Newcomers and critics commonly ask, “What is Bitcoin even used for?” Let’s address this question by looking at current use cases for Bitcoin (BTC), which include: 

• Method of payment
• Secure and fast global transactions
• Censorship resistance
• Store of value

Bitcoin as a method of payment

The Bitcoin network empowers people neglected or excluded from traditional payment methods to participate more fully in national and global commerce. Case in point, businesses in Nigeria that want to import or export goods from other countries must deal with prohibitively restrictive banking regulations, which includes central bank-imposed limits on foreign currency exchange. These limits led to the formation of a black market for foreign currencies where businesses must pay a premium to acquire the funds needed to engage in trade. Businesses started turning to Bitcoin as a beneficial alternative to avoid these additional costs and hassles.

While the previous example involves an emerging economy, the adoption of Bitcoin as a method of payment is also growing among many of the biggest companies in the world. Companies and brands that now accept Bitcoin include Palantir Technologies, Gucci, Tag Heuer, AT&T, Virgin Galactic, Balenciaga and even sports teams like the Miami Dolphins and Dallas Mavericks, among many others.

Bitcoin for Secure and Fast Global Transactions

Businesses that accept international payments through legacy processors are typically hit with high fees and slow transaction times that can take days or even weeks to complete. For example, the average global fee rate for remittances is 7.14%, a x7 difference compared to OpenNode, which is much lower. Further complicating matters, online payment processors like PayPal are not accepted in every country – and Venmo only the U.S. – yet Bitcoin can be sent and received by anyone around the world.

By enabling your business to accept Bitcoin payments, OpenNode makes moving money across borders significantly more affordable and faster than international payments through traditional channels. There’s no need to wait on a bank to verify and process a Bitcoin transaction, which is verified on the blockchain and can be completed in minutes. Transactions carried out using the Lightning Network (like most OpenNode commerce is) can be completed instantly.

Censorship Resistance

Another benefit of Bitcoin is censorship resistance. Without a central authority to dictate who can and can’t use it, Bitcoin has distinguished itself as the currency of choice for many individuals and organizations left out of traditional payment methods. One of the best examples is the whistle-blower nonprofit Wikileaks, which was blocked from receiving cash transfers by Visa, Mastercard, Paypal and other payment processors for publishing classified U.S. State Department documents. Without Bitcoin donations, Wikileaks may not have been able to continue operating.

Bitcoin as a Store of value

Bitcoin is especially helpful as a store of value that limits wealth from being devalued. As mentioned above, Nigerian businesses often use Bitcoin as a payment method to bypass foreign exchange limits, but many also keep their savings in Bitcoin as a way to limit the impact of inflation, with the Nigerian naira often experiencing double-digit inflation rates. Such a high inflation rate (listed at 18% for May 2022) can cause Nigerians to lose a significant amount of purchasing power each year by keeping their savings in nairas.

The use of Bitcoin as a store of value and savings is becoming increasingly more common in countries with hyperinflation such as Lebanon, Turkey, Argentina and Venezuela. In 2020, the inflation rate in Venezuela hit an astonishing 6500%.

Many describe Bitcoin as “digital gold” because of its scarcity, but this comparison does not paint a complete picture: Gold might have relative scarcity, but Bitcoin has absolute scarcity. Only 21 million Bitcoin will ever be mined, with production output decreasing every four years and ending entirely in 2140. As of 2022, only 2 million more new coins are left to mine. This predetermined schedule makes Bitcoin progressively more scarce regardless of demand or price increases.

By contrast, the U.S. government increased the supply of dollars by more than 25% in 2020 alone – from $15.33 trillion at the end of 2019 to $19.19 trillion at the end of 2020 – which (as pretty much everyone knows) led to market-crippling inflation and decreased purchasing power. Add European conflict and supply-chain issues into the mix, and many national currencies are suffering, making Bitcoin look like an attractive hedge against inflationary pressure.

Paul Tudor Jones, a billionaire hedge fund manager famous for predicting the 1987 stock market crash, established a Bitcoin position in May 2020. His reasoning? Jones predicted high inflation following the central bank’s printing spree, and he saw Bitcoin as a hedge against it. When asked about it, he said, “The best profit-maximizing strategy is to own the fastest horse. If I am forced to forecast, my bet is it will be Bitcoin.”