What is Bitcoin and DeFi?
Bitcoin is akin to digital currency, similar to the physical cash you use, yet exclusively exists in the realm of the internet. Are you familiar with how you securely keep your funds in your purse or wallet? Well, Bitcoin is securely stored in something called a digital wallet on your computer or smartphone.
Bitcoin is decentralized, meaning no individual or entity exercises
control over it. Instead, it is upheld by a network of computers across
the globe. These computers collaborate to maintain a ledger of who owns
how much Bitcoin and to validate transactions.
Why would someone opt for Bitcoin over traditional currency?
There are several reasons. Firstly, Bitcoin transactions can often be swifter and more cost-effective, particularly for international money transfers. Additionally, some individuals appreciate the notion of retaining authority over their finances without reliance on banks or governmental bodies.
What are the risks for individuals or businesses?
The risk associated with Bitcoin or DeFi for individuals or businesses new to finance or economics lies in the timing of acquisition and the intended use of Bitcoin. For instance:
Investing in Bitcoin:
Suppose one purchased 1 Bitcoin or a fraction thereof in July 2023 and wishes to sell it today, yielding a 47% profit. However, utilizing Bitcoin in this manner entails speculation and necessitates guidance, similar to investment practices in a Certificate of Deposit (CD), Investment Fund, or Stock Market. Discerning the opportune moment is pivotal for investment endeavors.
Transactions with Bitcoin clients and suppliers:
It is imperative to project both the short and medium term. Drawing from examples such as economies akin to that of El Salvador, where public policy acceptance has led to citizens being able to utilize Bitcoin as a payment method for commodities ranging from milk to vehicles. The transfer of goods and services using this currency is established similarly to how transactions are conducted with deficitary currencies such as CRC or USD.
Decentralization, as a means to safeguard one's labor and efforts from political and banking influences, has currently been predominantly facilitated through Bitcoin technology and the burgeoning development of DeFi. Historically, individuals acquired assets like gold and other metals; however, policies have sought to undermine personal control over such assets. Bitcoin and DeFi are emerging as viable options for wealth protection.
Bitcoin as a payment method
Businesses can receive Bitcoin if their clients utilize services like SINPE-Mobile or PayPal. From a tax perspective, the only distinction lies in the fact that platforms such as PayPal and SINPE-Mobile may share transaction records, whereas with Bitcoin, only the owner of the currency and the recipient possess control or access to transaction records.
The aim of disseminating this information is to provide a pragmatic and substantive perspective on the true essence of Bitcoin and DeFi, especially considering the negative publicity and intentions perpetuated by banks and governments regarding digital currency Bitcoin, while they prepare their versions to continue affecting the working and productive class of the economy.
Multiple options are available online for acquiring Bitcoin, enabling individuals to secure them in a digital wallet for the purposes of purchasing goods and services, investing, or safeguarding wealth.