What Are Bitcoins Used For – It Will Make You Want To Change Your Bank!
If you ask most people the question, what are bitcoins used for, they will probably tell you that you can use bitcoin in the same way you use fiat money, for investing, for buying and selling of products and for saving (also known as HODL).
It is true that you can do those things…
But it is not the real truth of what bitcoin is really all about.
The story of bitcoin starts in 2007 and is surrounded by a wave of corruption, theft and what could be known as the biggest institutional failure (or fraud) of all time!
This story, will make you look at your governments, banks and financial institutions in a completely different way and will make you want to change your banking system…
So what are bitcoins used for?
What Are Bitcoins Used For – How It All Began!
In 2007 and 2008, there was a global financial crisis. This crisis came to be labelled by the IMF (International Monetary Fund) as the worst financial crisis since 1930.
In the image above, the countries in brown suffered negatively from the crisis!
It is amazing to look back on it all now, but the trigger to this amazing story of fraud and corruption started in 2007 with a concept known as ‘Subprime Lending’.
Subprime lending is when loans are given to people who are known to possibly have a problem paying the loans back.
These people are often struggling financially, but they are given loans anyway in the theory that the lender is actually giving people who would otherwise be excluded, access to loan facilities.
The lender is actually taking a huge risk as the borrower, may not be in a position to pay back.
This is exactly what happened in the housing market in the USA.
According to Economist.com over a period of about 8 years, the price of a house rose in The USA by about 124%.
Many homeowners, refinanced their homes at lower interest rates.
By September 2008, the price of a house had declined by about 20%.
In fact in 2007, The Housing Wire reported that Foreclosure Filings were Up 93% From July 2006.
As prices fell, the borrowers who were considered high risk in paying back, began defaulting and by September of 2009, 14.4% of all US mortgages were delinquent or in foreclosure.
In addition to this, weak and fraudulent underwriting practices took place with some companies giving loans to cases that did not meet underwriting standards. In fact, some institutions did this to about 54% of all loans.
A practice called Predatory Lending also took place. This is when financial institutions advertise falsely and lure borrowers into unsafe contracts.
In fact one bank employee said, “If you had a pulse, we gave you a loan!”
In the end, of course, it all collapsed.
Banks who were thought to be ‘too big to fall’, came crashing down, and on 15th September 2008, The Lehman Brothers, with $619 billion in debt, shut down and started the world-wide financial breakdown.
The greed of the financial institutions we trusted to handle our money, caused a worldwide financial crash that affected millions of people.
What Are Bitcoins Used For – Bitcoin To the Rescue!
So one of the fundamental problems of the financial system, is that it is based on TRUST!
We have to be able to trust our financial partners with our money.
But as history has shown many many times, the governments, financial houses and banks, CANNOT be trusted with our money and they use it in ways, we do not want or worse, for total greed and fraudulent practices.
And WE CANNOT CONTROL OUR OWN MONEY!
At that point in history, there was no way for us, to transfer money, pay for things and basically operate financially without a bank or financial house.
In other words, we were at the mercy of these financial institutions…
We had no control over our own money and we were in a financial prison.
And then in 2009 a small team of developers, known as Satoshi Nakamoto, released a white paper offering a solution to these problems.
The 1st sentence of that paper explains, exactly what bitcoin was created for:
“A purely peer-to-peer version of electronic cash would allow online
payments to be sent directly from one party to another without going through a
Bitcoin therefore, gives us, the ability to transfer cash, using electronic methods to anyone we want, without the need of any other financial permission.
This is amazing…
Have you ever:
– Wanted money but the bank was closed;
– Tried to transfer internationally and told to wait 3 to 5 days and charged a fortune;
– Had to fill out stupid forms to avoid money laundering claims;
– Been asked endless questions about your personal life when opening bank accounts;
– Had to show proof of income to get an account;
– Been denied an account or credit card for some reason;
Bitcoin removes all of these problems.
The paper goes on to explain:
“Commerce on the Internet has come to rely almost exclusively on financial institutions serving as trusted third parties to process electronic payments. While the system works well enough for most transactions, it still suffers from the inherent weaknesses of the trust based model.
Completely non-reversible transactions are not really possible, since financial institutions cannot avoid mediating disputes. The cost of mediation increases transaction costs, limiting the minimum practical transaction size and cutting off the possibility for small casual transactions, and there is a broader cost in the loss of ability to make non-reversible payments for non-reversible services.
With the possibility of reversal, the need for trust spreads.
Merchants must be wary of their customers, hassling them for more information than they would otherwise need.
A certain percentage of fraud is accepted as unavoidable. These costs and payment uncertainties can be avoided in person by using physical currency, but no mechanism exists to make payments over a communications channel without a trusted party.
What is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third-party. Transactions that are computationally impractical to reverse would protect sellers from fraud, and routine escrow mechanisms could easily be implemented to protect buyers. In this paper, we propose a solution to the double-spending problem using a peer-to-peer distributed timestamp server to generate computational proof of the chronological order of transactions. The system is secure as long as honest nodes collectively control more CPU power than any cooperating group of attacker nodes.”
Now that may sound confusing to you, but what it basically means is that bitcoin does not need TRUST to operate.
It is a trust-less system that uses cryptographic proof to transact.
This removes the ability for users to fraudulently or greedily exploit other users.
And if you remember, the financial collapse of 2007-08 was caused by “The greed of the financial institutions, we trusted to handle our money, causing a worldwide financial crash that affected millions of people.”
So What Are Bitcoins Used For?
The real reason, we want to use bitcoin is to prevent, fraud, greed, corruption and financial crash in our financial worlds and give control of our money to the individual.
And in my opinion, giving YOU control over YOUR money is a good thing!
What Are Bitcoins Used For – Conclusion
Bitcoin was originally intended to offer us a peer-to-peer online system that removed the need for 3rd party approval or hindrance.
It allowed us to take control of our money.
As a result, as you can imagine, as users became to understand the real use for bitcoin, demand increased.
Consequently, as a result of the demand, trading of bitcoin started.
The ability to make money, simply by buying and selling of the coin became possible.
As a further result, demand grew and therefore, value increased!
Bitcoin rose to a staggering $USD20,000 a coin by the end of 2017.
But, do you think that banks, financial institutions and governments want to lose control of money?
Do you think they want us to have control over money?
With that in mind, do you understand the constant pumping of negative media, you see everywhere about the dangers of using bitcoin?
They are trying to scare us into not using bitcoin, so that they can keep control of money and use it fraudulently as they have been doing so for years.
Is bitcoin perfect?
No, but it removes many of the problems that come from banking systems and different coins are cropping up to remove the other problems that bitcoin cannot remove.
Bitcoin and crypto are here to stay…
The price is kinda irrelevant. If it goes up in value or if it goes down in value…
The price is actually NOT the key issue.
The key issue is that it gives us control of our money…
And for me that is worth investing in!
By now, you probably want to change your banking system to bitcoin…
And if you agree that it is time for you to
take control of your money then
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