Even more so than its run-up in price, a lot has been made of bitcoin’s primary gift to the world: the blockchain. From the notoriously consumer product’s risk averse banking industry to the start-up gamblers of the venture capital world, the potential of the blockchain has dominated the global financial conversation.
But what about bitcoin, though? What is its future? Can it still remain popular and relevant in an era where its underlying technology far outperforms the cryptocurrency itself?
Global financial transparency
I’ve been a “hodler” (that’s bitcoin “holder” for all you crypto-Muggles) since 2013, when I discovered and packaged this nine-minute video rant on bitcoin by agent provocateur Max Keiser into a brief Upworthy piece. Although it is not one of my higher performing contributions, something in the video just clicked with me, particularly in the wake of the global economic crisis from which bitcoin was born: transparency.
Having been acutely affected by the economic crisis (lost my house, car, and funding for my small business) and reading a half-dozen books during the Great Recession to figure out why, I was struck by the stunning lack of transparency in the international banking system that caused it, not to mention the equally stunning overabundance of trust in such an opaque system. Benefiting from all manner of government-backed corporate welfare, Wall Street gambled our money away recklessly in the dark of C-suites while Main Street naively kept bankrolling them in the light of yet another NFL football game commercial advertising the normalcy of a 401K. With such a complex, legally endorsed, multilevel marketing scheme designed to prop up financial markets, how could we have known – or stopped – what Big Banking was doing with our money, or that “money” itself was being “printed” to paper over their losses?
Thanks to bitcoin and the blockchain, I know where my money is and what it’s doing. If I want to send it directly, instantaneously to someone on the other side of the world for a fraction of the time and cost of a wire transfer fee, I can. Want to be your own bank, with your assets secure and visible at all times? Welcome to bitcoin! With the erosion of trust in governments and banks, financial self-reliance and transparency will always be the present and the future of bitcoin.
WORLD’S RESERVE CURRENCY
Without diving into an esoteric discussion on where the US Dollar derives its “value,” it is clear in these politically turbulent times that pinning your hopes of a world’s reserve currency to the fortunes of any one country – no matter how powerful – is patently ridiculous. Even more ridiculous is when said country nearly craters the world economy – and the global financial community still feels as if it has no choice but to rely upon that same currency for economic stability.
Political administrations change, governments fall, but the decentralized nature of bitcoin is designed to be constant and unimpeachable. Thanks to its built-in, finite methods of appreciation, bitcoin is primed to become the world’s reserve currency because it cannot be arbitrarily devalued by the whims of any one government, nor manipulated to bail out bad behavior. When there has been civil and financial unrest in a country (think Argentina, Cyprus, Venezuela, etc.), it is no coincidence that bitcoin has lurched upward in price, as citizens flee to financial safety in case their banks – or government – fail. Add in its transactional transparency and declining worldwide faith in American leadership, and I believe it is only a matter of time when, not if, the world eschews the dollar for the granddaddy of all cryptocurrency: bitcoin.
When I first got into bitcoin at $88 per coin in 2013, the few people who were speaking out against bitcoin were usually gold bugs (gold hodlers, if you will). Gold bugs tend to be quite fiscally conservative, clinging to the precious metal because of its market value and, well, tradition. With gold usually over $1200 an ounce, gold bugs would always tout it as an immense store of value that’s stood the test of time, despite its lack of practical application (fillings, shiny objects, maybe the occasional electronic device).
Well, on March 2, 2017, bitcoin passed gold and has rarely slowed down since. With gold trading at just under $1300 an ounce as of this writing, bitcoin is flirting with $3800 per coin. While that kind of stunning appreciation in five months’ time may not be sustainable, clearly the market has spoken. Although the $62 billion total bitcoin market cap pales in comparison to the nearly $8 trillion of gold’s, give it time. Institutional investors are just beginning to get over themselves to construct mechanisms to invest on behalf of their clients. The initial coin offering (ICO) gold rush for startup companies raising hundreds of millions of dollars in bitcoin and ethereum in excess of traditional venture capital must certainly contribute to the investment class’ nagging sense of … Read More
Edwardo Jackson is an author, poker player, and CEO of the fantasy sports-style movie game CinemaDraft. Also a bitcoin enthusiast interested in educating underrepresented communities, he has a hobby site called BlacksInBitcoin.com.