Bitcoin Explained - Differences Between Bitcoin and Money

Bitcoin has been around for more than 10 years, but it still seems like a puzzle to many. You have probably heard someone became a millionaire with Bitcoin because they bought it at $100. Or have seen its price chart on the top right of your TV screen when watching Bloomberg. You may have come across videos and posts on social media talking about price predictions and teaching how to trade it to become a millionaire. But there are many misconceptions and confusions about Bitcoin out there, and that’s one of the reasons many people don’t want to touch it, which is completely fair. It would not be wise to engage with or invest money in something that you have no idea about. That’s why I decided to write a blog explaining the fundamentals of Bitcoin and essential things you really should know about this new kind of money. Whether you are new to this space or want to start your Bitcoin journey, you will benefit from these blogs.

In the simplest terms, Bitcoin is digital money. Just like how some of you might use coins and bills to buy groceries, gas, clothes, and pay for food, Bitcoin is a digital version of money that can be used to buy stuff much like the money you see in your bank account app or during online payments.

Differences Between Bitcoin and Money

There are a few differences between what we know as money today and Bitcoin:

Centralized v.s. Decentralized

First of all, the Canadian dollar is a centralized currency, and pretty much all currencies in the world are centralized. Which means it's controlled by the government of Canada through the central bank, the Bank of Canada. Meaning that the government has control over its issuance and policies. They control the supply of Canadian dollars and can increase the supply, and they can implement monetary policies like interest rate hikes that we saw in the past year. Now the problem with increasing the money supply is that it causes inflation, which means the value of money decreases over time.

Bitcoin, on the other hand, is a decentralized currency. Meaning that it's not controlled by any single person, company, or government; instead, it operates on a network of computers around the world. Bitcoin’s supply is a finite number of 21 million, and the release of new coins is predetermined by its code. So no central authority can manipulate its supply. This actually gives Bitcoin an advantage over money, which is called deflation. Meaning that because its supply is limited, the value of Bitcoin increases over time.

Low Cost 24/7 International Transfers

Another difference is in international transfers. You can transfer Canadian dollars abroad, but you have to pay some fees and rely on banks. For example, you can’t make transfers during weekends or holidays because banks are closed. On the other hand, with Bitcoin, it doesn't matter what day of the week or time of the day it is; you can make transfers to anywhere in the world without any need for a middleman. Yes, you will still pay transaction fees, but it’s much cheaper and quicker.

And there you have it – a glimpse into the world of Bitcoin. We've explained the fundamentals, explored how it differs from traditional money, and understood its role in facilitating borderless transactions. Whether you're setting foot into this domain for the first time or are gearing up for your Bitcoin adventure, you've landed in the right spot. Be on the lookout for more blog posts, where we'll continue to simplify the complexities of this captivating digital currency.