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Bitcoin enables anyone to be their own bank, even those who live in “bankless” communities or who have traditionally not had access to financial institutions. This cryptocurrency allows holders to no longer be chained to their 9-to-5 jobs, or be dependent on controlled and potentially fraudulent financial institutions.
Cryptocurrency is no longer a word spoken by only the top investors. It has become a tool for building wealth and achieving financial autonomy.
This guide will discuss the nature of Bitcoin, the problem with traditional financial institutions, and how Bitcoin supports financial freedom.
The Decentralized Nature of Bitcoin
Bitcoin was created in response to flaws with traditional banking systems, which include:
High transaction fees and low transaction speeds
Potential fraudulent transactions
Involvement of third parties in transactions
Bitcoin differs from these traditional banks by operating on a decentralized finance (DeFi) system, which involves blockchain technology. The nature of Bitcoin and other cryptocurrencies means that there is no involvement of third parties, and all transactions are fraud-free since they can be verified on the public ledger.
Although transactions can be publicly verified on the blockchain ledger, users are not required to share any personal data. All peer-to-peer Bitcoin transactions show the details of the involved parties’ keys (as a numerical code) and not their personal information.
This extends beyond peer-to-peer payments, as all Bitcoin transactions have a level of anonymity not offered by traditional payment methods. People use Bitcoin for real-world transactions for this reason.
For example, this anonymity and added layer of security is why many people opt to play on a crypto casino and not a standard online casino or at a brick-and-mortar establishment. Since payments can be verified on the public ledger, the risks of fraud are almost non-existent. Crypto casinos also enjoy the benefits of lower transaction fees and instant withdrawals, and there’s no need for players to convert their local currency into one accepted by the platform.
Overcoming Financial Gatekeeping
Many Bitcoin enthusiasts are aware that traditional financial institutions are “gatekept”. This is because they must comply with national and state regulations, which often restrict how individuals can use their money. This is especially true in countries with strict government control.
Governments can also change regulations as they please, and banks need to adhere to any changes, which can put personal finances at risk. Banks have failed in the past, and they can potentially fail again, seeing individuals lose their funds.
How Bitcoin Offers Financial Freedom
The issues discussed above are common across the globe, but the nature of Bitcoin and other cryptos means they can offer financial freedom that centralized banks and traditional financial institutions can’t match.
Financial inclusion
The decentralized nature of Bitcoin means that people who previously had restricted access to banks are able to own crypto.
An estimated 1.4 billion people globally don’t have access to banks, the majority of which are women. Bitcoin circumvents this by providing financial inclusion to these communities and individuals.
Crypto and blockchain technology also offer equal opportunities as there is no discrimination when it comes to owning Bitcoin. It offers a path to financial independence and a better quality of life.
Global finance
Bitcoin is a global currency that can be accessed and used in almost any country. You can also seamlessly send Bitcoin to anyone, no matter where in the world they are.
Global Bitcoin transactions don’t require any exchange costs or permissions from foreign jurisdictions, offering a level of freedom that traditional international payments can’t match.
No third-party involvement
As mentioned, traditional transactions require the involvement of third-party financial institutions to facilitate payments. This means that the institution can deny a transaction, which takes away the individual’s financial freedom.
Bitcoin is totally permissionless, and the ability to pay other people directly and independently means that the individuals themselves dictate all transactions.
Cryptography
Bitcoin allows holders to take control of their own funds through cryptography. This is the ability to protect all communication or transactions through the use of codes, or in the case of Bitcoin, a private key. All transactions can be controlled using this key.
By preventing anyone else from accessing your private key, a person will have total control over their crypto. This key can be used to interact with the crypto network and sign transactions.
Diversification
Investors can improve their financial freedom by investing in crypto and digital assets as a means to diversify their investment portfolios. Cryptocurrencies often exhibit unique market behavior. Although a volatile investment, those willing to take risks can enjoy the growth of Bitcoin and move away from traditional (often regulated) stocks.
Liquidity
Bitcoin offers a higher level of liquidity and accessibility than fiat currency. Since it can be bought 24/7 and is not reliant on a bank’s opening hours, it is much more accessible than traditional investments.
Investors can also quickly react to changing market conditions, making it a great investment for those with both short-term and long-term financial goals.
Taking Steps To Financial Freedom
If you’re interested in increasing your financial freedom, here are some potential first steps to start your Bitcoin journey:
Choose a reputable cryptocurrency exchange by reading user reviews and community forums.
Assess the level of risk you’re willing to take since the crypto market can be volatile. Determining risk tolerance will help steer your investment decisions.
Diversify your investment portfolio by investing in Bitcoin, other cryptocurrencies (like Ethereum), and other digital assets.
Be prepared to adapt to changing market conditions so you can protect your investments when downturns occur.
Be in it for the long run since cryptocurrencies are volatile, but see growth over longer time periods.
*This article was paid for. Cryptonomist did not write the article or test the platform.
