Seven Bitcoin Effects Today

  1. Speculation. Bitcoin is a novelty that is a class of cryptographically backed assets. His course has growth potential and is subject to high volatility. Due to these factors, Bitcoin is ideal for speculators with a high risk tolerance. HODL !!!
  2. Acceptance by businesses. Businesses will increasingly accept Bitcoin because this will allow them to increase their profits by avoiding fees and cash backs on credit cards.
  3. Consumer acceptance. Buying goods from certain suppliers (using Bitcoin), consumers can save. For example, get a 20% discount on Amazon *. In addition, with the help of Bitcoin, consumers can buy things that they could not (easily) purchase in any other way. An American, for example, can buy Persian rugs or Cuban cigars online, despite the trade embargo. Bitcoin increases the efficiency of the economy, especially in similar niche areas.
  4. Security. Acceptance by businesses, consumers and speculators leads to a higher price and thus encourages more miners to participate and ensure the security of the system. A decentralized irreversible transaction register also serves as a form of triple accounting. Here, everything that happens with transactions (debit, credit, confirmation on the network) increases the reliability of the system and the level of trust in it.
  5. The preference of the developers. Bitcoin is a simple and predictable network with elementary rules and public code. It is fertile ground for developing complex algorithms, cross-platform payment protocols, smart contracts and other tools. Its decentralized nature allows for innovations that do not need to be resolved. Altcoins (such as Litecoin and Ethereum) do not pose a serious threat, since Bitcoin already dominates other cryptocurrencies, both as a means of saving and as a medium of exchange. If you doubt the significance of this network effect, or are worried that altcoins will overtake Bitcoin in any other way, I would like to draw your attention to the insightful and thought-provoking article by Daniel Kravitz: “The Coming Death of Altcoins”. Ultimately, developers will continue to reach for Bitcoin.
  6. Financing. Bitcoin will gradually absorb an increasing market share of classic banking institutions in areas such as money transfers, micropayments, peer-to-peer lending and trading in stocks and securities. This process has already begun (pay attention to the support of Open Assets and Colored Coins by the NASDAQ exchange, NYSE investments in Coinbase, etc.). The money we are accustomed to runs the risk of disappearing if they do not start using new protocols such as Bitcoin.
  7. Acceptance as a world reserve currency. In the end, all transactions will be settled through the blockchain: ownership of real estate, automobiles, purchase of shares and other monetary instruments and currencies. The logical continuation of the first six network effects is this final network effect. Any new player in the field of both crypto and traditional currencies will have to surpass Bitcoin in all of these seven areas. This is unlikely, given the pace of development of Bitcoin Core software, the level of investment in Bitcoin companies around the world, the growth of the Bitcoin user base, and much more; further price increases will only speed up the process. Finally, a speculative attack can dramatically increase the value of Bitcoin almost overnight.

Bitcoin is a strong currency: its environment is the Internet; he frees his users from the need for third parties; he saves money for businesses; he is deflationary; anyone can check his code; Bitcoin developers are working tirelessly to improve it; the list goes on. The above network effects can make Bitcoin only stronger. Competitors should be on the alert.

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