The Bitcoin official website(bitcoin.org
) has a Bitcoin FAQ
(Frequently Asked Questions), written around 2013, and some of the contents of this FAQ may have been obsolete. In order to help Bitcoin enthusiasts to understand Bitcoin (system) more comprehensively, our site will maintain a new and up-to-date FAQ on Bitcoin (system). In the content below, the content expressed by the “Knight” on the left side comes from the FAQ of the Bitcoin official website; the content expressed by the “Letters” on the right side comes from the opinions of some friends of our CEO, and is edited and reorganized by our editors. Tips: this article only states opinions of all kinds of people, and its content is NOT guaranteed to be correct, thus should never be considered as an investment advice or suggestion.
The Bitcoin system(a peer-to-peer digital cash system) is a great and epoch-making invention. Its emergence has brought many revolutionary positive effects to human society. Its positive significance is mainly reflected in the following aspects:
1. For the first time, Bitcoin system has invented a blockchain network technology that can be used to carry digital asset transmission without being endorsed or highly credible. Once the blockchain network technology was invented, people could use it to solve many problems that were previously considered difficult to solve. Blockchain network technology is very useful and can be applied to many fields such as finance, depositing, securing, fraud prevention, anti-cheating, and so on.
2. For the first time, Bitcoin system invented an automated, autonomous value transfer network that is comprehensive in the rule of law without help of any government. This also means that Bitcoin system invented a new monetary support system that does not rely on complex power organization structures.
3. Bitcoin system invented a low-cost, space-free public fund-raising(IPO) method or crowd-funding method, which is easier to operate than securities mechanisms such as traditional stocks. Public fund-raising refers to raising funds from mass consumers. In traditional business activities, IPO usually refers to public fund-raising via the issuance of stocks. In fact, an IPO can refer to any form of public fund-raising or financing. Let's talk about how the Bitcoin system performs its IPO. Shortly after the birth of Bitcoin, people discovered that Bitcoin systems can be used for cross-border payments and secret transactions. It was very useful and one of the best choice for many people at that time, so that BTC tokens in Bitcoin system were valuable. Some people thought that BTC would become more and more valuable in the future, and spent a lot of money to maintain the Bitcoin network through "mining" to obtain more BTC tokens. This mining behavior is actually helping Bitcoin system continue to issue more and more BTCs. The IPO function of the Bitcoin system was realized by "Got BTC by mining and sell BTC to the public in the market to obtain legal funds". That is, people only need to run Bitcoin wallet application software to mine BTC, and at the same time, mining contributes money to the Bitcoin network. So mining is essentially a continuous IPO behavior of the Bitcoin system, and it is simpler and more effective than traditional IPO method like issuance of stocks. Similarly, people can also generate more blockchain networks to issue more corresponding native tokens by copying and improving the open source codes of the Bitcoin system. As long as someone is interested in this new blockchain network and believes that the native token of this network will become valuable in the future, they will cost money to exchange the new tokens for investment. And for organizations, to create new blockchain networks and issue its native tokens is a simpler way of IPO and the easy way to collect funds directly from the public.
4. Provided funds for ICO projects appeared later on. ICO is "Initial coin offering", but tokens issued by blockchain networks are usually unstable in value, thus should not be called "coin". That is, ICO should be renamed as ITO(Initial token offering) which is more appropriate. Whatever, ICO or ITO is essentially a new way of IPO. If there is a difference, that is, before the emergence of BTC, the funds raised by the traditional IPO are mainly legal currencies or other legal securities, and the funds raised by ICO are based on BTC or crypto tokens like BTC. As crypto tokens are digital assets which can be freely circulated in blockchain networks and can be exchanged to legal currency in exchange markets, raising the encrypted digital assets(tokens) means raising the corresponding amount of legal currency. For example, many blockchain project development teams have used the ICO to raising BTC to obtain funds for project development. Among ICOs, the most famous one is the ICO implemented by development team of the Ethereum system, which raised 31,531 BTCs. And these funds helped the ongoing development of Ethereum. Now Ethereum system is the one of the most popular blockchain projects with a very high market cap. However, due to the unstable price of BTC, new tokens anchored with legal currency(such as USDT, USDC, TUSD, etc.) has a more stable price than BTC, these stable-value tokens are more suitable for estimating the market value of the new projects and can act as a store of value, thus more suitable for ICO. Later on, after stable-value tokens as USDT got widespread recognition, they have become increasingly popular. More and more new ICOs are performed to raise USDT and other stable tokens instead of BTC nowadays.
5. Created an era in which everyone can issue private money. Bitcoin system is an effective solution to Hayek’s currency non-nationalization ideals, it is also weakening the autocratic capacity of the government or currency issuers to control money system of a country. Nowadays, everyone can easily distribute their own private tokens or private currencies on public blockchain networks such as Ethereum(ETH) network and Stellar(XLM) network. Of course, whether a newly issued private token can eventually develop into a currency depends on whether it can has a more stable value and be widely accepted as a payment method by the public in the future.
6. Helping civilians gain the freedom to dispose of their private token assets. Civilians can exchange assets for crypto tokens(encrypted digital assets) to achieve free disposal, concealment, and transfer of wealth. By holding crypto token assets, people no longer have to deposit their property in a government-controlled banking system in the form of legal currency. Instead, they can freely control their private property and avoid interference from the government or someone powerful.
The emergence of the Bitcoin system has indeed had a huge impact on the world, and Bitcoin system was valuable during its early ages for many people need it. Although the underlying blockchain technology of the Bitcoin system has been extracted and widely used in various fields of human production and life, it does not mean that BTC is still as valuable as it was. In fact, since the price of BTC cannot be stabilized, BTC will inevitably withdraw from the historical stage as a means of payment. After 2017, less and less people use BTC to buy commodity or pay for business deals due to its unstable price and value, and BTC is going to be useless as people can always find a better way to pay in their business deals instead of BTC, thus the use value of BTC is becoming weak and BTC may be forgot by people in the future. See also: Is Bitcoin valuable? and Is Bitcoin really used by people?