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  • Top Bitcoin Myths – #2: Bitcoin does not solve any real world problems


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    The following guest post is one of a series courtesy of Marco Streng, CEO and Co-founder of Genesis Mining.

    Genesis miningMany people believe that Bitcoin does not have any relevance to real world problems. Yet it does. Bitcoin solves innumerable real world problems. Many of these problems are not obvious to many people in first world countries like the United States or the United Kingdom. Consider the following:

    Underbanked

    In the United States alone, over 20% of the population is considered underbanked. In other parts of the world vast populations are underbanked. To be underbanked means not maintaining a checking or savings account at a traditional retail commercial bank or similar institution. The underbanked rely on alternative financial services. These services include pay-day loans, prepaid cards, subprime auto loans and check cashing stores. Alternate financial industries that serve the underbanked account for $89 billion in annual revenue. This is a shocking number considering many of these alternate financial services are outside the scope of traditional financial regulation creating the potential for abusing customers.

    Bitcoin Solution

    Bitcoin walletOpening a Bitcoin account (a wallet) is as simple as creating an email address, a technology that is almost universally understood and practiced at this point. Once you have a wallet, you are able to send and receive Bitcoin instantly and practically for free. There are no bank hours, no bank applications, nor do you have to go to a physical location in order to complete the transaction, or deal with a bank which many find intimidating and perplexing.

    Remittance

    Every year a reported $500 billion dollars is sent across the world via international remittance payments. Take for example an Ecuadorian immigrant working in Canada who has a family in Ecuador that relies on his income to survive. Each week he sends home a portion a good part of his paycheck through companies such as Western Union. Such companies Western Union and other similar companies often charge fees from 10-20% of the amount wired to complete the transaction…. and that does not include the cost of converting the currencies between countries. As National Geographic said,

    Western Union makes and spends billions of dollars doing what Bitcoin does, for free.

    Bitcoin Solution

    Bitcoin enables these transactions to occur instantly over the Internet…..it has no borders. Transferring Bitcoins is as easy, and as inexpensive, as sending an email. Further, there is no middle man, no remitter, charging 10% or more.

    Unstable government currencies

    Cyprus: A government backed currency is as stable, or unstable, as the national government, and local economy in which it is used. Recent history reveals just how fragile a local currency can be.

    Zimbabwe: In one particular month in 2009, the government backed currency increased 70 billion percent. It became common in the country for laborers to request to be paid in the morning because they knew by the time they were paid after work, the currency would be worth far less. After years of inflation, the government abandoned their national currency and informally adopted the US dollar.

    Argentina: In 2002, the Argentine economy was in distress and to ease this stress, the government converted all bank account holders’ U.S. dollar deposits into the much less valuable Argentine peso. Overnight, Argentine citizens were forced into holding a currency which they felt was inevitably going to be worth far less tomorrow than it is today. While they did slightly recover from this collapse, the currency is still experiencing inflation at a rapid rate. In 2014, the Argentine peso inflated nearly 40%.

    Venezuela: In 2014 after growing tired of facing an uncertain future, students in Venezuela took to the streets and began to protest. Major international brands such as Delta and Brinks were forced to pull out of the country after reporting losses of hundreds of millions of dollars as the currency began inflate at a rate of over 60% in 2014 alone.

    Bitcoin Solution

    Global Pricing: The value of Bitcoin is calculated on a global basis. This means that one country’s economic tension will not substantially impact the value.

    Decentralized: As a decentralized technology no one government can manipulate the currency. ~no one government can manipulate the ledger~

    Deflationary: There are only 21 million Bitcoins that can ever exist and this number cannot be changed. So unlike traditional government backed currencies, the option to simply increase the supply does not exist.

    Related News

    • Milly Bitcoin

      The replies are the cultist replies that you often see in Bitcoin forums. Actual, real world experiences are quite different. The myth is that you can solve these problems instantly using Bitcoin as this article implies. The reality is that Bitcoin is a useful tool that may help, possibly in significant ways, to alleviate the problems discussed. However, it brings with it another series of problems and issues.

      The author also does not understand how Bitcoin works. Transactions are not “instant,” it takes many minutes for the network to come to a consensus over the state of the ledger and that severely complicates many use cases. Not that these things can’t be overcome but it will come at an expense. Also, the blockchain does provide financial services such as loans so you can’t claim that Bitcoin will somehow solve overpriced payday loans or other similar issues of the underbanked. It is also unclear what the mining fees will be in the long term as the block rewards diminish and the mining fees rise. There is a very long way to go before it can be claimed that Bitcoin will solve all these problems.

      • jimbit

        You make valid points.. as for your first point, DASH can be used, which has instantX transfer.

        As for loans, you are correct, there is NO easy way to loan btc/crypto currency currently.

    • National currency is actually virtual in the sense that money (and credit) is a virtual agreement to use something as a means of stored value. If you were not required to pay taxes and other gov’t services in the national currency, it would become worthless.

      Bitcoin does solve a lot of problems by providing a public ledger cryptographic method of sending tokens securely across borders. In previous times, we relied solely on central authorities which held monopolies on it.

      cryptoC doesnt replace fiat currency, but it does compliment it. It solved 2 large problems (fungible, secure stored value, and ability to move it rapidly). Plus blockchain technology (or sidechain) technology to use for other things like car or land title records, and other things that an irreversible ledger is helpful.

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    Top Bitcoin Myths – #2: Bitcoin does not solve any real world problems

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