Okay then, explain it to me. What can I do with bitcoin that I can't do with credit cards, US currency, checks, etc.? What can I do with bitcoin that I can't do without it? What exactly makes it "useful"? What gives it "value"? I'd honestly like to understand what makes so many people buy in to the siren call of "Bitcoin".
Saying "it's an algorithm" makes it seem like you think that somehow gives it value, but I don't understand how. It sounds more like a word that people parrot to make it sound like they're more educated than the people they're talking to, when in reality they are just as clueless as the rest of us. It sounds like a meaningless word used to explain the inexplicable. It's based on the assumption that the other person will not be willing to admit that they are too dense to understand the simple explanation that "it's an algorithm" is all that is needed, and if they can't understand that, there is no hope for them anyway. Meanwhile, the person who used the term doesn't understand it either, but they think they can bluff their way through by acting like the buzzword explains it all.
It is a frictionless, trustless method of exchanging value. For example, if you want to buy a cargo container full of sneakers. Now you would agree on a price in yuan. Then you convert it to dollars. Then you wire the money from your bank through a settlement system which charges you a fee to convert your dollars into yuan. They wire that money to China.
That process probably takes two days minimum and probably upwards to 5-8% in addition to your fee for the sneakers.
With a blockchain tech you agree on a price in bitcoin. You convert your dollars to bitcoin. You then transfer the funds to the other party. The blockchain verifies the balance on each account and makes the transfer. The verification goes through six or seven confirmations. The bitcoin arrives in the vendor’s account and is immediately converted to the local fiat.
That transaction takes about ten minutes and costs about 1/10th of the bank fee.
Bitcoin is NOT for buying a cup of coffee. It’s is for moving significant amounts of value quickly and securely. It is a public ledger—meaning it is open for audit. The security on these transactions are, by the nature of the cryptology, more secure with anything you would have with a bank or credit card transaction.
As you can see, the immediacy of the transaction makes the value fluctuations almost moot because it doesn’t change that much if you are converting on either end—certainly not enough to make it more expensive.
That is just one example.
Another example would be tying contracts or records to the blockchain. One example is real estate titles. Once the records are uploaded to the blockchain your property would be assigned an “address.” Every time the property is bought, sold, or otherwise affected it would be recorded to the blockchain.
In a few years you would go online, get the address for the property and you would be able to perform a complete title search in seconds. It would be secure and could not be counterfeited. Tax records could be assigned.
Imagine no title insurance, no search fees, and a full accounting of any liens or encumbrances. What would THAT do for closing costs?
Medical records could be used the same way. And it would be much more secure than a social security number. You swipe a card upon entering any hospital and they would have instant access to every medical record. And since it’s a 256 key number, no one is going to guess it.
Finally, the value come with its utility. People don’t see it today. But the example I gave are just two very broad things that could be done. Any type of contract could be sent as a “smart contract” that secured the payment and would only release them to the counter party when the conditions are met. Think about it as an escrow account that cannot be robbed and can only be executed when both parties agree.
That is the value. You need something to be the toll that allows these transactions to take place.
It’s not pie in the sky. It’s not make believe. This stuff is happening today. You will hear more about the blockchain and these “coins.”
Personally I think the name makes it sound stupid. Use of a term like a toll, or token, or whatever better describes what it is.