Bitcoin is frequently celebrated as a groundbreaking digital currency with unique qualities that distinguish it from traditional fiat currencies. In this article, we will examine the advantages of Bitcoin compared to conventional currencies, focusing on its decentralization, transparency, and potential as a global alternative to traditional monetary systems.

Most importantly, Bitcoin has significant value compared to other currencies due to its high degree of freedom and transparency.

Traditional currencies have been controlled by governments, often leading to policies such as exchange rate manipulation, quantitative easing, and interest rate adjustments, which can adversely affect people with limited economic knowledge or neighboring countries. In other words, traditional currencies are susceptible to manipulation of value by issuers based on government interests, and this cannot be avoided. However, Bitcoin is produced according to a predetermined algorithm, and its production can be accurately predicted. Bitcoin offers a major advantage in that it is free from the manipulation of value by issuers, which is an inherent problem with traditional currencies.

Of course, the inability to implement efficient monetary policies with Bitcoin is a significant drawback. However, the fact that arbitrary manipulation is impossible can also be seen as an advantage unique to Bitcoin, so a comparison of pros and cons is necessary. Even if Bitcoin were to replace the currency of a country, it is still possible to adjust the currency multiplier by increasing the reserve requirement, so completely withdrawing from monetary policy is not necessary.

The transparent issuance process of Bitcoin, free from vested interests, also indicates the potential for it to evolve into a new reserve currency or a major currency. Currently, the US dollar, as the world’s reserve currency, is widely used for payments worldwide and is recognized for its value due to US influence. However, as the dollar becomes the reserve currency, the US gains significant seigniorage, leading to resentment from other countries. China is a prominent example of a country that resents the dollar’s hegemony and is actively exploring alternatives. Despite the potential benefits of weakening the dollar’s dominance, the People’s Bank of China, wary of Bitcoin’s decentralization, has prohibited financial institutions from engaging in Bitcoin transactions and related services.

If the global economy becomes sufficiently integrated, there is a possibility that a neutral currency not influenced by any specific country will be needed. In such a scenario, Bitcoin could emerge as a natural alternative. Moreover, considering the optimal currency area theory, Bitcoin’s decentralization and global nature make it a potential candidate for such a role.

Bitcoin’s security aspect lies in the fact that the Bitcoin network itself is currently considered secure. While exchanges are frequent targets of hacking, the fundamental software and algorithms maintaining the Bitcoin system are believed to be sound. However, it should be noted that the security of the Bitcoin network implies that transactions can be conducted safely, akin to using fiat currency to purchase goods without worry, although there may still be thieves attempting to steal from convenience stores.

Overall, the Bitcoin network’s stability stems from the fact that disrupting Bitcoin would require controlling more than half of the network’s computational power, which is practically impossible. Additionally, the distributed nature of mining pools, along with strong incentives for participants to ensure no pool controls more than 50%, further solidifies the network’s security.

Bitcoin’s relatively fast transaction speed and low transaction fees were once considered significant advantages, particularly in foreign countries with outdated banking systems. However, currently, Bitcoin’s transaction fees are relatively high, and transaction speeds are slow. Bitcoin is an experimental currency that cannot be used in real-world economies.

Bitcoin is a fragmented currency system, with some advocating for it purely for speculative purposes, while others seek to escape centralized banking systems. Bitcoin provides a means for individuals to safeguard their assets from sudden inflation or mismanagement by institutions and governments. In countries where the traditional currency trend is unstable, Bitcoin is rapidly gaining popularity as a replacement, offering stability and serving as a more reliable option. As Bitcoin gains traction, it is increasingly accepted as a form of payment in various establishments worldwide.

In conclusion, Bitcoin’s advantages lie in its freedom from government manipulation, transparency in issuance, and potential to evolve into a global currency. However, challenges such as high transaction fees and slow transaction speeds persist, making it an experimental currency with both benefits and drawbacks.