Bitcoin is a business — you can buy equipment, rent it out to a network, and get paid for it, or buy part of a mining company as an investor. You can even directly buy hash rate in the form of tokens, open an exchange platform, or put your Bitcoin ATM. Everything is as it should be — business purchases goods cheaper and sells them more expensive.
The definition that bitcoin is MLM (multi-level marketing) is very superficial. There is no business plan or tiers, but there are product consumers who recommend the product to others and attract new members to the network. The more participants or users, the more valuable the currency is.
Bitcoin is the new perfect money. You can exchange them for any goods you have in the world. Although, it is not yet as easy to do as exchanging US dollars or euros. You have to search for who accepts Bitcoin, but it is possible. And BTC is, by all definitions, money, or maybe even something more. Bitcoin can be considered the digital equivalent of cash without the physical embodiment. It serves as a medium of exchange, a store of value, and an investment asset, but it does not have the attributes of a security. Bitcoin has no relation to any companies or project’s financial health or profits. Yes, bitcoin is not very suitable for transferring small amounts of money, and yes, while you will pay for the product, its price may fall or rise. But we will come back to this issue later.
Bitcoin is gold, but it has one key difference: gold, like Bitcoin, resists inflation on its own, but it is harder to store, move, and sell.
Besides, one day, gold will be mined so much that there will be no point in new mining, and the price will stop rising. And if there is a crisis, all production companies will start reducing their purchases to save themselves. In the end, gold, like the states, will lose, and its price will fall.
As we can see, gold is significantly inferior to bitcoin, and in addition, unlike BTC, it does not participate in the role of raw materials for the company like gold. In contrast, it has a different role. It is more of an arbitrage and not a commodity role. But as great as Bitcoin is, it still doesn’t come close to the market value of gold and silver, the other two decentralized assets.
The total global value of gold is just over $12 trillion, and silver is worth about $1 trillion. I believe this is favorable for bitcoin, which currently has a market capitalization of about $433 billion. For a digital asset to have the same value as silver, each bitcoin must be valued at $60k, which it has reached before and will likely reach again.
For BTC to become as valuable as gold, it would have to trade for a staggering 630 thousand dollars, which is not the best option if we want to have time to stockpile this valuable resource (Fig.10).
Fig 10 Advantages of Bitcoin compared to Gold and government money
Bitcoin is the most secure database, and for many years since its inception in 2009, no one has been able to trick, hack, or alter it in any way. Anything can be written into this database, up to 4 MB in size, and this information will be stored in the network’s memory until our planet ceases to exist.
Bitcoin is a commodity expressed at its best. According to the U.S. Commodity Futures Trading Commission (CFTC), bitcoin is the only crypto-asset officially considered a commodity. All other coins and tokens can be classified as securities. Now, think about why I am talking about Bitcoin and not its alternatives.
Bitcoin is a religion or sect that believes jealously in technology and the possibility of a decent life given to everyone. Bitcoin has its own symbol, similar to the cross for Christianity or the crescent moon for Islam. Its «B» symbol is known by literally every person on the planet who has accessed the Internet at least once. In such a religion, there is a specific «God of Bitcoin,» symbolizing the incomprehensible idea of a decentralized financial system.
There are also sacred texts containing information about blockchain and cryptocurrency. There are rituals associated with using or investing in Bitcoin to help believers feel connected to its ideas and community. There are holidays like Bitcoin’s birthday or the famous Bitcoin Pizza Day dedicated to the first purchase made with the coin. There is also a mythical creator – Satoshi Nakamoto, and other personalities who have made a particular contribution to the development of Bitcoin and have been honored, brought gifts, or invested in charity or development projects supporting Bitcoin. There is even merch – symbols, items, and clothing that help users identify with this religion. You don’t have to go far – you’re holding this book that is also part of the Bitcoin culture and religion.
Now for a more complex concept. Bitcoin is a cryptocurrency based on the Bitcoin Protocol, which uses a distributed network of nodes (nodes) to provide security and transaction support. If you don’t know what it is, don’t feel bad. The main thing to remember is that the BTC network is resilient to censorship and single points of failure. Plus, bitcoin uses cryptographic methods to ensure security.
Over the years, bitcoin has demonstrated the reliability and resilience of its system, and it has never been hacked in its 14 years of existence.
Bitcoin is a means of waging soft warfare. Soft warfare (non-linear or hybrid warfare) is a conflict strategy that uses unconventional methods and tactics rather than armed aggression to achieve its goals. Soft warfare includes information operations, economic pressure, diplomatic tactics, cyberattacks, and other unarmed measures. Soft warfare has become more common in the modern world, especially with the development of information technology and social media, which allow for the rapid spread of misinformation and manipulation of public opinion. The main objective of soft warfare is to achieve political, economic, and cultural advantages without overt use of armed force. It can include interfering in the internal affairs of other states, disinformation, and manipulation of public opinion, weakening foreign economies, supporting non-governmental organizations, terrorist groups, etc. If all of this can be done with fiat money and gold, it is possible with Bitcoin (Figure 11).
Fig.11 Bitcoin as a means of achieving political, economic, and cultural advantages without the overt use of armed force
Bitcoin is a public voting system. If verified wallets are assigned to each person at the state level, by transferring a minimal amount of money, a person can cast a vote in an election or referendum. This way, you can have the most honest, secure, and open system of open voting without spending millions of dollars on election preparation to get people’s opinions.
And lastly, bitcoin is a payment system for states and the largest companies in the world.
The list can go on indefinitely, saying that Bitcoin resembles a financial pyramid scheme, an anonymous darknet wallet, a way to launder money, or something else. And in a way, those who call BTC such words are right, but only partially. Over time, people will find dozens more meanings for Bitcoin and its properties, and each meaning will be correct for a particular people group. Therefore, no matter how one tries to compare everything in the world to Bitcoin, it will turn out that this is partly true for Bitcoin, but overall, it does not fall into any of the categories humans have invented.
The most accurate way to put it is that Bitcoin is a combination of all of the above, but certainly, in each case, its merits are most pronounced.
Bitcoin is an interdisciplinary technology, a unique combination of different technologies and fields of knowledge, which makes it an interesting research and practical topic for many professionals, academics, and just curious people like you and me.
Fig.12 A visualization