With hedge funds, family offices, and institutional bankers adding Bitcoin to their portfolio, the cryptocurrency has finally attracted the recognition of being a unique asset class. Although this is a well-cemented fact for those in the space since Bitcoin’s early inception, this digital token is strikingly different from traditional asset classes such as real estate, stocks, and even gold.
Features That Make Bitcoin Unique
Decentralization of Bitcoin's Network
The Bitcoin network is a truly decentralized financial asset because the validation process requires unanimous consensus among all of the nodes in the bitcoin network before the bitcoin block reward is created. A node is simply a computer connected to a network of other independently operated computers communicating with each other over the internet. In other words, decentralization acts as a checks and balances system before blocks are added to the chain. The decentralized bitcoin network is a core feature that makes Bitcoin unique.
Censorship Resistant
There’s a long history of unwarranted search and seizure of private property and wealth by institutions or governing bodies that retain the threat of violence or incarceration. A relatively recent example would be US President Franklin D. Roosevelt signing of Executive Order 6102 in 1933, “forbidding the hoarding of gold coin, gold bullion, and gold certificates within the continental United States.” Eminent domain rules across Europe, Canada and the United States allow the government to seize private property for public purposes under special circ*mstances.
Today, short of two people exchanging local fiat currency in person, there are few if any other methods of exchanging financial assets without some sort of censorship via a governing body or corporation.
One of Bitcoin's most criticized and valued unique features is that transactions are anonymous. The only information available, which is also available to anyone with an internet connection, is the wallet address of the initiating address and where it's intended to go. The address is completely anonymous and requires a private key, known only to the owner of the wallet.
Anti-Money Laundering (AML) laws require exchanges that convert fiat-to-crypto or crypto-to-fiat are required to conduct know your customer (KYC) processes before creating a new account and wallet address for their customers. For those users who wish to remain completely anonymous, one may still create a wallet on their own without the help of an exchange.
One of Satoshi Nakamoto's, the anonymous creator of Bitcoin and it's blockchain network, core philosophical beliefs is the right to privacy.
Hard Cap of 21 Million Bitcoin
There will never be more than 21 million Bitcoin. The hard cap of 21 million is built into the core of Bitcoin's code. It cannot be changed unless there is unanimous consensus by a decentralized body of custodians who are elected into service. The fixed supply dynamic of Bitcoin has become one of the key value propositions for the market demand and incentive to continue validating the network.
Could 21 Million Hard Cap Ever Change?
It is worth noting that there is a process for maintaining Bitcoin's core protocol. Anyone can submit a Bitcoin Improvement Proposal (BIP). A BIP is simply an idea that may improve Bitcoin's core protocol. There is a strict process and workflow designed to submit a BIP,and a overwhelming factor in its success of implementation is generating a minimum 95% consensus from the Bitcoin mining community. In other words, a BIP needs to be truly sincere in its goal and objective of improving Bitcoin and almost unanimously agreed to before it ever sees the light of day.
Fortunately, the hard cap of 21 million Bitcoin is one of its most valued features. Any changes to the cap are arguably remote at best.
Immutable
Every transaction on the Bitcoin network is stored on a block that is linked to a previous block of transactions. This blockchain technology is immutable, which means no entity can erase or alter any information on the network. Transactions on Bitcoin are verified by network nodes through cryptography and recorded in blockchain (which is essentially a public ledger).
Immutability makes the network reliable and trustworthy. It sets it apart from all other asset classes where a lack of transparency, forgery, or corruption could pose a risk to the investor.
The popularity and ubiquity of Bitcoin make it more valuable. The fact that Bitcoin is considered a legitimate store of value and used by so many people gives it more liquidity and acceptability than most other traditional assets.
Here’s an overview of all the ways Bitcoin differs from two mainstream asset classes:
Bitcoin’s network effects, immutability, censorship-resistance, capped supply and decentralization are what makes it unique and sets it apart as a unique asset class.
Bitcoin's network effects, immutability, censorship-resistance, capped supply and decentralization are what makes it unique and sets it apart as a unique asset class.
Like all forms of currency, Bitcoin is given value by its users, supply, and demand. As long as it maintains the attributes associated with money and there is demand for it, it will remain a means of exchange, a store of value, and another way for investors to speculate, regardless of its monetary value.
Bitcoin is an alternative form of digital money that is not issued by nation states or corporations and is not controlled by financial intermediaries like banks. People who find value in this new form of money include investors, libertarians, the financially oppressed (no matter where they live), and others.
Bitcoin Cash was created to allow more transactions in a single block, theoretically decreasing the fees and transaction times. Despite their philosophical differences, Bitcoin Cash and Bitcoin share several technical similarities: They use the same consensus mechanism and have capped their supply at 21 million coins.
Bitcoin Is A Leaderless System Of Rules, Not Rulers
It is possible for a monetary system to run without leaders. Currently, our money system is operated by a group of people who make decisions based on their assessment of what is happening and on predictions of what may happen in the future.
This means that third-parties like banks, financial institutions, and governments stand between you and your money. Bitcoin requires no permission from anyone. It is free and open to use globally. There are no borders or limits with Bitcoin.
The world's most valuable cryptocurrency has proved its superiority. Bitcoin's (BTC -0.19%) price has been on an absolute tear. Since the start of 2023, this digital asset has soared 311%, thanks recently to the approval and launch of spot exchange-traded funds.
Since most cryptocurrency owners hold on to their holdings for a longer period, it could be argued that cryptocurrencies belong to the store of value asset class. However, some scholars argue that cryptocurrencies constitute a new asset class.
Bitcoin is a form of digital currency that aims to eliminate the need for central authorities such as banks or governments. Instead, Bitcoin uses blockchain technology to support peer-to-peer transactions between users on a decentralized network.
The Bitcoin network's security is multi-layered. Transaction hashing, mining, block confirmations, and game theory all work together to make Bitcoin's blockchain impenetrable. Since the first transaction block in 2009, the network has never once shut down – and no bitcoin has ever been stolen from the blockchain.
Decentralization: Unlike traditional currency, Bitcoin isn't controlled by a central authority. Instead, it's powered by a decentralized network of computers, which means no one has the power to control it. Limited Supply: There will only ever be 21 million Bitcoins, making it a scarce asset.
These characteristics of Bitcoin are at the heart of what really defines it and what makes it incredibly unique and special: Decentralisation And Consensus. Trust Minimisation And Verifiability. Free, Open And Permissionless.
Ammous begins by defining what he means by “hard money.” Hard money is money that is difficult to counterfeit and that cannot be easily debased. He argues that bitcoin is hard money because it is based on cryptography, which makes it difficult to counterfeit.
One of the biggest advantages of Bitcoin is that it's an accessible and versatile currency. It can also be used to purchase goods and services from the growing list of places that accept it.
Bitcoin is unique from other cryptocurrencies due to several reasons. They are discussed below. The bitcoin network effect and its proven security make it one to be modeled after by other cryptocurrencies. Bitcoin has the largest developer ecosystem with more software and more implementations than other crypto assets.
This means that third-parties like banks, financial institutions, and governments stand between you and your money. Bitcoin requires no permission from anyone. It is free and open to use globally. There are no borders or limits with Bitcoin.
The total number of bitcoins is limited to 21 million. And by design, the number of bitcoins minted per block is reduced by 50 percent about every four years. The creator designed it to create its scarcity to increase its demand and price.
Introduction: My name is Aracelis Kilback, I am a nice, gentle, agreeable, joyous, attractive, combative, gifted person who loves writing and wants to share my knowledge and understanding with you.
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