Bitcoin For Dummies
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With bitcoin, trust has to work on both sides. Even though you as the user are always in control of your own finances, you still have to trust the rest of the bitcoin network to not drop off the face of the earth tomorrow.

The chances of bitcoin disappearing are so slim that it isn't something you should worry about. However, if there is one thing that life has taught you, it is that there are no certainties in life. Luckily for everyone involved, the bitcoin network consists of many individual users, as well as bitcoin nodes, which are put in place to keep the network running at all times.

The concept about bitcoin that people have the most difficulty with in terms of trust is decentralization. As mentioned, bitcoin is a decentralized digital currency, which means there is no central point of failure that would cause the bitcoin network to not recover. Every individual user is an integral part of the bitcoin ecosystem, so it would take a nearly impossible amount of collaboration in order to shut down everyone at the same time.

You can compare bitcoin's decentralization with how Google's search engine works. The engine itself gets accessed by millions of people at the same time, yet it never seems to slow down. That's because Google's search engine runs on so many servers — in a decentralized manner — that it would take a tremendous effort to bring it down altogether.

Decentralization also brings forth another aspect that makes people think twice before getting involved in bitcoin. Because the network is made up of lots of individual users, there is no central authority overseeing the bitcoin network. That means if you own bitcoin and something goes wrong for some unforeseen reason, no one will reimburse you. When your BTC are gone — either by you having spent them or even having lost them, they are gone — there is no chance to recover them.

Trusting bitcoin technology

Human nature tells you to keep doing things the way we have been doing them. Beware change. When the Internet came around in the early 1990s, few thought it would ever become a commonplace, household service. It was for geeks. Yet look where you are now — everybody's grandparents and their pet dogs are on the Internet. That being said, the transition from no connections to people all over the world being connected was a big change.

Bitcoin is often compared to the early Internet, a new and disruptive technology that seems to be far ahead of its time. In part, that's true, as bitcoin is solving a technological problem that most people don't think about in the first place. Not because the evidence isn't there, but simply because human nature rejects changes as long as things "still work fine the way they are."

And just like the Internet, it will take a rather long period, many years at least, before bitcoin becomes mainstream technology. Even though several great bitcoin projects and platforms are in development, it will take a lot of time until they are ready to be used by the general public. On top of that, there need to be more educational efforts regarding bitcoin that focus on the underlying ideas and technology, rather than the "alternative currency" aspect.

On the other hand, a lot of people have already put their trust in bitcoin technology. Most of the technology in existence today is focused on financial means, such as the remittance market. Bitcoin technology allows you to send money to anyone in the world, at little to no expense. In doing so, remittance players such as Western Union, Moneygram, and even traditional banks will potentially face stiff competition from this "fake Internet money," as bitcoin is often called.

Whether you should put your trust in bitcoin technology is something only you can decide for yourself. Bitcoin was, is, and will always be intended to put you in control of your bitcoin money.

Trusting bitcoin as currency

As previously noted, bitcoin is not a proper currency in its truest sense, but rather an alternative, digital method of payment. Granted, you can buy and sell services and goods in exchange for bitcoin, but the monetary aspect lacks certain features required for it to be considered as a true "currency" in the traditional meaning.

Nevertheless, lots of merchants put their trust in bitcoin as a payment method, simply by accepting it alongside more traditional ways of paying. The reasons are fairly simple:

  • No extra costs associated with accepting bitcoin payments
  • No additional infrastructure to set up
On top of that, as a merchant, you can integrate bitcoin payments in both your online and physical stores, if you want. In either case, you will be able to convert any bitcoin transaction to your preferred local currency immediately and have funds deposited to your bank account the next business day.

From a consumer point of view, using bitcoin as a payment method means you don't have to spend any of your cash, nor use a bank card or credit card linked to any of your bank accounts. However, in order to obtain bitcoin, you usually have to buy some first, which does involve spending your own money.

Bitcoin is all about letting the individual user control funds at any given time. And that aspect scares a lot of people away, as governments and banks have been holding our hands along the way for the past half century or so. Taking care of everything ourselves can be a burden, as many do not want that responsibility. And if you honestly feel that you don't want to invest your time in managing your money at your leisure, when you need it, at any given time or place, then bitcoin is not for you.

But if you're fed up with the current financial system of governments and banks, bitcoin is well worth the time and effort. No one is saying that bitcoin has to replace the local currency you've been using to date. Both systems can coexist peacefully. However, once you start seeing the benefits and potential of using bitcoin for various types of purchases, you will feel a rush of excitement, and more importantly, invigorating financial freedom.

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