin the buyer and seller could make the transaction without cash, without the need for a bank to deposit the currency into; all while the transaction being record on the blockchain.
This may not seem like much but then consider the fact that so many banks charge fees to hold your money in their vault. Fees if you do not keep a certain amount in your account or use some of their other services. Banks make money by charging you to use your own money. All while claiming that by keeping it with them, it is safe and insured. Using Bitcoin does incur fees, but those fees are far less then any bank will charge you and actually keep the network in operation instead of making some bank wealthy. While Bitcoin can be purchased today and used today its true value is still in fluctuation. For those willing to take a small risk in time, money and effort one can easily obtain Bitcoin and move away from being solely dependent upon their government’s currency.