Politics and Growing Pains
No-one said the road to Bitcoin’s success was going to be easy. At it’s core it challenges many perceptions we may have about money and governance. Bitcoin may not be the first instance of man trying to create a distributed digital currency separate from legacy monetary systems. It is however the most successful attempt thus far in human history with its conception and the advent of Cryptocurrency.
Cryptocurrency and it’s individual technologies are not brand new concepts. However Bitcoin connected the dots and pulled off a feat that most would have argued in the past to be virtually impossible. It managed to be the first ever fully decentralized protocol to allow a transfer of value between intermediaries without a 3rd party.
The recent departure of Mike Hearn from Bitcoin’s core development and the ongoing debate about how to go about scaling the current transaction limitations lead to a temporary drop in price and a lot of movement from investors out of Bitcoin and into alternative Cryptocurrencies. It could be the start of Bitcoins decline and eventual death, it could also just represent a footnote in the history of it’s long a tenuous struggle that’s bound to take place in it’s challenge to our current paradigms and powers that be.
What I can say is that in the 7 years since it’s launch, naysayers have been preaching about it’s inevitable failure, and enthusiasts have been shouting about it’s launch to the moon.
While it’s admirable to take a side rather than sit on the fence, this sort of behavior mostly boils down to man’s Achilles heal- Emotion’s.It may be hard to remove emotions from your decision making when dealing with something that is volatile in price when you are financially invested.
Bitcoin Is Volatile
The volatility in the value of Bitcoin has been tremendous, and still is. This is expected as it started with no market cap at all and has grown to a market cap of 96 Billion Rand as of today. We expect to see less volatility as more Fiat currency flows into the Eco-system providing more liquidity. So until then, how can we use it as a currency?
If we consider USD to be a good store of value, then Bitcoin is hugely better. It has increased in value tremendously in comparison. The USD has seen a devaluation of around 90% since 1950 due to inflation. It’s simple economics, the more money that is printed for no good reason, the lower the value of each dollar. This is true for every Fiat currency worldwide.
Bitcoin has seen a tremendous increase in value this chart shows Bitcoin vs. USD from 2012 to 2016. The truth is, the price of a Bitcoin is not that important in the long term. Prices rise and fall as the free market attempts to determine it’s value.
Okay fair enough “Bitcoin is an orange and USD is an apple” and one must only compare apples with apples and there are many more alternative cryptocurrencies that Bitcoin must compete with.
There Are New & Better Cryptocurrencies
There is much development in the cryptocurrency space lately and one could argue that Bitcoin will fall to a leaner, faster and more efficient “competitor”, if you will. All this recent innovation has brought many new and improved technologies and code on the scene. Bitcoin is inherently large and slow moving due to it’s decentralized nature and it is unable to compete in the race to launch and implement these ideas.
You could argue that Bitcoin is the Myspace to Ethereums Facebook – great while it lasted but in the end Myspace failed to innovate and keep it’s head start. While some of these points may be true, is this such a bad thing after all?
Bitcoin can take from these code-bases and use them in their own future updates.
At the end of the day there is room for more than one cryptocurrency, freedom of choice is highly valued amongst most of Bitcoins libertarian proponents. If it turns out that one of the alternatives overtakes it in market cap and userbase, is that not a win? We get what we wanted, either way.
If this happens, does it mean that Bitcoin is now without value? Certainly not! It still has the same intrinsic value and potential that it’s always had.
Will Bitcoin Succeed?
I think Bitcoin will continue to grow in user-base and we will see ever increasing development in the coming years. Bitcoin has the head-start because of the network effect, it was the first to move and has already got a wide reach. Like with bringing any new product to market, it’s not necessarily about who has the higher quality product or the most features, it’s also about current usability, availability and brand recognition. Taking these factors into account, Bitcoin is the clear forerunner for now.
If you’re talking about the long and distant future, it’s guaranteed to fail. Everything does. It’s not a matter of if it will fail, it’s a matter when it will fail and what does the path to failure look like.
If you told a Roman during the height of the Roman empire that their precious little city and their mountain of gold would all come tumbling down, he’d tell you that you were crazy, which army or nation could possibly compete?