Bitcoin will never be a currencyits something way
Cryptocurrencies are booming beyond belief. Too many altcoins to name have skyrocketed in value along with the Big Two. ICOs are raking in money hand over fist over bicep. What the hell is going on? A certain seductive narrative has taken hold, is what is going on. This narrative, in its most extreme version, says that cryptocurrencies today are like the internet in I understand the appeal of this narrative. Because bitcoin will never be a currencyits something way nobody wants to actually use blockchain protocols and projects, those tokens that are supposed to reflect their value are ultimately … well … worthless.
Bitcoin, despite its ongoing internal strife, is very useful as permissionless global money, and has a legitimate shot at becoming a global reserve and settlement currency. Its anonymized descendants such as ZCash have added value to the initial Bitcoin proposition. Similarly, Litecoin is now technically ahead of Bitcointhanks to the aforementioned ongoing strife. Ethereum is very successful as a platform for developers. But still, eight years after Bitcoin launched, Satoshi Nakamoto remains the only creator to have built a blockchain that an appreciable number of ordinary people actually want to use.
No other blockchain-based software initiative seems to be at any real risk of hockey-sticking into general recognition, much less general usage. But on the other hand, maybe the ratio of speculation to actual value in the blockchain space has never been higher, which is saying a lot.
Some people argue that the technology is so amazing, so revolutionary, that if enough money is invested, the killer apps and protocols will come. That could hardly be more backwards. But projects with hardly any users, and barely any tech, raising bitcoin will never be a currencyits something way of millions? That smacks of a bubble made of snake oil… one all too likely to attract the heavy and unforgiving hand of the SEC. That seductive narrative though!
The internet in ! But hear me out. Maybe the belief that blockchains today are like the internet in is completely wrong. I propose a counter-narrative. Similarly, open-source Linux was vastly more democratic, and more technically compelling, than the Microsoft and Apple OSes that ruled computing at the time.
But nobody used it except a tiny coterie of hackers. This is amazing, groundbreaking work… but why would an ordinary person, one already comfortable with Box or Dropbox, switch over to Storj or Blockstack?
The similarities to Linux are striking. Linux was both much cheaper and vastly more powerful than the alternatives available at the time. It seemed incredibly, unbelievably disruptive. Windows was a rattling lemon of a station wagon; MacOS was a bitcoin will never be a currencyits something way sealed Volkswagen Beetle; and then, weirdly … beyond weirdly … there was:.
Linux, which is right next door, and which is not a business at all. The people who live there are making tanks. These are not old-fashioned, cast-iron Soviet tanks; these are more like the M1 tanks of bitcoin will never be a currencyits something way U. Army, made of space-age materials and jammed with sophisticated technology from one end to the other. But they are better than Army tanks. These tanks are being cranked out, on the spot, at a terrific pace, and a vast number of them are lined up along the edge of the road with keys in the ignition.
Anyone who wants can simply climb into one and drive it away for free. Customers come to this crossroads in throngs, day and night. Ninety percent of them go straight to the biggest dealership and buy station wagons … They do not even look at the other dealerships. This is not a dismissive analogy, or one that in any way understates the potential eventual importance of the technology! There are two billion active Android devices out there, and every single one runs the Linux kernel.
Linux was immensely important and influential. Most of modern computing is arguably Linux-to-Linux. To quote my friend Shannon: But if your investment thesis had been that ordinary people would adopt Linux en masse over the next decade — which would not have seemed at all crazy — then you would have been in for a giant world of hurt. Linux did not become important because ordinary people used it. Instead it became commodity infrastructure that powered the next wave of the bitcoin will never be a currencyits something way.
Does Ethereum gas cost too much? No problem; just switch your distributed system over to another, cheaper, blockchain. Instead, wake me up when bitcoin will never be a currencyits something way prices begin to track the demonstrated underlying value of the apps and protocols built on their blockchains. Disclosure, since it seems requisite: I mostly avoid any financial interest, implicit or explicit, long or short, in any cryptocurrency, so that I can write about them sans bias.
I do own precisely one bitcoin, though, which I purchased a couple of years ago because Bitcoin will never be a currencyits something way felt silly not owning any while I was advising a since defunct Bitcoin-based company. Windows was a rattling lemon of a station wagon; MacOS was a hermetically sealed Volkswagen Beetle; and then, weirdly … beyond weirdly … there was:
To give you some perspective on this number, the US Dollar money supply M2 has doubled since and the cumulative inflation over the past 10 years in the US has been Fiat currencies are very bad at protecting wealth and purchasing power, they lose a lot of value over time.
Bitcoin is built on a totally different paradigm. Its supply is very limited and written in its core code. Something I hear from skeptics often is that Bitcoin and other cryptocurrencies are made out of thin air and are backed by nothing. What they do not realize is that so are all fiat currencies. What gives the US Dollar - and any other fiat currency - its value is that people trust the US Dollar to be accepted by others as a form of payment in the future.
As long as people believe that Bitcoin has value, it will be valuable. Japan even made it a legal currency of payment just a few weeks ago, so things are moving in the right direction for Bitcoin.
It is unlikely that Bitcoin will ever become a full-fledged currency that will be used frequently as a form of payment, it will be far too valuable for that. This is a direct application of Gresham's law that states that "bad money drives out good". This is why silver had taken over gold as currency before fiat currencies were invented. People wanted to protect their wealth by keeping their gold and were spending their silver coins instead in French it is the same bitcoin will never be a currencyits something way for "money" and "silver".
Other cryptocurrencies like Ethereum are much better suited to act as currencies in the daily life as their supply is not as constrained as that of bitcoins. When compared to other fiat currencies, Bitcoin is still tiny. A drop in the ocean when compared bitcoin will never be a currencyits something way the other main fiat currencies or even to gold.
Bitcoin is the first cryptocurrency ever being invented so it has the first mover advantage and almost worldwide name recognition. Even though it is technologically behind other cryptocurrencies, the agreement reached two weeks ago at the Bitcoin will never be a currencyits something way conference to increase the block size and to activate the SegWit protocol in the next 6 months should debottleneck the network.
It should also at last put an end to the civil war that has been plaguing the Bitcoin community for months on how to take Bitcoin to the next stage.
Some cryptocurrencies will become ubiquitous without any doubt, but there is no way of knowing for sure which ones Ethereum and Ripple are serious challengersso it may be worth hedging your bets when investing in cryptocurrencies.
If you are interested in making money with cryptocurrencies, start your trading on a free demo account with a regulated broker. Bitcoin Price Have you ever thought why a charity or a nonprofit organization would want to use cryptocurrency in the first place. In order to get the current ask price, use the getticker api which will return something like.