Why I’m Stacking Satoshis

Last July, I began covering bitcoin. The premise was based on three phases for widespread adoption: the first being institutional adoption, the second catalyst of global economic uncertainty, and the final stage of mobile payments.

With Square’s cash app reporting fifty percent of its payments being made in bitcoin, or $178 million, it’s time to revisit why bitcoin is a transformative technology that is often misunderstood. Square’s report was for the period between October 1st and December 31st, which represented an increase of 50 percent over the prior two quarters.

Perhaps the more critical point to understand about bitcoin is that its purpose is not to polarize opinions on fiat currency. This is not a political election where you must choose a side. Rather bitcoin solves critical issues with digital trust and the fees associated with financial transactions. Therefore, it can coexist with fiat currency while having a unique purpose.

In January, I covered a string of mergers and acquisitions across fintech, such as Visa-Plaid, Mastercard-Nets & Vocalink, Fidelity-Worldpay, and Fiserv-First Data. The problem with these acquisitions is there’s little benefit to customers and merchants. Digitization in finance is built atop age-old infrastructure and ignores the most obvious area in need of disruption: transaction fees.

Peer-to-peer payment apps on the market, such as Venmo, continue to charge merchants 2.9% plus a 30-cent transaction fee. Square charges 2.6% plus 10 cents per transaction. Therefore, the real value to consumers and merchants from fintech has yet to be seen. Last year alone, retailers paid $108 billion in electronic-payment costs — fiat currency can’t solve this issue.

Fiat currency also does not solve security issues as centralized systems do not inherently ensure digital trust. The Association of Certified Fraud Examiners reported a 42% frequency of fraud across small businesses costing an average of 5% of gross revenues. Credit card fraud is at $30 billion per year. Although Mastercard and Visa invest heavily in artificial intelligence for fraud detection, this is not necessary with a decentralized system that uses the network to verify identity.

Apple, Google, Microsoft, and Amazon reached market caps of $1 trillion because their products scale to global populations and are required on a daily basis. Bitcoin not only scales to the global population but it also protects their livelihood – a necessity rather than a convenience.

At its current price of $10,000, the market cap of bitcoin is at $250 billion. Meanwhile, Bitcoin offers the most secure network in the world and is capable of reducing fees of $100 billion annually. This is in addition to automating our financial system, which can’t be done without a decentralized blockchain solution. The fact bitcoin hedges against inflation is a bonus but is not the primary benefit of bitcoin.

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William K. 3 months ago Member's comment

The last two criminal extortion attempts that I experienced demanded payment in bitcoin. So while others may have better experiences with it, mine differ a bit.

Michele Grant 3 months ago Member's comment

#Bitcoin is the go to currency for criminals for a reason.