Bitcoin Future Looks Bright
Many people do not seem to see the Bitcoin future as being very promising…yet. Some are paranoid that Bitcoin will be banned or that it is in a bubble, has no intrinsic value, is not secure and can be hacked – the reasons are many. Others feel the price has gotten too high, or that they’ve missed the “good entry point” and are hesitant to invest now, even though it looks like cryptocurrency is here to stay. Let’s take a look at each point and try to make some sense of Bitcoin, cryptocurrency and the blockchain technology. Even if one is not inclined to invest, it is prudent to be well-informed and knowledgeable about the subject.
There are countless articles on why Bitcoin is in a bubble, most of them haven’t aged well as the reasons cited have begun to be proven untrue. Some claim the competition is fierce and there are many altcoins that will oust Bitcoin from the top and take over. That clearly isn’t happening, at least not yet and not even close. Others say a strong brand name isn’t enough – as if Bitcoin is just another company like Ford or Apple and they clearly do not understand the ecosystem surrounding Bitcoin or the network effects that keep it growing. And there are others that say the bottom line is performance and feel Bitcoin hasn’t lived up to the level of efficiency required – but they may be ignorant of the Lightning Network advances when making such claims.
In any case, is it really fair to compare Bitcoin, a digital currency meant to be used in place of fiat currencies, with bubbles of physical commodities and traditional financial markets? As opposed to this relatively uneven comparison, some have attempted to come up with other types of comparisons such as the rise of Amazon, as both can be considered emerging technologies. To counter these arguments, there are many asking if Bitcoin is perhaps the “pin” vs. the “bubble”.
The fact is, only 1,800 Bitcoins are mined each day, which is only $11.7 million at $6,500 per Bitcoin (price as of this posting). If an investor, say a hedge fund, wants to own $1 billion in Bitcoin they will have to buy it from hodlers who already own it and are willing to sell it at a premium price. Such a buy order would push the price even higher. If Bitcoin remains the lead crypto-coin, there is no reason it could not reach $50,000 to $100,000 in the next five years. But what’s the hurry? Frankly, it would be a good thing if price slows down a bit so those of us confident of a bright Bitcoin future could accumulate more.
Bitcoin Best Entry Level
Since its creation, the trend has been nothing but up, with the caveat that it is subject to 60-90% corrections to the downside. While it lost 90% of its value from 2013 peak in 2014, it doubled in price from the 2015 low and more than doubled again in 2016, then rose over twenty-fold in 2017 with violent downturns that wiped out many a trader. Hodlers are the ones that reap the rewards and the value of dollar cost averaging is clear. Dollar cost averaging is purchasing a fixed dollar amount of an asset at specific intervals over a period of time.
Dollar cost averaging requires a good deal of patience, discipline and self-education in order to fend off doubts and uncertainties. The ability to hodl and not sell when the price doubles, triples or even quadruples is not easy, nor is it easy to continue to hodl when the price drops. Dollar cost averaging and hodling bitcoin has been proven to match the performance of professional traders. The best way to establish a position is to make a substantial purchase and then dollar cost average every month to reach a point where 5% of your assets are in Bitcoin. The truth is, no one knows what the Bitcoin future holds – the key is to be prepared regardless of what happens, with a limited amount of risk.
Bitcoin Intrinsic Value
Bitcoin cannot be confiscated, and that is its unique intrinsic value. What other assets can you hold that cannot be taken by the powers that be? Altcoins are subject to collapse as scams come under scrutiny and are proven to offer nothing of value to those who invest, benefiting only the issuers and promoters of one ICO scam or another. Each discovery serves to show the underlying value of Bitcoin, particularly when combined with promising new innovations like the Lightning Network. Money is defined as anything that serves as a generally accepted medium of exchange, is legal tender for repayment of debt, is a standard of value, is a unit of accounting measure, and is a means to save or store purchasing power. The direct cost and opportunity cost of production makes up an asset’s total production value. Since it costs practically nothing to create more fiat currency, which is backed only by the “full faith and credit” of the government issuing it – fiat has little production value. Bitcoin is backed by its high production cost.
There is an unlimited supply of fiat money, and in the case of the gold standard, the supply is also effectively unlimited. Bitcoin is designed to have a fixed supply of 21 million, and then there will be no more to mine. This makes Bitcoins, based on pure math, one of the most scarce commodities in the world. Approximately 75% of all Bitcoins have been mined, and the scarcity adds to its value. As Bitcoin becomes more useful its utility value will increase also, particularly among millennials. A little over a year ago, Bitcoin was trading under $1,200 – a price we will likely never see again. In contrast, the US Dollar, Yen, Euro, etc. will likely depreciate in value. It appears the one asset unencumbered by debt and more stable going forward would be Bitcoin.
Fiat money is a technology that has been virtually the same for over 5,000 years, and there are some who question if it will survive in a Bitcoin future which younger generations view as an alternative and an improvement over the current state of affairs. There is one major difference between Bitcoin and other assets – the value and distribution of Bitcoin and its operation can be vetted by anyone at any time. There is no shroud of mystery, but rather a decentralized and open source system that anyone can access and review. There is no entity controlling the distribution of Bitcoin, or creating new supplies. Bitcoin’s operating rules, number in circulation, ownership, and distribution of coins are all completely defined and accepted by everyone who uses it, anywhere in the world. It is easy to understand why this marvelous achievement is viewed as a threat to some, but a gift to others.
Bitcoin Future Commerce
Many older investors think crypto is a scam and have zero intention of owning any – they also think it will be banned by governments eventually. Actually, five to ten years from now, it is likely all financial transactions will involve cryptocurrency and the blockchain. Those companies that discover and develop use-cases for the Bitcoin blockchain and ways to monetize it will become huge successes. While governments may fight against Bitcoin in the short-term, it is likely digital currency will be the future of commerce throughout the world so it is unlikely much will be gained by long-term resistance. Banning cryptocurrencies would ignore the economic advantages of the underlying technology.
The power of Bitcoin is that as a decentralized currency it cannot be confiscated. Once people realize that securing their private keys is what prevents hackers from stealing Bitcoin, and some company creates a user-friendly way to secure them, it is likely Bitcoin will become more widely adopted. The Bitcoin network is made up of thousands of computers across the world, and anyone can join the network without approval or fees. While there are people who will always be uncomfortable securing their own money, Bitcoin eliminates the need for a third party to hold your assets. Banking and financial services may change in nature and be geared more toward securing private keys vs. holding and storing assets.
Protection against fraud is another primary benefit of using Bitcoin. For eCommerce, payments are irreversible and secure, with all transactions recorded on the blockchain and funds locked in Bitcoin’s cryptography public key system. The manner in which a payment occurs on a decentralized blockchain provides a level of encryption that is virtually impossible to breach. Lower transaction fees, faster transactions, peer-to-peer exchanges, security and the ability to offer instant incentives will likely appeal to major eCommerce platforms. Who knew that credit cards would become synonymous with payments and spending, in general, fifty years ago? The same may turn out to be true about Bitcoin in the near future. Each time a credit card is used, the merchant is charged 2% to 5% in fees and the consumer pays more as a result. Bitcoin is a better alternative because it doesn’t cost as much and there is no fraud or chargebacks to deal with.
While it is taking some merchants a bit of time to wrap their minds around the concept of cryptocurrency, there are many embracing it with open arms already. These merchants are accepting payments directly from their customers with no middleman taking a piece of the pie. Bitcoin cannot be forged like checks, counterfeited like bills, or hacked like databases – as the transactions contain only enough information to be processed, not enough to steal the payee or payer’s account data. Digital assets are stored on a public ledger, so even if one loses their hardware wallet, deletes their desktop wallet, or damages their smartphone wallet – as long as those all-important private keys are stored securely, their Bitcoin remains accessible and secure. Bitcoin is a new payment method and it is very different from the 50-year-old payment networks currently capitalizing on merchants and consumers. People are starting to catch on and it stands to reason it won’t be long before credit cards become obsolete.
Money and More
Cryptocurrency is literally money made for the Internet. With Internet technologies transforming our workplaces, relationships, and societies, it stands to reason our financial practices will also be affected. We have no control over the platforms that affect and inform us on a daily basis, even as they reorganize our lives to their own benefit. Technology companies line their pockets at the expense of users and lobby governments to open doors for their so-called innovative practices. But a new movement is taking shape in the form of co-op platforms that promote democratic ownership to decentralize the power of apps, websites, and tech giants. The goal is to ensure the Internet will be owned and governed differently through a global ecosystem of cooperatives vs. a concentration of wealth and the Silicon Valley winner-takes-all economy.
The outrage over the power of tech giants – commonly referred to as “Death Star” platforms – is nothing compared to what it can be when they dominate the majority of services we depend on to live, when we can be tracked 24/7 whether we’re online or not, when our success or failure is determined algorithmically by a rating, and when all providers are 1099 contractors bearing the burdens of real costs without the benefits or protections – practices today will look amateurish in comparison. The tech giants have a huge head start over the movement for platform cooperatives. However, it is possible those who create the most value for online platforms – providers like drivers and hosts and artists – will one day own and control the platforms we use and depend upon.
Blockchain versions of Uber, TaskRabbit, Kickstarter and more are starting to find traction, but there is much work to be done. Entrepreneurs are starting to launch their own digital platforms for various services and these platform cooperatives are bringing the structure of traditional cooperatives, including worker ownership and governance, to the digital world. More and more are turning to equity crowdfunding for financing, and cryptocurrency is set to play a major role. Blockchain can be used to keep track of usage and openly distribute revenues, assign ownership, and more.
There is great interest in how the technology might be encoded with cooperative values and create the potential for digital, cooperative currencies. Redirecting the massive ability to raise funds through initial coin offerings (ICOs) to benefit the sharing and co-op movement is starting to be explored. New groups are emerging that invest in platform cooperatives without taking ownership of its investments. These groups are looking to invest in more stable, ethical platforms that focus on long-term, sustainable growth. Bitcoin-powered blockchain technologies can create possibilities for platforms with no central company in charge. Sound familiar?
Bitcoin Future Users
Oddly enough, 50% of millennials are political independents, which is a huge increase over prior generations. Yet these unattached millennials are increasingly connected to the “Death Star” platforms and services despite the platform’s totalitarian goals. These platforms do not need to own key physical assets or employ any providers to profit. This shift of the burden of major life risks like unemployment, health, and old age onto workers is dangerous for platform users. The ability to continue duplicating the success seen today is great given the incredibly low costs, global reach, and massive funding. The “Uberization” of everything is possible and the growth is spilling over into politics as these platforms literally force the creation of favorable policies in local governments. Death Star companies rely on the contributions of users as a means to generate value within their own platforms, and all of the profits are captured by those operating the platforms.
There are experimental platform cooperatives emerging, including blockchain-based cooperatives that leverage the same technology Bitcoin uses to coordinate work, govern the platform, and distribute ownership. Efforts to channel growing negative sentiment around the tech giants are starting to power this new, evolving movement, but care must be taken not to repeat the mistakes of the past. Platform cooperatives must be populist, trans-partisan with a focus on practical advantages like higher pay, better working conditions, good reputations, longevity, and better rewards for stakeholders that include providers, customers, founders, investors, local communities, and the environment.
Bitcoin attracts users who feel the current system is broken and while the media focus is fixated on price, the reality is that blockchain technology may ultimately provide the means for individuals to cooperate toward the creation of a common good while ensuring that everyone is duly compensated for their efforts and contributions. It appears the first opportunity to do that has been lost, as the Internet is now increasingly centralized and controlled by only a few large tech giants. One can hope that continual engagement in emerging technology offering new opportunity for large, successful, community-driven applications will appeal to more and more people – just as Bitcoin and the ideas behind its creation continue to gain wider adoption.