I had a discussion about Bitcoin with a colleague at work yesterday where he claimed Bitcoin was about to die as a crypto currency. I just can’t see that happening anytime soon, though, and here’s why.
First of all we need to be at least somewhat aware of what Bitcoin actually is and what it isn’t. First, and most importantly, it’s not a centralised currency such as the fiat currencies (dollars, euros, Swedish kronas, etc.), but a decentralised bit of code, a token. It’s not really possible to cheat or change the blockchain without people noticing like you do when you create more paper dollars out of thin air with fiats. Instead it will act more like a gold based currency that becomes more valuable when more value is added to the system instead of fiats which become less valuable over time due to inflation.
”You can’t buy things with Bitcoin”
Well, that’s true and false. Crypto currencies is still in its childhood, not many people know what they really are, most have heard about them but not much more. We often tend to forget this point. There’s also not that many who uses Bitcoin as an accepted payment method, yet. There are, however, marketplaces where you can buy practically anything you’d like online but it normally takes a bit of dedication to the subject to actually try it out. Then there’s always the speculation game that goes for any currency.
”The government will shut it down”
Yeah, I don’t know enough on the technical stuff to say one or the other but what I do know is that when people get a taste of crypto currencies they won’t let it go easily and since it doesn’t take another central bank with a printing press to start a new currency, anyone can create their own crypto currency in their basement, they won’t be able to stop it, realistically.
So, while there might be holes in Bitcoin, they haven’t showed themselves yet (that I know of) and when/if they do some other, better crypto currency will be standing in line to take over the market.
”So, why do these people, calling themselves experts, try to tell us it’s failing?”
There’s always the doomsayers who thinks everything’s going down the drain, but if we exclude these and look at the other aspects, then?
If we look at it from a perspective of any of the current global actors like states, banks, etc. then cryptos would be one of their primary threat to their reign. Everything we know is carefully built on and around the economy of the fiats and the presumption that it can be controlled and manipulated by the state who ”owns” the currency. You have the central bank who provides everyone with paper money and the bank who makes sure that the 1s and 0s on your account can be manipulated by the whim of the current politician in charge. Any changes to this fragile system could break that same system and all of those power hungry politicians would loose a lot of influence.
The influence bankers, politicians and world leaders have in media companies (and vice versa for that matter) could therefore never be used to promote the use of a crypto currency because that would directly undermine their own currency and hence their control of a state, etc.
It’s also interesting to consider what would happen if Bitcoin i.e. would be considered a valid option for savings and even for speculation in the broader public.
”China will end Bitcoin”
This is the first misconception of anyone used to talking about the normal currencies, they believe that states are big players in this kind of thing, but they’re really not. The whole point is that states won’t have much to say about it but to decentralise it to make it harder to shut down, to the point of where it takes a complete shutdown of internet and the power grid. I somehow don’t see them doing that. There will always be holes to exploit, even in the great firewall of China.
As for China hindering the growth of Bitcoin. Perhaps this is possible by forbidding trade etc., and, yes, that might be a setback for the crypto currency but then another, such as Ethereum, will take it’s place or it’ll just switch places or go underground and loose enough of its value to make it a non-issue for states anymore and the circle begin anew. The thing is that a decentralised currency as large as Bitcoin won’t go down easy. Enough people know about it to care about it and believes in it and should the price suddenly drop a lot of people see a buying opportunity instead. It’s really not dependent on any one country to ”allow” it at this point. It’s just another bump in the road, some larger, some smaller.
"Bitcoin’s based on reputation and not the bad kind of reputation"
The fiats are depended on the reputation of the current government in charge of that currency, not only the currency itself. If the citizens see that the government and politicians behaves badly and corrupt and doesn’t give the citizens the services they consider themselves entitled to the reputation goes down the drain. When the reputation goes down the drain people won’t be as happy to pay their taxes anymore and will look to alternatives (Bitcoin, etc.).
This is not really the case either with cryptos. Cryptos are based on nothing more than the actual value of the currency, they will strengthen from disorder in different countries since they are an option where people, instead of relying on one central unit to ”fix things” they rely on the market and private companies. Private companies you can argue with, talk with, come to agreements with and cooperate with. Nothing of that is (normally) possible with a centralised unit.
Bitcoin at this point reflect the belief in other, normal people rather than the belief in corrupt politicians.
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