I love the idea of Bitcoin. But, as someone who's been working in banking for more than a decade - what problem does Bitcoin solve? Serious question; 'cause I'm failing to come up with a good answer.
Edit: The closest I've come to answering this: To me Bitcoin is more a decentralized international payment protocol (such as SWIFT); not a store of value / currency. But I rarely see it being pitched in that way.
For me it solves "trust". See, Americans find it so difficult to relate to this issue because US central bank has such strong economics that a major event is unthinkable.
But going back to 2009 Greek crisis and the "bank run" prevention. Same thing happened in Argentina before and also in Mexico (the ones I know of).
We people in these countries dont trust our monetary and banking systems. The traditional way to offset that was gold or USD. But they are not so liquid or easy to store.
Cryptocurrencies are an instrument to detach the "value transfering" properties of money from the government control. With high liquidity and extremely easy to store.
The inefficiencies of BTC (performance, traceability, ease of use) are more technical details that people has been slowly tackling.
Bitcoin solves the problem of a trustless money system. If you do trust the current money system I think it more importantly kickstarted research into decentralized finance.
For example with cryptocurrency I can within seconds get a loan. That is just not possible with the current financial system. This also leads into the concept of flash. loans where you can borrow as much money as you want as long as you return it in the same transaction.
Another thing cryptocurrency allows is for micropayments. Images hiring someone and paying them per second where they can instantly spend what they have earned instead of having to wait for a payday.
Another thing cryptocurrency allows for is trading digital assets atomically such that you don't need a middleman. Imagine you wanted to buy a video game item from someone. Instead of having to worry about being scammed you can setup a transaction where both assets are exchanged at the same time avoiding a potential middleman and avoiding getting scammed.
Now most of this could be done with the old financial system, but the decentralized finance space is just moving faster than what the centralized finance space can keep up with.
Instead of thinking about what bitcoin&co. save for a single average person (not that much in comparison to e.g. gold), think at bigger scale:
It forces states to be even more mindful about what they do with their currency.
Because, states have a lot of ways to prevent people from starting to avoid their currency. In particular they can increase tax on everything, such as real estate, income, or just wealth in general. However, taxing bitcoin (or even monero) is so much more difficult, that it can act as a sort of regulator - similar to gold, but even better in this point.
To start, take a look at the original whitepaper by the creator of Bitcoin (specifically Abstract, Introduction, and Conclusion):
https://bitcoin.org/bitcoin.pdf
The original intention was to create "an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party."
Although starting as a decentralized payment protocol, the idea of trustless decentralization turned out to be applicable to store of value and use as a currency.
For the 3 aforementioned points:
1. You don't need to trust anyone to verify payment transactions.
2. You don't need to trust any group (the Federal Reserve, the gold or diamond industry, etc.) for it to be a store of value. (which is, eliminating unpredictability on the supply side[1])
3. You don't need to have any particular reason, other than public adoption[2], for it to become a common currency.
Let's consider the fiat comparison to US dollars.
1. You need to trust financial institutions to handle transactions.
2. You need to trust the Federal Reserve to be responsible about management of supply.
3. The US dollar is backed by the strength of the US government and the US economy.
If all of these things were true (as it somewhat usually is), everything works fine. But fraud/backcharges/misc. happen, recessions happen and the Fed can be judicious about pulling certain financial levers, and it's entirely possible that the currency of the future becomes something else, like the Chinese Yuan, because of changes in world power.
[1] Bitcoins supply is released at a fixed rate, which makes it predictable, tying its value much more closely to demand than supply. This value eventually becomes completely demand-driven once the last Bitcoin is mind.
[2] The catch-22 of bitcoin public adoption - it's only useful if everyone is using it, but there isn't anything else that makes you want to use it. It would be like if it was 1776, and instead of introducing a US dollar backed by gold, you introduced the modern version backed by debt.
This is why the news of the past few months of institutional adoption is so monumental - it indicates a tipping point of the beginning of stable public adoption, a problem that is completely outside of the hands of the technical driving forces of cryptocurrency.
Society has had multiple stores of value, as none is perfectly secure. Gold, oil, dollars, real estate, (some) bonds & equities. Crypto is the first that’s decentralized and digital and on a open network not governed by any centralized entity which is powerful bc the world needs a international reserve currency
Bitcoin is a digital hard asset, that is a hedge against inflation. We've seen insane money printing over the past year thanks to COVID, and while we can debate on the merits of it, what is indisputable is that fiat money can be arbitrarily debased at will.
Yes, a decentralized international payment protocol is a good answer, but it also has a currency itself embedded in it. A type of currency to make this protocol work.
The whole thing saves a lot of manpower and energy in the world, so in that regard it potentially holds a lot of value.
However, if you told me to open up Excel and calculate the approximate true value of 1 BTC, I am unable to do so.
I can imagine scenarios where for someone with very specific needs of anonymity it solves problems, but I cannot imagine any direct problems it solves for me.
If everyone switched to BTC employment in the financial sector would not shrink. Are you saying it would? I can put a bundle of dollars in the mail but even if that was free, it is still risky. My understanding is that I pay my bank to hold my money and transfer it because it is much less risky than doing it myself.
Edit: The closest I've come to answering this: To me Bitcoin is more a decentralized international payment protocol (such as SWIFT); not a store of value / currency. But I rarely see it being pitched in that way.