Whether you are for financial freedom or easy transfer of money, Bitcoin offers solutions to your financial needs. Bitstocks’ CEO, Michael Hudson, explains.
What does financial freedom mean to you?
Perhaps it is as simple as access to the financial means to satisfy your immediate needs or future desires? Maybe it goes further and includes the ability to share your wealth with your family for generations to come, or even being able to generously contribute to charitable causes close to your heart? Or is it the security of liquid assets, accessible and deployable despite any regime change in the traditional financial system and irrespective of political influence or economic positions? Perhaps it is all encompassing, and most importantly, underpinned by the capacity to interact financially without requiring permission to do so. The traditional financial system is just that: a permission based environment, where as your financial status grows, so too does your personal risk. As with any financial decision, the primary objective is to evaluate options and select that which does the best to alleviate and mitigate risk. In this day and age where less and less remains certain when it comes to the financial game, it is becoming increasingly critical to
unshackle from the legacy financial system and find true financial freedom.
Historically, we have not had a choice.
Irrespective of the wealth you amass, or the societal ties you have, you remain a creditor of the incumbent financial system. Your financial advisors, wealth managers, private bankers and even your accountant, certainly do what they can to minimise exposure, but ultimately, your money and assets still remain either within the realm of corporate governance, or lack liquidity for immediate access when markets tremor or tumble.
Today, we have a choice; access to an alternative, permissionless financial system, and that alternative is Bitcoin.
At its foundation, Bitcoin is a peer-to-peer currency and payment network. It was created some 8 years ago with the intention of introducing a financial system that was decentralised from the grip of central authorities, which allows for payments of any amount to be made directly between two parties, anywhere in the world, at anytime, without the need for involvement of profit-making intermediaries. In essence, it stands for everything the incumbent financial system isn’t. The traditional financial ecosystem is centralised and heavily regulated by governments and the
corporations they back. This provides them with the power to exercise control over almost every aspect of our financial affairs. We pay for the ‘privilege’ of economic inclusion directly through taxes and transactional fees, while our overall wealth is subject to erosion from inflation (thanks to quantitative easing and poor monetary policy decisions). Not to mention the growing war on cash through demonetisation, forcing us to hold funds electronically and essentially
allowing the ‘powers that be’ access to our money any time they choose.
Think of the bank bail-ins and subsequent haircuts experienced by the Cypriots, due to massive accumulated government debt. Or how about the draconian restrictions on daily cash withdrawals imposed on Greek citizens during Grexit discussions. Or even the stringent capital controls that the Chinese face, limited to move their money out of the country and hedge against a crippling yuan. Regardless of your financial status, or the financial freedom you believe you have, when a government steps in with such measures, everyone is affected, and those with sizable assets stand to lose the most.
Charting New Waters
Unlike the traditional system, bitcoin offers true monetary sovereignty. To be the captain of your own ship; to plot your own financial course, so to speak. Bitcoin has 5 qualities that make it vastly different from the sinking system we are accustomed to.
Bitcoin is Decentralised
As a decentralised platform, there is no central body of control. There is no single organisation or person ‘at the top’ making decisions that impacts your financial standing or well-being. There is no-one to tell you where, how and when you can spend or save your money, place limitations on, or even seize access to, it. Being distanced from central authority, particularly the government, also means bitcoin is immune to political and economic persuasion,
corruption and coercion. In fact, if anything, the aggressive adoption of bitcoin has been fuelled by the growing lack of confidence in government-backed banks and rife political and economic uncertainty.
Bitcoin is Permissionless
In stark contrast to the traditional financial system where you require permission to be a financially active individual, bitcoin is open for anyone to use, irrespective of socio-economic status or location. According to The World Bank’s Global Findex there are 2 billion unbanked adults in the world today. In 2017 – 2 billion do not have access to formal financial services! How is this even possible? Quite simply, because they have not been granted the permission to do so. In some instances, this is as a result of where they live, being too remote for any banking institution to care. In other case, it is because they do not have the required documentation such as proof of identification or an acceptable residential address. These people are discriminated against merely because of where they are born.
Interestingly though, even in the most rural stretches of the African plains, there is Internet access and even the poorest will hold in their hand a mobile phone. Entrepreneurs here will set up a shack on a dusty road with the words ‘Internet Cafe’ painted on the tin wall, and make use of old computers to connect their rustic community to the world. The beauty is that is all that is needed in order for them to access bitcoin and be included as economically active
citizens of the world. Just a basic connection to the Internet. And in the not too distant future, there will be bridges between basic data networks, such as the SMS network, and Bitcoin, circumventing the need for a full Internet connection, and empowering a wider net of individuals.
Bitcoin is Borderless
Following on from the point above, it is also beneficial to highlight the fact that bitcoin has no restrictions on international transactions. Often, with the legacy financial system, global payments involve a myriad of administrative hula hoops, hidden costs and lengthy delays that can impact on the amounts due to undulating exchange rates.
With bitcoin, there are no capital controls in place and you are free to send as little, or as much money as you like, to anywhere in the world. The almost instant transaction processing time means that recipients receive funds within a matter of minutes and the fee is way below that of any traditional money transfer. Imagine being able to close up that deal on that magnificent 120’ Primadonna you have had your eye on with the broker in Cancun before your morning
espresso cools? Bitcoin makes this perfectly possible and incredibly easy.
Bitcoin is Unregulated
To say bitcoin is unregulated is not entirely true. It is not regulated in the traditional sense by human-led associations laying down guidelines or legislation, but rather it is self-regulated by the technology it runs on; using impenetrable cryptography protocol to sustain and secure itself, and protect users. Put simply, Bitcoin is governed by mathematics. If you can trust that 2 + 2 will always equate to 4, then you can trust in Bitcoin’s self-regulating rule set. With Bitcoin you place your trust in maths, not in the integrity of human actors. Bitcoin comprises a large network of computer nodes who each run a full copy of the general ledger of bitcoin called the blockchain. The nodes – or miners as we call them – verify transactions and add them, in blocks, to the blockchain. Imagine playing Tetris. As the blocks are placed one on top of another, the underlying blocks are contained and can not be changed. As a financial firm with a vested interest in bitcoin, we are naturally interested in the regulation aspect. While we agree that bitcoin as a technology or network can not and should not be regulated, we are welcoming of regulation of the businesses providing services around bitcoin and we remain an active voice to the authorities in this regard. It would provide additional peace of mind to our clients, minimise risk through accountability, and flush out the companies with dubious practices or malicious intent. Our business takes extreme care when dealing with our clients’ sensitive information, we run it as a professional bitcoin investment firm with protocols and processes aligned to those of the regulated financial sector and we deploy the highest level of security throughout. Furthermore, we leverage off the transparency of the blockchain technology to provide our clients with real-time, independent, verified solvency of their holdings; an industry first!
Bitcoin is Deflationary
Central banks are able to pump new money into the system by simply ‘printing more’. Although we know they do not physically actually print more, they add a couple more zeros at the end of a computer string and ‘voila’ – more money! This new money sucks its value from the existing money supply, which results in currency debasement, more commonly known as inflation. Bitcoin, on the other hand, has a hard-coded supply limit of 21 million bitcoins. New coins are issued into circulation at a predictable, diminishing rate. The miners receive a set number of bitcoin, currently
12.5BTC, for each block added to the blockchain, which happens approximately every 10 minutes. Once the maximum supply is in circulation, no new coins will be able to be introduced, effectively creating a deflationary economic model. This is written into the source code of bitcoin and, therefore, uneditable. If we consider the basic economic relationship of supply and demand, it is clear to see why their has been a digital “gold rush” for bitcoin to date, a trend we only
see strengthening as the wider population begin to understand the benefits and almost limitless potential of this technology.
As a comparatively young financial system, bitcoin no doubt faces a few stormy seas ahead, however we are confident that with even just the few remarkable characteristics we have outlined above, together with the ever-mounting distrust in the traditional system, it is our professional belief that bitcoin will continue to make exceptional headway through these uncharted waters, as we see more and more people empowered and finding true financial freedom.
For more information about Bitstocks or investing in bitcoin, you can visit our website – www.bitstocks.com or
give us a call on +44 203 743 9177.