Bitcoin thrives against all odds
Since it is currently all the rage right now, I would like to announce that I will be launching my own cryptocurrency next week.
Let’s call it “kingcoin”.
No, that’s too selfish.
How about “muttcoin”? I’ve always had a soft spot for mixed races.
Yes, that’s perfect, everyone loves dogs.
This is going to be the most important thing since fidget spinners.
Congratulations! Everyone reading this will get a muttcoin when my new coin launches next week.
I will evenly distribute 1 million muttcoins. Feel free to spend them wherever you want (or where someone will accept them!).
What’s that? Did the Target cashier say they wouldn’t accept our muttcoin?
Tell those who doubt that muttcoin has scarcity value – there will only be 1 million muttcoins. On top of that, it’s backed by the full faith and credit of my desktop’s 8GB of RAM.
Also, remind them that a decade ago, a bitcoin couldn’t even buy you a pack of gum. Now a bitcoin can buy a lifetime supply.
And, like bitcoin, you can safely store muttcoin offline, away from hackers and thieves.
It is basically an exact replica of the properties of bitcoin. Muttcoin has a decentralized ledger with crypto that is impossible to crack and all transactions are immutable.
Still not convinced that our muttcoins will be worth billions in the future?
Well, it is understandable. The fact is, launching a new cryptocurrency is much more difficult than it sounds, if not totally impossible.
This is why I believe that Bitcoin has reached these heights against all odds. And because of its unique user network, it will continue to do so.
Sure, there have been setbacks. But each of these setbacks has ultimately led to higher prices. The recent 60% drop will be no different.
The miracle of Bitcoin
Bitcoin’s success is based on its ability to create a global network of users who are willing to transact with it now or store it for later. Future prices will be determined by the growth rate of the network.
Even in the face of price shocks, bitcoin adoption continues to grow at an exponential rate. There are now 23 million open wallets around the world, chasing 21 million bitcoins. In a few years, the number of wallets can grow to include the 5 billion people on the planet connected to the Internet.
Sometimes the motivation of the new cryptocurrencies was speculative; other times they sought a store of value outside of their own national currency. In the last year, new apps like Coinbase have made it even easier to onboard new users.
If you haven’t noticed, when people buy bitcoin, they talk about it. We all have that friend who bought bitcoins and then wouldn’t shut up. Yes, I am guilty of this, and I am sure some readers are too.
Perhaps unconsciously, the holders become crypto-evangelicals, since convincing others to buy serves their own interest in increasing the value of their properties.
The evangelization of Bitcoin, spreading the good word, is what miraculously led to a price increase of $ 0.001 to a recent price of $ 10,000.
Who could have imagined that its pseudonymous creator, fed up with the global banking oligopoly, launched an intangible digital resource that rivaled the value of the world’s largest currencies in less than a decade?
No religion, political movement, or technology has ever witnessed these growth rates. On the other hand, humanity has never been so connected.
The idea of money
Bitcoin started as an idea. To be clear, all money, be it shell money used by primitive islanders, a gold bar, or a US dollar, started as an idea. It is the idea that a network of users values it equally and is willing to part with something of equal value for its form of money.
Money has no intrinsic value; its value is purely extrinsic, only what others believe it is worth.
Take a look at the dollar in your pocket – it’s just a fancy sheet of paper with a one-eyed pyramid, a dotted portrait, and signatures of important people.
To be useful, society must see it as a unit of account and merchants must be willing to accept it as payment for goods and services.
Bitcoin has demonstrated an amazing ability to reach and connect a network of millions of users.
A bitcoin is only worth what the next person is willing to pay for it. But if the network continues to expand at an exponential rate, limited supply argues that prices can only move in one direction … higher.
The bottom line
Bitcoin’s nine-year rise has been marked by huge bouts of volatility. There was a correction of 85% in January 2015, and some others more than 60%, including a colossal reduction of 93% in 2011.
However, through each of these fixes, the network (measured by the number of wallets) continued to expand at a rapid rate. As some speculators saw their value decimated, new investors on the margin saw value and became buyers.
The abnormal levels of volatility are actually what helped the bitcoin network grow to 23 million users.
Hey, maybe we just need some price volatility in muttcoin to attract new users …