Man holding bitcoin showing financial decentralization

How Bitcoin Is Aiming to Bring Financial Decentralization in the World

The interest in bitcoin has again risen up after the pandemic. The price of bitcoin has reached to its previous level around $10,000 which has gone under $4,000 at the initial stage of the pandemic. Now some experts have predicted that bitcoin will again take a huge upsurge as like in 2017. With the rise in unemployment due to the pandemic, the perception towards bitcoin of many people has changed.

Today, people from different age groups irrespective of their gender are interested in bitcoin. As a result, the bitcoin community is growing and it can bring a global financial decentralization. In this article, I have found some valuable information on how bitcoin is going to bring this revolution from a lot of research.

The intention behind Bitcoin transactions

Bitcoin is aiming to adopt a democratic model of transactions that will bring a new transformation in the financial world. The traditional model of transaction involves intermediaries such as banks and financial institutions who are approving the transactions between the sender and receiver. Here the banks are playing as a central authority that can verify and approve the financial transaction.

However, bitcoin transactions are totally different from conventional transactions. In the bitcoin network, the sender can directly send money in the form of bitcoin without the need of a bank or central authority.

This is possible due to the most innovative technology of the 21st-century blockchain. It is a decentralized public ledger that allows financial transactions with cryptography security features. Due to this reason bitcoin is known as a cryptocurrency.

How Bitcoin can bring global decentralization?

As bitcoin transactions occur through a decentralized network, it has many benefits. Because the decentralized network has many benefits which are discussed below.

1. Fight inflation

The traditional payment system incorporates banks, government, and financial institutions that have authority over the financial transactions. This is a big problem for the users in the system. The major problem is that the goals of the users in the system do not match with the objectives of the system. For instance, to meet the economic requirements, governments who have the authority to issue currency inflate the currency which is a major problem for the users. With decentralization banks, financial institutions and the governments will lose their authority of approving and taking major financial decisions on a large scale. So the aim of bitcoin is to adopt a democratic model of transaction that will prevent any trusted third party to inflate the currency.

2. Transparent transactions

Another advantage of the decentralization is everything is transparent. The underlying blockchain technology is open-source software that allows every user in the network to review the transactions. This also builds confidence and trust in technology as well as the mode of transactions in the users.

Further, consensus users can improve the software which is also transparent to every user in the network. This feature is not available in the conventional payment system. That means if any major change in policy and method is done by the government, then those things are not transparent to the users. The government can make these decisions on its own without the knowledge of its users. Whereas in the bitcoin network every member has voting rights to approve the change.

3. Low-cost transactions

The cost of transactions in a decentralized network is very low. Sending and receiving money through a decentralized network is free even for cross border transactions. This is one of the major reasons why people are adopting bitcoin. On the other hand, the traditional payment system charges a high transaction fee for cross border payments.

Conclusion

As mentioned above, decentralization allows the users to transfer money without a third party in a secure network without transaction fees. Moreover, bitcoin has become popular because of the increase in its value. People are gaining significant profits by investing in bitcoin through the bitcoin up.

Adopting a more democratic model with different advantages over the traditional payment system, bitcoin is going to bring decentralization in the world. I hope this article has helped you to get some insight into the concept of decentralization and how it is going to bring a transformation in the financial world. Now share your thoughts about this matter in the comment section.

 

Staff Writer at CPO Magazine