Bitcoin thrives against all odds
Since it is currently all the rage, I would like to announce that I will be launching my own cryptocurrency next week.
Let’s call it “real currency”.
No, that’s too selfish.
How about “muttcoin”? I have always had a soft spot for mixed breeds.
Yes, that’s perfect, everyone loves dogs.
This is going to be the biggest thing since fidget spinners.
Congratulations! Everyone reading this will receive a muttcoin when my new coin is released next week.
I will evenly distribute 1 million mixed coins. Feel free to spend them wherever you want (or wherever someone will accept them!).
What’s that? Did the cashier at Target say they won’t accept our muttcoin?
Tell the doubters that muttcoin has a scarcity value: only 1 million muttcoins will ever exist. On top of that, it is backed by the full trust and credit of my desktop computer’s 8GB of RAM.
Also, remind them that a decade ago, one bitcoin couldn’t even buy you a pack of gum. Now one bitcoin can buy a lifetime supply.
And, like bitcoin, you can store muttcoin safely offline away from hackers and thieves.
It is basically an exact replica of bitcoin properties. Muttcoin has a decentralized ledger with unbreakable cryptography, and all transactions are immutable.
Still not convinced that our mixed currencies will be worth billions in the future?
Well, it’s understandable. The fact is that launching a new cryptocurrency is much more difficult than it seems, if not outright 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 eventually resulted in higher prices. The recent 60% drop will be no different.
The Bitcoin Miracle
Bitcoin’s success rests 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 rate of growth of the network.
Even in the face of wild price swings, 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 may increase to include the 5 billion people on the planet connected to the Internet.
Sometimes the motivation of new crypto converts 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 bitcoins, they talk about it. We all have that friend who bought bitcoin and then wouldn’t shut up. Yes, I am guilty of this, and I am sure many readers are too.
Perhaps unwittingly, holders become crypto evangelists, as convincing others to buy serves their own interest in increasing the value of their holdings.
Bitcoin evangelism (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 global banking oligopoly, launched an intangible digital resource that rivaled the world’s largest currencies in value in less than a decade?
No religion, political movement, or technology has 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, whether it’s the shell money used by primitive islanders, a gold bar, or a US dollar, started out as an idea. It’s the idea that a network of users values it equally and would be 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 think it is worth.
Take a look at the dollar in your pocket – it’s just a fancy piece 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 shown 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…up.
The bottom line
Bitcoin’s nine-year rise has been marked by huge bouts of volatility. There was an 85% correction in January 2015, and a few others above 60%, including a colossal 93% reduction in 2011.
However, through each of these fixes, the network (as 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…