Should I Use Bitcoin for Saving?

Bitcoin is for Savers; fiat is for debtors

One of the most common misconceptions that I hear in the bitcoin space is that “If you don’t spend your bitcoins, then it will never reach mainstream adoption”. While it’s good to use your bitcoins as a medium of exchange, the only way that mainstream adoption will ever be possible is if someone else first wants your bitcoins as a store of value. Since most people seem to use bitcoin for saving or some sort of safe haven asset, it is only a matter of time before it finds itself being used as a de facto medium of exchange in communities around the world.

Bitcoin is for Savers

Ok, so you finally got some bitcoin. Now what? What should you do with it? You should save it for later because bitcoin is deflationary by design and deflation is for savers.

In economics, deflation is a decrease in the general price of goods and services due to the rising value of a currency or monetary unit. This means that over time, deflation enables people to purchase more goods and services with the same amount of money. So, as the price of bitcoin continues to climb, the cost of goods and services will continue to fall. Imagine how much easier it would be to save for a car or a down payment on a house when your purchasing power increases over time.

This bitcoin meme has been circulating since bitcoin’s inception and it will continue to evolve as more people save their bitcoins.

Bitcoin is Deflationary by Design

Most modern economists generally believe that deflation is bad for economic activity because as the value of your currency continues to rise, it typically reduces spending and increases the real value of debt. This wouldn’t be such a problem if the majority of modern societies weren’t based entirely on debt and consumption but that isn’t the case. Can you imagine how much debt you wouldn’t have if your purchasing power increased over time?

You might also hear economists claim that bitcoin will never work because most people “hoard” their bitcoins. What they don’t acknowledge is that the word “hoard” is just their biased way of saying “store value” or “savings” and contrary to what you may have heard, savings is actually a very good thing for a healthy economy. People will save their bitcoins until their needs and wants outweigh their desire to hold their bitcoins. Eventually, two or more parties who recognize bitcoin as a store of value will naturally find a way to use bitcoin as a medium of exchange and it will only grow from there. Within the next decade, Bitcoin and the crypto economy will prove to be one of the healthiest economies in the world and it’s primarily thanks to their deflationary economic model.

In short, a deflationary money system incentivizes savings, discourages debt, discourages waste and over time, creates more purchasing power for the society that uses it. Now let’s take a look at how inflation does pretty much the exact opposite.

Fiat is for Debtors

In economics, inflation is the rate at which the general level of prices for goods and services is rising and, consequently, the purchasing power of currency is falling. Currently, the inflation rate of the US Dollar is about 3-5% annually which means that a $100 item at the store today will likely cost you $103-$105 in exactly one year. What this also means is that if you do not get at least a 3%-5% pay raise each and every year, you are working just as hard for less purchasing power. The end result is either a lower standard of living for the same amount of labor or the same standard of living for an increased amount of labor. You either end up with less time or less money to do the things you want.

The majority of fiat money supplies are inflationary and based on money being printed out of thin air from a central bank and then lent to other large banks at interest. The money is then lent out to smaller banks (again, at interest) and then eventually the money is finally lent to people like you and me (yet again, at interest) in form of home loans, business loans, auto loans, student loans, credit cards, secured loans, unsecured loans, lines of credit and a number of other debt based financial instruments.

After all of that interest bearing debt has worked its way down to people like you and me, we end up paying up to 20% interest just to get small loans for things like buying a car or investing in education. The entire system is based on putting people into debt to the banking system and that is only if your credit score is good enough to be worthy of debt.

But wait, the debt ripple effect doesn’t stop there. It keeps going by directly affecting the purchasing power of the currency that is being inflated.

Back in 2007, the country of Zimbabwe was the victim of their government hyper-inflating the money supply. Month-to-month inflation rates had exceeded 50% which ends up to compound to about 12,000% annually. This means that for the people of Zimbabwe, something that cost $100 on the first of the year would cost $12,000 exactly one year later. Yes, you read that correctly. You don’t need to be an economist to see that it doesn’t make any sense to save when money loses its purchasing power that quickly.

In short, inflation incentivizes debt, incentivizes consumption, discourages savings and reduces purchasing power of everyone within an economy. It is no wonder why countries that struggle with high inflation rates, tend to find themselves in economic turmoil.

Why Use Bitcoin for Saving?

Bitcoin is going to continue to reach new all time highs and with each and every article that gets published, people start asking what bitcoin is and how they can get some and use it as a store of value.

The primary use case of bitcoin today is as a store of value like a savings or an investment but in the not so distant future, we will see bitcoin and other cryptocurrencies like bitcoin emerge as the dominant medium of exchange in a growing number of communities around the world.

Take Action. Use Bitcoin.

Additional Info

Here are some other good articles and sources on hoarding, I mean…saving your bitcoins.
I’m Hoarding my Bitcoins, and No You Can’t Have Any

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Is Bitcoin The Reserve Currency of The Internet?

Bitcoin is the reserve currency of the internet

The internet is a global economy that transcends nation states and political borders. PayPal, Square and other FinTech companies have enabled entrepreneurs around the world to transact business electronically but these services along with all other payment networks are centrally operated and subject to countless laws across a multitude of jurisdictions. What the internet needs is its own payment network and currency that isn’t subject to the same set of rules as traditional payments. Could bitcoin rise to the challenge as the reserve currency of the internet?

Decentralization and the Internet

When the internet started gaining mainstream adoption, it challenged a number of legacy industries that had enjoyed monopolies for decades and even centuries. Among the first industries to be devastated by the internet were media based services like music, movies and publishing. Record labels were one of the first to take a hit when file sharing services like Napster stepped onto the scene. Newspaper readership plummeted as blogging and independent news sites began popping up. TV shows lost countless viewers as more and more people began watching shows made by independent creators on YouTube.

Now the internet is disrupting resources in the real world. The shared economy is turning industries like hotels, taxi cabs and parking lots upside down and it is only a matter of time before robots disrupt the employment of human labor on a large scale. But what about money and banking? How have these industries been affected by the internet?

The Reserve Currency of the Internet

In 2009, the world of money and banking changed forever when the internet finally got its own currency. A currency that is not controlled by the ruling elites or monopolies but rather a system that is controlled for and by the people. Just like media moguls lost control over the flow of information, banks have lost their monopoly over people’s means of exchange. The world has entered a new era where the production and control of money is shifting to the hands of the market and not just the ruling class. The internet has given the world bitcoin and bitcoin is the reserve currency of the internet.

Use Bitcoin

Using bitcoin transfers power from multinational financial institutions to individuals like you and me and the banks know this. The internet has supplanted the reign of media moguls and now it’s time for the banks to endure the same fate. Join the new global internet economy and replace your currency with bitcoin, the reserve currency of the internet.

Take Action

We are doing whatever we can to increase bitcoin awareness and educate new users and we need all the help we can get. If you feel that this post would benefit others, please share it. Furthermore, if you feel like educating people about bitcoin out in the real world, start the discussion with one of our bitcoin shirts.

Reason to use Bitcoin 29 t shirt

How do you see bitcoin disrupting reserve currencies around the world? Let us know with a comment below or a tweet at @BitcoinReasons

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Do We Pay for Things With Our Privacy?

Reason to use Bitcoin 24: You should only have to pay for things with your money; not pay with privacy

We all use money in our daily lives. Some of us use paper bills, some use electronic forms of money while some economies rely heavily on barter systems and commodity based money like gold. No matter what form of money you use, you shouldn’t be required to pay for things with your private information along with each payment. This is where bitcoin has immense privacy enhancing features for transacting value both on and offline.

Cash

Before the invention of electronic money, the only way that you could pay for things was with cold hard cash. Cash came in many forms and up until the invention of fiat money the preferred form of cash was gold. Since gold is way to difficult to transport in quantity, paper note representations of gold were created and still to this day, cash is the most private and anonymous means of transferring value. This is one the main reasons why cash is the currency of choice for illegal activity.

Know Your Customer (KYC)

Banks and financial institutions are required by law to collect too much of your personal information. These types of regulations often perpetuate financial exclusion and further foster global disparity by keeping the lower class out of the banking system.

In order to open a bank account in most developed nations, you need all sorts of identifying documents. Government issued photo ID, birth certificates, proof of residence and this is if you are a citizen. If you are an immigrant, things become much more difficult and often result in denial. It is these KYC regulations that are one of the driving forces behind the erosion of privacy and increasing poverty around the globe. You shouldn’t have to surrender your identity in order to store and transact value in the digital age.

Checks

Checks gave birth to all sorts of new fraud and cybercrime that had never existed before. Whenever you pay someone with a check you are revealing some very personal information about yourself. Each check has your first name, last name and address. That’s not good for your privacy. You also surrender both your checking and routing numbers on each check which can open you up to some check fraud problems. Watch the movie “Catch Me If You Can” starring Leo DiCaprio for the story of the greatest check fraudster in the world, Frank Abagnale.

Debit and Credit Cards

Every single time that you swipe your credit or debit card you are surrendering personal information about yourself not only to the vendor that you are buying from but also to your bank. With each transaction, they know where you are, when you are there, how much you spent and often times what you purchased. ApplePay removes some of this information being revealed but you still do not have private control of your funds.

Digital Cash

One of the beautiful things about bitcoin is that you can store and transact value without having to attach your identity to your money. This is what makes bitcoin the most private payment network on the planet. Not only do you keep full control of your personal information when you spend with bitcoin but you also keep full control of your funds. It is this type of financial privacy that will enable more economic inclusivity than any existing payment mechanism in the world today.

Reason to use Bitcoin 24 t shirt

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What is Money?

Reason to Use Bitcoin 8: Money is one of society's most remarkable yet poorly understood inventions

What is money? Lots of people have confidently told me that “money is the root of all evil” yet when I ask them what money is, they can’t seem to come up with an answer. Why is it that so many people seem to think that money is innately evil? Why doesn’t anyone understand what money is or how it works? Money is one of society’s most remarkable yet poorly understood inventions and without it we could not enjoy the pleasures of living in a modern society. In order to better understand what money is, I would like to ask you a question. If money is the root of all evil, then what is the root of all money?

What is money? Is it these pieces of paper that we use to buy things? or is it something more than that?

Money is a Tool

Money is a piece of technology that we use to weigh and measure goods and services against each other. In short, money is a tool for exchange and organization. Without money, we simply could not organize and solve problems of large scale. Unfortunately, too many people view money as the end rather than the means which is one of the reasons money gets a bad reputation.

Ok, so we know that money is a tool but what does this tool do and what allows it to work?

Money is anything that does three things. Money is a store of value, a medium of exchange and a unit of account. Anything that performs these three functions is, by definition, money. This means that no matter what you use to do these three things, you are using money.

Money is a Store of Value

Money needs to be storable. One of the first forms of money was salt because everyone wanted it to season their food. Once it was so widely desired, people who had salt would use some for seasoning their food and they would store the rest so they could trade it with others. In this sense, salt was a store of value. One of bitcoin’s primary functions is as a safe haven asset to store value.

Money is a Medium of Exchange

Money needs to be exchangeable with other parties. After salt became sought after by everyone in a society, it was easy to trade with others for goods and services. Bitcoin is not yet accepted directly by most as a means of exchange but many payment processors are enabling it to be used as one. Some platforms exclusively use bitcoin as the payment mechanism because they understand its utility as a means of exchange.

Money is a Unit of Account

Money needs to be used as a unit of account. Since everyone was using salt to store value and exchanging it with other people in their society, salt could also be used as a unit of account. In ancient markets, simple scales were used to account for different amounts of salt. Trading things measured out in salt was what would allow for people to account for certain things. Trade can easily be accounted for using Bitcoin since each bitcoin can seamlessly be divided into 100 million units.

In order for money to be able to successfully do these three things, it needs to have 6 characteristics; durability, portability, divisibility, uniformity, scarcity and acceptability. The more of these qualities that something has, the better that something functions as money. Salt does not possess these qualities (durability & scarcity) and so it was gradually replaced by better forms of money like gold. Bitcoin possesses all of these characteristics to an even greater extent than gold.

Bitcoin is a Far Greater Tool Than Money

The first application that brought the internet into mainstream use was the invention of e.mail. For the first time in history, people could send mail to each other electronically and this was groundbreaking technology at the time. But as we all know, the value of the internet is so much more than email.

Bitcoin is no different. Its first application is being recognized as a form of money but it will not be long before people around the world realize that it is capable of doing so much more than just buying things. Bitcoin is a distributed network that can send, receive and store information and it does this better, faster and with a lower cost than any existing system. Since modern money has become information, this has immense implications for the future of trade, all forms of record keeping and information exchange.

Bitcoin Is Competitive Money

When you go to the store, you have all sorts of choices on what products you can buy. You can decide what type of car to drive, or what dry cleaner to use and what cell service provider will drop your calls but what about money? Do we have the freedom to chose what money we use? The short answer is no, we don’t.

So I would like to bring this back to my original question, What is the root of all money?

Up until the invention of bitcoin, the control of all money supplies has been in the hands of a small group of elites and central bankers but now that bitcoin and cryptocurrencies are here, that control is shifting from central banks to the people.

Take Action

We are doing whatever we can to increase bitcoin awareness and educate new users and we need all the help we can get. If you feel that this post would benefit others, please share it. Furthermore, if you feel like educating people about bitcoin out in the real world, start the discussion with one of our bitcoin shirts.

Reason to use Bitcoin 8 t-shirt

What do you think is at the root of all money? Let us know with a comment below or a tweet at @BitcoinReasons

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How Will Bitcoin Change The World?

Reason to use Bitcoin 11: If It Fails, Nothing Happens; If It succeeds, It Will Change The World

Bitcoin has been dismissed by economists, news agencies, banks, politicians and countless other skeptics around the world as a ponzi scheme, a joke, “fake money” and more. But what they all fail to realize is that bitcoin is just an open-source software that doesn’t care what they think. It is the most influential math experiment in history and it does what it wants. This is exactly why bitcoin will change the world.

If Bitcoin Fails, Nothing Happens

Bitcoin is primarily recognized as the world’s first form of digital cash. This is not to be confused with digital payment systems like we already use today but we will touch on that in a minute.

There have been numerous attempts to create a digital form of cash but they have all failed to create something that is digitally scarce. With each failure, programmers have come one step closer to discovering the blueprint for a system of digital cash that actually works.

In 2009, that blueprint was finally uncovered by an individual or group of individuals using the pseudonym Satoshi Nakamoto. Satoshi delivered to the world a white paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System” and this was the first system in history that enabled two parties to transact value between themselves without the need for a trusted third party.

If bitcoin fails, nothing happens. It will be just like all of the other attempts to create digital cash that came before it. But what we are seeing is that it is not failing at all. It is changing the way the world works just as the internet has.

The Birth of Digital Money

The first record of a digital form of money being used in the United States was in 1872 when a popular telegraph service named Western Union used a series of passwords and code books to send the first “money by wire”.

This was a breakthrough in the transference of money not only because money could now be sent across an entire continent in seconds but also because it created a huge leap forward in reducing the risk of moving money. A process that used to take up to 110 days and was at constant risk or being stolen was now almost instant and immune to hijack.

Money had just taken its first step toward being digital.

If Bitcoin Succeeds, It Will Change The World

Western Union had discovered a new system that would forever change the world. The problem with Western Union and other similar services is that anything centrally owned and operated can be centrally obstructed. These centrally controlled systems require you to trust them with the custody of your money. Bitcoin, however, is radically different.

Bitcoin’s revolutionary innovation is trust; not money.

Up until the advent of bitcoin, in order to send money, you needed a trusted third party like Western Union. In modern times, this means using a service like Visa, MasterCard, PayPal, etc. All of these systems require that you trust the transfer system to not steal your money and bitcoin removes the need to trust these third parties in order to transact value. This is monumental.

Bitcoin has managed to bring together three crucial elements for a digital cash system to work. Cryptography, compensation and distribution. Without any one of these three elements, the system would not work.

Cryptography

Banks and payment networks rely heavily on strong cryptography and encryption technology to keep transactions secure. Remember those passwords and code books that Western Union used? That’s cryptography and it is very important not only for banking but for all information flows.

Encryption technology has come a long way since the early days and has become incredibly complex but to get an understanding of some of the underlying technology behind bitcoin, this video does a great job explaining something called Public-Key Cryptography.

Compensation

These strong cryptographic mechanisms can be very costly to operate and maintain which is why banks charge a small fee to store and transfer your money. Compensation is necessary if you want a system to operate. The problem with bank fees is that they are disproportionately high compared to bitcoin fees. For example, to send $1,000 with Visa or PayPal, it would cost about $25 but to send the same $1,000 with bitcoin, would cost about 8¢. The difference in price stays in your pocket.

Distribution

This is where the magic happens. Distribution is what makes the bitcoin network so resilient. There is no single point of failure. Since there is no single central point of failure, it is practically impossible to attack in the same way that governments and corporations have been unable to stop illegal file sharing and “piracy”.

In short, bitcoin removes the need for these other mechanisms by replacing trust in a central third party with trust in a distributed network that is secured by math. This is monumental.

Use Bitcoin

No matter what you think about bitcoin, it is already changing the world. It is the topic of discussion with governments, banking institutions, corporations, freedom advocates, entrepreneurs, venture capitalists and disruptarians around the world. It wouldn’t be such a topic of discussion if it wasn’t making changes in the global economy. It has subverted power over global money flows and is enabling more individuals to have more control over their daily lives and futures.

Take Action

We are doing whatever we can to increase bitcoin awareness and educate new users and we need all the help we can get. If you feel that this post would benefit others, please share it. Furthermore, if you feel like educating people about bitcoin out in the real world, start the discussion with one of our bitcoin shirts.

Reason to Use Bitcoin 11 t-shirt

How do you think bitcoin will change the world? Let us know with a comment below or a tweet at @BitcoinReasons

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Cybercrime is Evolving Faster Than Your Bank’s Security

Reason to use Bitcoin 12: Cybercrime is evolving faster than your bank's security

In our hyper connected tech world we have probably all heard a number of buzzwords that are related to cybercrime. Identity theft, ransomware, hacks, leaks, fraud, viruses, phishing, forgery, malware and spam are all terms that we either hear on the news or the latest primetime tv drama and that is because cybercrime is evolving at an alarming rate.

What is Cybercrime?

Cybercrime refers to criminal activities carried out by means of computers or the internet and it is one of the fastest growing black markets in the world. Cybercriminals work in illicit parts of the internet with incredibly high risk and even higher profit margins. In order to stay one step (or several steps) ahead of law enforcement, hackers are always evolving and advancing to use the most cutting edge technology available.

Bank Security

One of the biggest security weaknesses with the banking system is that banks are legally required to collect all sorts of your personal information in order for you to store value or use their network. These privacy invasive regulations are commonly known as Know Your Customer laws or KYC for short. These laws create an abnormally large collection of personal data for hackers and cybercriminals to target by forcing your personal identity to be attached to all of your electronic spending. The end result is the erosion of financial privacy and the creation of large caches of your personal data ripe for exploitation by dark markets.

Cache for Cash

The larger these collections of personal data caches become, the greater incentive for a group of hackers to target them. These data caches can be at banks or on social media accounts. According to the Wall Street Journal a recent hack of Home Depot resulted in 53 million email accounts being compromised. With these e.mail hackers can launch phishing scams and spam attacks that can deliver malware.

Once this malware installs itself on your computer, it searches for personal info such as names, addresses, phone numbers, bank accounts, passwords, medical records, social security numbers and anything else that can be used to hijack your identity both on and offline. Once your data is mined, hackers can do all sorts of things with it like opening up bank accounts or lines of credit in your name such as personal loans, credit cards, claim your tax returns, obtain medical care like prescription drugs just to name a few.

This is not just a threat when you spend money on the internet but every time that you swipe your credit or debit card you are transmitting lots of your personal data. So imagine that every single time that you have ever used your credit card…ever. Now imagine that malicious actors gained access to that data. How could your life be damaged?

Use Bitcoin

It is much harder for identity theft to destroy your credit when your identity is not attached to your money. This is why the world needs a payment network that doesn’t require any of your personal information in order to send, receive or store value. Bitcoin is just the solution for such a problem. It provides the user with increased privacy while reducing your risk of falling victim to cybercrime and we are just beginning to learn of the benefits of using bitcoin.

Take Action

We are doing whatever we can to increase bitcoin awareness and educate new users and we need all the help we can get. If you feel that this post would benefit others, please share it. Furthermore, if you feel like educating people about bitcoin out in the real world, start the discussion with one of our bitcoin shirts.

Reason to Use Bitcoin 12 t shirt

How do you think bitcoin will help to prevent cybercrime? Let us know with a comment below or a tweet at @BitcoinReasons

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Bitcoin Will Create Millionaires and Billionaires

Reason to Use Bitcoin 22: It is likely going to create a lot of multi-millionaires and billionaires in the next twenty years

Since it’s inception back in 2009, one Bitcoin has gone from being worth absolutely nothing to being worth 1/10,000 of a pizza to achieving parity with the US dollar and reaching an all time high of $1,271 (which at the time was worth more than one troy ounce of gold – $1,201.91). It is the limited supply of bitcoin that creates this sort of purchasing power and will likely create a number of multi-millionaires and billionaires in the next ten to twenty years.

The $8 Million Pizza

On May 17th 2010 a Florida resident named, Laszlo Hanyecz placed an ad on the forum BitcoinTalk asking if anyone would buy him two pizzas in exchange for 10,000 bitcoins that he had mined on his computer. It wasn’t until several days later on May 22nd that a man from the UK decided to take him up on this exchange and placed an international phone order to a Papa John’s Pizza store in Florida and had two pizzas delivered to Laszlo. This was a historic moment for the bitcoin community because it is the first recorded transaction of bitcoin ever being used as money. Just so you have an idea of the value of bitcoin, 10,000 coins are worth $8.5 million at today’s price.

To commemorate the transaction, May 22 has been dubbed Bitcoin Pizza Day and a number of pizza shops around the world offer discounts to bitcoin users on this day.

The $27 Apartment

A similar situation took place back in 2009 when a Norwegian named Kristoffer Koch decided to buy 5,000 Bitcoin for about 150 Norwegian Krone (about $27 USD). In April of 2013, Kristoffer found a pleasant surprise when he learned that the price of Bitcoin had shot up to about $219 USD making his 5,000 coins worth about $1.1 million. He could have held onto them but decided to sell most of them to pay cash for an apartment in one of Oslo’s high end neighborhoods.

What is unique about this story is that Kristoffer was not a business mogul or wall street trader. He was just a computer nerd who thought the idea of bitcoin was cool enough to spend $27 on. Once he purchased them, he just saved them for a few years and they ended up being worth every krone.

If you compare his purchase of 5,000 coins to today’s price of about $850 per coin, those same coins would be worth about $4.2 million.

Own Some Bitcoin

While these sorts of insane percentage gains are long gone, it is important to understand that owning even a small amount of bitcoin can pay off BIG over the next two decades. $27 may not buy you a luxury apartment in one of Oslo’s affluent neighborhoods, it could prove to be one of your best long term assets. The moral of the stories above is that everyone should own at least some bitcoin. Buying and saving $27 is probably a good starting point. I think that the only regret that you will have is that you didn’t buy more.

Take Action

The purpose of this campaign is to increase bitcoin awareness and educate new users and we need all the help we can get. If you feel that this post would benefit others, please share it. Furthermore, if you feel like educating people about bitcoin out in the real world, start the discussion with one of our bitcoin shirts.

Reason to Use Bitcoin 22 t-shirt

Do you think bitcoin will create more millionaires in the next twenty years? Let us know with a comment below or a tweet at @BitcoinReasons

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More Smartphones than Bank Accounts

Reason to use Bitcoin #47: Soon there will be more smart phones than bank accounts

Bitcoin adoption is accelerating around the world and soon there will be more smartphones than bank accounts. Tech giants like Google and Facebook have plans to speed things up by targeting emerging markets to bring over a billion new users into the internet economy. These next billion users are going to need a means to connect to the net and mobile devices like smartphones are the cheapest and most common means of making that happen.

The Underbanked

It is estimated that there are currently over 2 billion adults who do not have access to bank accounts. They have essentially been “left behind” by the banking system but they haven’t been left behind by technology. Smartphone usage has been steadily on the rise for years and according to a report by Statista, there will be an estimated 2.87 billion users by the end of 2020. One of the biggest problems with legacy finance is that regulations are perpetuating aglobal financial exclusion. So, what would you do if you didn’t have access to a bank account and you wanted to accept payments online?

Meet Bitcoin

This type of banking exclusion is driving people to alternative means of conducting business. For billions of people, increased access to new tools is opening doors for bitcoin to come in and fill the gaps that have been created by the banking system. Bitcoin doesn’t operate like a bank account at all. It is open 24 hours a day, 7 days a week. It doesn’t close for holidays. It doesn’t have “company policies” or hours of operations or age limits or require an address. It is the most radically inclusive financial tool in the planet and all people like you and I need to do is use it.

From Me to You

Since bitcoin is a borderless open-source software, it is not bound by the rules of any single jurisdiction. This new frontier is enabling creative destruction in finance like never before. With nothing but a smartphone I can send money from anywhere in the world to anywhere in the world without any middlemen. Now anyone with a smartphone is able to spend bitcoin in any number of countries as an alternative to the local fiat currency. In fact, there are entire neighborhoods popping up all around the world that are adopting bitcoin because they see it’s potential to remove the banks (and their fees) from business.

While bitcoin isn’t likely going to become a key payment mechanism in the developed world, it certainly has the potential to become a dominant player in parts of the world where people trust their cell phone more than their government or financial infrastructure.

2017 and Beyond

In 2016, the price of bitcoin grew by over 110% largely fueled by demonetization, hyperinflation, gold seizures, currency manipulation, capital controls and other actions by banks and governments. These type of actions on behalf of the ruling class are not likely to slow down in 2017.

Ease of Access

Smartphones are used to do almost everything these days. You can book international flights, call an Uber, expand free education with podcasts, monitor physical activity and even manage entire businesses from a 4 inch touchscreen. As people become more and more comfortable using their smartphones for all of these things, the idea of paying for things with bitcoin doesn’t sound so crazy.

Take Action. Use Bitcoin

Bank accounts obviously offer utility for those of us in parts of the world with a robust banking infrastructure but what about those who do not have such easy access to these financial tools? How can they take part in the global internet economy? Well, with nothing more than an internet connection and a smartphone, they are now able to tap into one of the biggest innovations in the finance industry since the invention of money itself. Now they have access to Bitcoin.

Join Us

We are doing whatever we can to increase bitcoin awareness and educate new users and we need all the help we can get. If you feel that this post would benefit others, please share it. Also, if you feel like creating discussion around bitcoin out in the real world, we would love it if you would wear one of our bitcoin shirts.

Reason to use Bitcoin 47 t shirt

Do you think people without modern banking services will skip banking because their smartphone offers a more inclusive alternative? Let us know with a comment below or a tweet at @BitcoinReasons

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How Can Bitcoin Be Used for Crowdfunding?

Reason to use Bitcoin #44: Bitcoin takes crowdfunding one step further by making it a truly global concept.

Over the past decade, Crowdfunding has grown from being a small niche community to now being one of the first places to go to for businesses, causes and projects to raise startup capital. For those of you who don’t know or understand what crowdfunding is, it is simply the idea of collecting small amounts of money from large amounts of people to launch a business, product or idea. This method is pretty much the exact opposite of legacy industry bank loans which is primarily borrowing large sums of money (at interest) from a small group of people.

From Kickstarter to IndieGoGo to GoFundMe to Patreon to new methods that allow people to invest in real estate properties and equity crowdfunding where you are actually buying into part ownership of the actual company, crowdfunding is quickly becoming the de facto choice for all sorts of raising capital.

Crowdfunding Platforms

It is important to note that I am not at all against these services. I think they are great services that are helping lots of people achieve their business dreams without having to rely on bank loans and I fully support more people raising capital with these services. With this post, I am trying to highlight the added long-term utility of ALSO accepting Bitcoin alongside existing crowdfunding infrastructure to help bring more of these tools to the global market.

So, let’s take a minute to look at the biggest crowdfunding services online and their pros and cons.

Kickstarter

This is by far the biggest and most prominent crowdfunding service on the internet. They allow a number of projects to raise funds but only if they receive 100% of the funds they need to achieve their goal. If you are trying to raise $10,000 and you only raise $9,950, then your campaign is a failure and you get $0. Yeah, you get nothing. Nothing. Those who want to support you don’t get charged and nothing happens with your campaign. You just wasted all of your time and effort to learn how to fail to fund a Kickstarter campaign. Now it’s back to the drawing board for you and your marketing team. You can even raise $55,000 for making Potato Salad.

IndieGoGo

Very similar to Kickstarter but with some slight differences. Instead of an “all or nothing” approach, IGG has the option to do the same thing but also allows you the option to keep funds if you don’t reach all of your goals. This is called Flex Funding and it’s likely what draws a large number of users to the service. The fees structure is slightly different for each type of these campaigns.

GoFundMe

Anything goes on GoFundMe as long as it’s legal. This is where people go to ask for money for anything and everything. I want to go to summer camp, please fund me. I want to buy a puppy, please fund me. My boy scout troop wants to go on a road trip, please fund me. I paid over $300 for an Uber ride on Halloween, please fund me. This is where mostly small amounts of money are raised but for all sorts of family, friends and community type projects with less focus on business interests. GFM takes a few percent and then sends you the funds that you raised when your campaign is complete.

Patreon

This is not for people who put together a campaign but instead it is more for raising funds for long term content creators like musicians, youtube channels, bloggers, writers, etc. The idea behind Patreon is that you pledge to support these content creators with a small (or large) weekly or monthly pledge because you believe in what they do and you want to help them to do it more often. You essentially pay people small amounts of money to creators who you feel make quality content.

There are a number of other services that offer similar financial services but those are the biggest ones and they are shaking up the way people raise capital for all sorts of things today.

Financial Exclusion

Now, what is the problem with all of these services if I only have good things to say about them?

Well, they all come with lots of strings attached like fees, policies, geographic barriers, banking regulations and even legal challenges that might restrict who can pledge or raise money.

So, how can Bitcoin be of any help here? Let’s take a look and see how the world’s most widely used alternative payment network can add even more value to this crowdfunding space.

One of the biggest problems with all of the above crowdfunding services is that they are limited by laws, regulations, policies, bank access, geographic barriers and more.

Well, what if there was a way to send and receive money from anywhere in the world to anywhere in the world without any sort of middlemen, banks or regulators getting in the way? What if the nobody even needed to have a bank account in order to send or receive contributions?

Bitcoin is a Perfect Match for Crowdfunding

Well, let’s take a look at how Bitcoin is different than these other services and it brings crowdfunding to the global market.

1. It’s free to accept and fees are minimal

This is probably one of the most obvious benefits of using Bitcoin for any sort of funding. Kickstarter takes 5% and since they have helped raise over $1 Billion as of March 2014, that’s over $50 Million in fees that they have pulled in. What if more people in more places could take part in crowdfunding ideas in their own locales?

2. Bitcoin doesn’t have “company policies”.

All too many kickstarter and IGG campaigns have been suspended or shut down strictly because they don’t meet certain requirements. This happened to me a few years ago when a buddy and I tried to crowdfund a co-working space in our local town. Kickstarter told me that my project didn’t meet their campaign guidelines and so they shut me down. I wasn’t worried about it but what if you could crowdfund more things with fewer barriers to entry or policies getting in the way?

3. Bitcoin doesn’t acknowledge “citizens or legal residents”.

I spend a bit of time asking and answering questions on Quora about Bitcoin, Cryptocurrencies and Crowdfunding. One of the common themes that I notice lots of people from foreign countries seem to be looking for ways around the legal restrictions put onto campaign hosts. People seem to be looking for ways to crowdfund their projects in other parts of the world where they don’t have access to those tools yet. Currently EU citizens can pledge money to Kickstarter and receive products but only a handful of countries around the world can actually raise funds using these crowdfunding sites. Once again, billions of people are held back by antiquated laws and policies. What if everyone could raise capital with equal access?

4. Bitcoin doesn’t care how old or young you are.

Currently you have to be at least 18 years of age to raise funds with most crowdfunding platforms. Bitcoin is all inclusive so literally anyone at any age can use it to raise money. You can receive them with just about any smart phone. What if children in foreign countries could receive donations to pay for their school? or food? or disaster relief?

5. Bitcoin doesn’t care if you have a name, address, bank account or a government issued ID.

This one is kind of a big deal since it puts a lot of limitations on hundreds of millions of people. You need to meet certain banking requirements in order to send or receive payments on crowdfunding sites but not everyone has access to such financial infrastructure so this creates some serious barriers to entry for some of the people who need these services the most.

6. You can raise money for anything YOU want to with Bitcoin.

Nothing is prohibited. Currently, Kickstarter does not allow you to raise money for charity, food/drink products or political campaigns. What if you could easily raise funds for those types of things or maybe you just want to raise funds for your news leak website 😉

7. There is no time limit for bitcoin donations.

If you want to accept donations for the rest of your life, you can easily do this with Bitcoin. You can even receive donations long after you are dead and have donations pass onto your posterity. Lets see Kickstarter do something like that.

8. Funds cannot be frozen or seized.

Legacy financial industries have the ability to instantly and indefinitely freeze your money and in some rare instances they can even seize your money. Bitcoin is not susceptible to such worrisome circumstances. If you have the bitcoins, then YOU have them and not the bank or crowdfunding site.

9. Bitcoin provides more privacy and protection from identity theft.

One of the problems with banks and the legacy finance system is that is requires a lot of your personal information to store or transfer value. In September of 2015, Patreon had personal information from 2.5 million users compromised in a data hack. That kind of personal data is not attached to bitcoin so it is impossible for such data breaches to even happen.

10. Bitcoin further enables digital tipping.

We have all probably given or received a tip in cash form. Maybe you have given someone on the street some spare change or provided a meal for someone in need. Perhaps you’ve wanted to give a tip to a musician on youtube just as easily as as you give a tip to a musician on the subway platform. What if you could give small amounts of money to people for pretty much anything? Bitcoin enables this like no other financial service.

I know all of this is a lot to take in and understand with just a single blog post but because Bitcoin is not a company but rather a global peer-to-peer network running an open-source software, it is opening up a whole new world of permissionless global commerce that has never been seen before. Imagine a world where anyone could raise support for any cause without any fees or censorship.

Conclusion

I am not saying that you need to abandon these services and switch to bitcoin but what I am suggesting is that if you are looking to raise money using any sort of crowdfunding service, I strongly suggest that you also accept Bitcoin donations because it costs about $0 to accept it, people from around the world can send /receive it and you will never have any if you don’t allow it happen.

If you related to this post, then show your support for Bitcoin as a means of crowdfunding, then take action and get your very own Reason to use Bitcoin #44 t shirt at our online store and help us to keep these blog posts coming.

How do you think bitcoin can enable a new wave of crowdfunding? Let us know with a comment below or a tweet at @BitcoinReasons

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