Kaozai Creator Alliance | What can Bitcoin be used for besides buying Tesla?

After breaking through the previous high of $20,000 at the end of last year, Bitcoin has been rising strongly all the way. Calculated from March last year, the 15-fold increase in one year has made this controversial issue once again a hot topic.

Some people say that this is the money that is truly in their own hands, and it is a revolution.

Some say it’s a scam, a financial bubble like the tulips;

Some people say this is digital gold, even better than gold.

Some people say this is illegal, has no government credit endorsement, and has no value at all;

Some people say that this is to protect human private property and represents the spirit of freedom and independence.

Some say it facilitates crime and that transactions using Bitcoin make it more difficult to investigate crimes.

A thousand people may have a thousand different opinions about what Bitcoin is, but what Bitcoin can be used for is actually happening and everyone can see it.

Payment

Bitcoin can certainly be used for payment. At the beginning of its creation, Satoshi Nakamoto defined it as a peer-to-peer electronic cash payment system. From 10,000 bitcoins to buy two pizzas 12 years ago, to now more and more institutions and individuals accepting Bitcoin as a means of payment. The latest example is Tesla, which not only purchased Bitcoin, but also supported Bitcoin payment for car purchases, and stated that the Bitcoin received would not be sold for legal currency.

For payment, Bitcoin has the advantages of peer-to-peer transactions, more secure funds, and privacy protection. Of course, the current Bitcoin transfer speed is not ideal, and the handling fee is also slightly expensive when making small payments.

Criminals are also using these features of Bitcoin to trade drugs, illegal weapons, and so on, but data shows that this is only a very, very small part of Bitcoin transactions. The 2020 Cryptocurrency Crime and Anti-Money Laundering Report by CipherTrace, a US cryptocurrency intelligence company, shows that in 2020, major cryptocurrency thefts, hacking attacks, and fraud totaled $1.9 billion, the second highest year in cryptocurrency crime value ever. But cryptocurrency crime in 2020 fell 57% from 2019, from $4.5 billion to $1.9 billion in 2020. Illegal transactions account for only 0.5% of Bitcoin's annual trading volume.

International Transfers

Bitcoin has incomparable advantages over any existing system for international transfers. Compared to the current international transfers that take a week, Bitcoin can complete the transfer within an hour, and the fee is low.

A fast international transfer method like Bitcoin can greatly accelerate the business progress of many multinational companies and strengthen import and export trade between countries.

Using Bitcoin for international transfers also reduces the opportunities for criminals to commit fraud due to transfer time differences.

Money laundering is also used in this function. The anonymity of Bitcoin transfers makes it easy for criminals to launder money and for corrupt officials to transfer their assets abroad. It is unrestricted and anonymous and difficult to track.

Stored value, investment targets

Although the issue of Bitcoin’s value is still under discussion outside the industry, the attributes of “digital gold” have indeed been recognized by more and more people. Musk, the founder of Twitter, and others have expressed their support for Bitcoin. Tesla and Microstradge have publicly bought Bitcoin, and recently Meitu became the first person in China to take the plunge and also included Bitcoin and Ethereum in the company’s reserve assets.

As an investment target, from the perspective of returns, there are probably few better investment targets than Bitcoin this year.

Financial Management

Since Bitcoin has the attributes of value storage and investment target, it is natural that Bitcoin can also be used for financial management. Bitcoin's financial management is mainly concentrated in the field of DeFi, a decentralized, more efficient and transparent financial system.

This means that Bitcoin can also be deposited in banks in the DeFi field, lent to others as loans to earn interest, deposited in funds in the DeFi field to invest and make profits, etc. This is the reason why people in and outside the circle have two extreme views on Bitcoin: when people outside the circle are still discussing whether Bitcoin is air or illegal, the circle already has a complete set of self-consistent mechanisms.

Compared with the developed Ethereum DeFi, Bitcoin financial management currently faces many problems, which can be summarized into two points: the high wear and tear caused by high fees and low returns, which seriously do not match Bitcoin's king status among cryptocurrencies. Only a few projects such as acBTC can bring higher DeFi returns. From the perspective of financial management, Bitcoin has not yet fully started.

A tool for currency wars?

The openness of Bitcoin gives it a lot of possibilities, and its ultra-high liquidity allows it to circulate without borders and restrictions. Some people believe that the surge in Bitcoin is a conspiracy by the United States to launch a currency war against China. The United States uses the ultra-high liquidity of Bitcoin to plunder China's wealth, and by buying a large number of Bitcoins to push up the price, it lures Chinese investors to take over, thereby plundering China's wealth. However, this view has no evidence and is difficult to stand up logically.

The mother of blockchain technology

Although blockchain is one of the underlying technologies of Bitcoin, the blockchain technology was born with Bitcoin. This may be the greatest impact that Bitcoin has brought to the world. The spiritual core of independence, freedom, and fairness behind cryptocurrency is close to the values ​​of today's era. Blockchain believes that individual power relies on the collective, and the matching incentive mechanism and consensus mechanism are new ways to change production relations and improve production efficiency. Now this technology is being highly valued and promoted all over the world.

Bitcoin is a technological invention and a payment method. The technology and method are neutral. It depends on how you use them. Just like the US dollar and the RMB, some people use them to buy milk, while others use them to hire people to commit crimes.