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5 ways Bitcoin is a force of good for the world

It’s worth considering for a moment the breakneck speed Bitcoin and blockchain have travelled to get to this point in 11 short years — has it all been worth it? Will Bitcoin and blockchain be as transformative to society as the internet has been? And will this make society a better place?

CBDCs are just around the corner

China is on the verge of releasing their digital yuan project. Devised by the Bank of China, the digital yuan will be a central bank digital currency (CBDC).

These asset classes will enable governments to keep better track of the flow of their economies, allowing for more progressive and efficient forms of taxation.

In addition to making UBI (universal basic income) a more feasible prospect on a large scale, CBDCs will create greater transparency for how wealth is transferred to maximise profitability for businesses who are able to harness this data. This is assuming that CBDCs would use a public ledger like Bitcoin’s, so that all transactions are visible to all network participants.

Redistribution of wealth

Cryptocurrencies offer many opportunities to modernise the world’s economy: small transaction fees across borders, decentralised financial control and a finite, decimalised money supply.

What’s not changed since the arrival of Bitcoin is the concentration of wealth. If we look at the data,1,000 wallets hold 40% of all Bitcoin in circulation. There are over 46 million Bitcoin wallets in existence to give you some idea of the scale.

However, some have argued that cryptocurrencies offer a way to address inequality through the form of Universal Basic Income (UBI), as seen by the Good Dollar project — claimants can log on to receive a daily allowance of Good dollars to pay for essential living. The case for digital currencies was also made when the US Government sent out stimulus cheques to boost the economy during the course of the pandemic.

Cheques are slow and inefficient, which costs time and money, the argument goes; so why not use a digital wallet system for the distribution of cash?

Digital wallets could one day provide an inexpensive way to distribute cash to those who need it;  during the first COVID lockdown in the US, citizens were sent $1,200 cheques as compensation for the halted economy to try and kick start consumer spending. Had the pandemic not hit for another few years, the US government could easily have used digital wallets to distribute digital dollars instead.

Blockchain use-cases

Over the last 10 years, blockchains have been developed for all manners of industries besides cryptocurrencies: real estate, voting systems, food sourcing, smart contracts, supply chains, legal procedures and many more.

Blockchain is providing new ways to make established industries more effective in a similar way to how the internet has done in recent years. By providing an immutable system to deliver information, trust can be established quickly and easily, making life better for both businesses and consumers.

The possibilities presented by blockchain have been discussed in relation to the post-pandemic world. One airline has so far claimed that once the vaccine for COVID is widely available, passengers will be required to prove they have been vaccinated to travel. A blockchain for verifying those who have had a vaccine could speed up the verification process and help us get back to normal sooner.

Cryptocurrency could disrupt the current state of the financial world

Since the banking crisis of 2008, there has been distrust of traditional financial institutions owing to the culture of reckless, greedy lending from banks. Bitcoin offers a way to take power away from centralised finance and distribute it elsewhere.

This could have huge implications on how finance operates in society and bring accountability and transparency to lending processes with (distributed ledger technology) DLT.

The decline of traditional banks could also boost innovation in financial services. Many banks are well-established, having been founded over 100 years ago and have grown to behemoth sizes. This makes them slow to adapt and arguably stifles innovation in the digital economy.

Smaller fintech businesses underpinned by digital currencies will be nimble enough to adapt to the evolving market, thereby increasing productivity.

Easy to invest in

Bitcoin as a tool for investment is now gaining a lot of traction amongst investors and after its recovery post-2018, Bitcoin is proving itself as a serious investment vehicle that is here to stay.

Ark Investments believe that the 2020s will be a pivotal period of appreciation for Bitcoin, arguing that its market cap could reach the ‘trillions’ by the end of the decade.

Pointing out the gradual decline in the trust of gold as an asset class, Ark proposes that a shift of just 10% of investments from gold into Bitcoin would push market cap over one trillion — a scenario that is not out of the question given the new emergence of institutional investors now opting to buy Bitcoin rather than gold.

Due to the cap on supply at 21 million bitcoins, the asset has a truly finite supply; gold, on the other hand, can always be found elsewhere, or more sophisticated mining technology could be developed to extract it, thereby increasing supply and placing question marks over gold’s rarity and intrinsic value.

Bitcoin and blockchain are here to stay, so it is hopeful that they continue to lead to greater technologies that benefit the financial world.

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