Have you heard about Bitcoin and wondered what its primary purpose is? If so, here’s why Satoshi Nakamoto might have created Bitcoin.
Almost every adult knows about the U.S. dollar. Some countries have even integrated this currency into their financial systems, meaning citizens can use the U.S. dollar alongside their local fiat money. In most cases, this happens after the local fiat money losses value. Ideally, the U.S. dollar has made a mark in the world.
However, technological advancement has led to Bitcoin creation. And some people wonder whether the world needs Bitcoin when the U.S. dollar and other fiat currencies are still functioning. To some people, Bitcoin is a speculative asset. Such people trade cryptocurrency on platforms like Bitcoin Era. Thus, people can purchase and sell this virtual asset on such a platform and hold it in their crypto wallets. Afterward, they can sell it to gain profits once the value increases.
Why Satoshi Nakamoto Created Bitcoin
Satoshi Nakamoto didn’t create Bitcoin as a speculative investment. Instead, he envisioned this digital asset as a conventional fiat currencies alternative. But the world is unsure whether Bitcoin is a speculative asset or a currency more than a decade later.
So, what’s the primary purpose of Bitcoin? Is it a speculative asset because of its inherent volatility or a currency? This article explores the primary purpose of Bitcoin.
Bitcoin as a Virtual Currency
According to Satoshi Nakamoto’s whitepaper, Bitcoin should be peer-to-peer electronic cash. This paper notes that Bitcoin was to work as an anonymous payment system or alternative to conventional or fiat money. This virtual payment method would eliminate third parties in all transactions.
However, it’s still arguable whether this virtual currency has achieved Satoshi’s initial vision. So far, Bitcoin has exhibited scalability issues, prompting some people to consider it as value storage. Ideally, some people think Bitcoin can’t replace fiat money or serve as its alternative.
But its value has increased so far, prompting some people to consider it a gold alternative. Nevertheless, this cryptocurrency may not have fulfilled Satoshi’s vision. Bitcoin is sometimes unable to process eight transactions within a second. Network congestions can also increase processing fees in some cases.
Bitcoin doesn’t have a transaction value in terms of daily exchanges. Therefore, it’s more of value storage instead of an alternative currency. This virtual currency has features that make it compare to fiat currencies. For instance, people can use it as an exchange medium. However, scalability issues prevent it from achieving a global status as an alternative currency.
Long-term Useful Purposes of Bitcoin
Bitcoin’s adoption and usage continue to grow globally. Consequently, more people are considering taking this cryptocurrency around the world. Therefore, Bitcoin could eventually serve as a global currency and value storage. But this will take time because of its low liquidity.
Since Bitcoin has a relatively small market, its volatility will continue. That’s because small events, like whales selling their crypto holdings, can affect its value. Perhaps, what will make Bitcoin stabilize eventually is the ease of acquiring it even without a bank account.
Also, merchants can accept Bitcoin and convert it to fiat money as long as the local regulators allow it. Bitcoin is accessible to everyone, and no central authority regulates it. Therefore, people can use it as a unit of account, exchange medium, and value storage. Perhaps, these are the primary purposes of Bitcoin.
Bitcoin’s primary purpose is to facilitate peer-to-peer transactions using computers. Satoshi Nakamoto wanted the world to have a fiat money alternative. However, Bitcoin serves as a speculative asset due to its high volatility. Nevertheless, experts note that Bitcoin’s value may stabilize as this cryptocurrency gains more acceptance and application. Thus, Bitcoin might eventually serve as a currency that people use as an exchange medium, account unit, and value storage.