In the final section of this chapter, we consider if bitcoin is something that you would want to buy and own, either for daily use or as an insurance and investment.
We have seen the strong cases of bitcoin in the previous sections. Bitcoin essentially transfers freedom back into the hands of the people. But what benefits does it hold for the casual everyday user?
For Daily Use
- To pay for goods and services.
- Many merchants and online businesses offer sizeable discounts for their products paid in bitcoin compared to paying with credit cards or PayPal. This is because merchants save on transaction fees when goods and services are paid for in bitcoin, and they can be certain that funds are genuine and not run the risks of encountering credit card fraud or back charges.
- In some countries, government and sales taxes are waived when goods and services are paid in bitcoin.
- Significant savings can be realised by using bitcoin as a payment method.
- We have seen land and properties paid for in bitcoin.
- In certain states and countries, taxes and electricity bills can be paid in bitcoin.
- As emergency cash during overseas travel.
- Bitcoin can be “stored” on a wallet in your smartphone and be converted to cash either via a Bitcoin ATM or exchanged with another person via a P2P cryptocurrency exchange. More about this in Chapter 2.0.
- Some users are surprised when travelling in another country that merchants do not accept currencies from their home country, but readily accept bitcoin in exchange for goods.
- To send money to family members overseas.
- Some parents find it more viable to send money to their children studying overseas using bitcoin. It is quicker and far cheaper than using traditional banking routes, and concerns of volatility can be mitigated if converted immediately or at the right time.
- Domestic workers working overseas find sending money back to their families in bitcoin better than using banks and remittance companies like MoneyGram and Western Union when they save as much as 10% or more in transaction fees.
- To pay for business expenses or property loans overseas.
- Some business owners find it convenient to make payments for business expenses overseas using bitcoin due to its speed and low fees.
- For the same reason, some property owners with real estate in a foreign country prefer to make transfers across borders using bitcoin to pay for maintenance and upkeep or service loans via a proxy.
As An Investment
- To combat inflation and hyperinflation.
- For residents of nations which experience hyperinflation such as Venezuela and Zimbabwe, bitcoin offers an alternative currency to safeguard their holdings against drastic loss in currency value. They can also use bitcoin to purchase goods online and delivered to their doorstep, that they can’t otherwise do with their sovereign currencies.
- As a store of value.
- For residents of nations that underwent financial crisis like Greece where bank accounts were frozen with limited withdrawal limits, residents of these nations could store their wealth in bitcoin to bypass government and central bank controls over their holdings.
- Bitcoin is also an ideal store of value and safe-haven assetA safe-haven asset is a financial instrument that is expected to retain, or even gain value during periods of economic downturn. These assets are uncorrelated or negatively correlated with the economy as a whole, which means that they could appreciate in the event of a market crash. against corrupt government regimes.
- Bitcoin also offers an alternative safe-haven asset over the traditional store of value asset class like gold and precious metals to hedge against an economic downturn.
We have come to the end of Chapter 1.0: Bitcoin Basics and hope that you now have a better and solid understanding of what bitcoin is and how it works.
In the next Chapter 2.0 Wallets and Transactions, we begin at Section 2.1 What is a Bitcoin Wallet to understand what bitcoin wallets are and how they work, and later on look at how you can set one up so that you can be part of this revolutionary technology and start making bitcoin transactions.