Summary

• There are many possible reasons why some still do not understand the idea behind bitcoin, and it comes as no surprise.
• Complex mechanisms that operate bitcoin might not be fully understandable for everyone; hence some could still be suspicious about cryptocurrency.
• Originated 11 years ago, bitcoin is still considered as a relatively new payment method, and there is not as much literature as there are for regular fiat currencies.
• In reality, is it possible that even the worth of fiat currencies might be as surreal as bitcoin is to some people?

When bitcoin emerged back in 2009, no one would have thought it would come to the level where it is, at the present time. It was greeted with scepticism because everyone was used to fiat currencies, thinking that bitcoin was not genuine since it did not have a physical appearance.

On the other hand, fiat currencies, such as the US or AU dollar, have physical notes, have been around for a while and are accepted as an exchange system everywhere in the world. It is no surprise that people get suspicious when something new emerges, but is there a reason why some people still do not understand how bitcoin works?

Must read: What is a cryptocurrency and how to use it?

Possible reason #1 – complex mechanism

The peer-to-peer system might appear abstract to some people so they might not understand it without previous in-depth knowledge.

Unlike owning notes and coins in wallets, using bitcoin is a bit more complex than that. Bitcoins need to be mined in the system, and for that, it takes a lot of mathematical knowledge involved.

Miners are solving complex mathematical and IT issues, which needs to be done in order to verify the transactions.

After the verification, transactions are posted publicly, but the user’s privacy and account are anonymous. The whole concept of blockchain technology is highly complex, so some could strive to stay away from bitcoin just because they do not understand how it works.

Also read: Bitcoin for Beginners: 5 things you need to know

Possible reason #2 – not been around for a while

11 years ago, the first bitcoin got introduced to the market. That is not a long time, is it?

It comes as no surprise that people did not get used to the fact that bitcoin exists. There is not a lot of literature that covers cryptocurrencies, at least compared to “normal” economy and finance, so people still might not have enough knowledge about the subject; hence they might not understand bitcoin.

Who created bitcoin is still a mystery, but what is known for sure is a pseudonym Satoshi Nakamoto – an individual or a group that invented bitcoin.

Learn about; What is Ripple?

It became globally known for low-cost transaction fees and having decentralised network. Today, there are more than a hundred cryptocurrencies in the market, but the biggest competitors to bitcoin are Ethereum, Litecoin, Ripple, Stellar and NEO.

Interesting read: What is Ethereum?

Possible reason #3 – not real money?

Some may think that bitcoin is an illusion and it does not exist because it is not available in a physical form. There are just some numbers and trades that one sees online, but there is no real proof that bitcoin exists, while on the other hand, fiat currencies appear in the form of coins and notes.

Some experts argue that fiat currencies are also more unreal than real. They are stored in physical assets, but the meaning itself was made by the people. The illusion of money existence is backed only by “faith” that someone else would accept, e.g. dollars for whatever good people desire.

That takes us back to the very first form of the money trade – barter.

Barter was a way of exchanging physical goods, usually in the form of animals like sheep or goats, for something that people wanted in return. They just hoped that the other party would accept the goods provided for barter and return them the desired good in exchange.

So, how is that different from money nowadays?

Barter system was probably different because money is now widely accepted and has been known as a way of purchasing products for a very long time.

But even fiat currencies exist in more digital forms than physical notes. It has been estimated that only 10% of the total US dollar supply (around US$1.5 trillion) exists in cash. The rest of US$13.7 trillion exists in cyberspace, in online banking apps.

The main problem that fiat currencies face is inflation. Inflation usually happens when the governments decide to print more money for a greater reason, so in theory, there are unlimited amounts of money that could exist.

As an example, what US$1 represented in 1959 is now the equivalent of 12 cents.

By creating bitcoin, inflation was intended to be made extinct, as it usually is a fault in the money world and hard to fix. That is why there is a fixed number of bitcoins (21 million) that are expected to be mined by 2140. After that, no more bitcoins will be created.

Do read: Can Bitcoin be converted to real currency?

Possible solution

The whole money system is very abstract if one puts an extra thought to it. People work relentlessly for it; they try to have it as much as they can and potentially grow it even more.

All that with one interesting fact – money in its philosophical meaning only has a symbolic worth.

Also, if people could switch from exchanging two goats for 10 kilograms of wheat to exchanging some paper notes for food and cosmetics, they will come around and start understanding bitcoin and other cryptocurrencies even more.

Not so long ago, it was abstract to think that fiat currencies could come in a digital form, whereas now, rarely anyone uses cash in developed countries.

It is unbelievable what people can get used to, everything with time.

Once people learn and understand that fiat currencies are as unstable as cryptocurrencies, bitcoin will surely be more understandable for everyone. As newer generations are digital-oriented, it is believed that bitcoin will slowly replace even gold, if gold does not become digital too.