DeutschBitcoin holders may be pleased with unimagined price gains, but there are also other good arguments in favor of Bitcoin (BTC). These are the five most important reasons for Bitcoin.
1. Abolition of Cash
If EC cards suddenly stopped working in the event of a global crisis, citizens would flock to bank counters to withdraw cash. It would be the only means of payment that gives citizens a sense of security and that still works. We had a similar scenario at the beginning of the COVID-19 pandemic.
But that doesn’t have to be the case. What is much more important here is the question of how much cash there is at all and whether everyone could actually get their cash. The answer to this question is sobering, because currently only about 1.3 trillion euros are in circulation as coins and banknotes, according to the report by the European Central Bank (ECB). That would only be a fraction of the total money supply M3, which amounts to 13.9 trillion euros.
Accordingly, citizens could only exchange about 10 percent of their bank balance into cash, which in turn means that we are already dependent on electronic payments today. Anyone who wants to protect themselves from such scenarios prefers to keep part of their assets in BTC.
2. Privacy
The abolition of cash could lead to the “transparent citizen” in the long term. Due to purchasing behavior, many conclusions can already be drawn about the buyer today, as electronic payments are managed from a central location. Bitcoin could also provide a remedy in this area and ensure more privacy. After all, with BTC, banks and other central intermediaries are dispensed with, and instead peer-to-peer payments are used, which are recorded decentrally. Governments and companies thus have less insight and monitoring power. Another reason for Bitcoin.
3. Financial Inclusion
According to data from the Global Findex – a database published annually by the World Bank – approximately 1.7 billion people worldwide do not have access to financial intermediation. This means that those affected cannot open a bank account, but have to store their savings as cash reserves. The inhabitants of India and sub-Saharan Africa are most affected.
The inadequate access to the financial sector poses a major problem, especially for those citizens who rely on support from relatives abroad. They cannot receive their cash by bank transfer to a bank account, but are dependent on expensive remittance service providers such as Western Union.
Bitcoin is therefore also proving to be the better solution in the event of a lack of financial intermediation, as participation in the BTC protocol only requires access to the Internet and a mobile device – and these two things are much more widespread today than bank accounts.
4. Hedging against Inflation
Since the US dollar and the euro are considered world reserve currencies and are still strong despite unconventional monetary policy, citizens in the USA and Europe will not be exposed to any pressure on the consumer price index in the coming years.
However, the situation is quite different in countries such as Turkey or Argentina. Measured in Argentine pesos (ARS), Bitcoin has already reached its all-time high. Every Argentinian who has ever invested in Bitcoin is now in the black, which will certainly generate further demand. The No. 1 cryptocurrency is a very suitable means of hedging against inflation due to the limited amount of money in circulation.
5. Capital Controls
Controls and even theft of cash are not uncommon at border crossings. Anyone who relies on digital gold can carry their entire fortune across national borders “in their head”, because only knowledge of the private key and the associated UTXOs is required to access the crypto asset. Anyone who can memorize their seed phrase can rule out loss, confiscation and theft of their assets.
Reasons for Bitcoin
Of course, there are even more (good) reasons in favor of Bitcoin. And depending on the development of the global economy, further advantages will be added to these.
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