In the last half-year we witnessed a bear market in the crypto-currency world. BTC fell from its peak of 20,000 to 6000$ losing 70% of its value. The other coins fell even further in percentage terms. In addition we see a barrage of negative news around BTC. Notable economists and investors warn continuously that BTC is a bubble that the tech underlying is of limited value, and in the current world of credit cards and banks we don’t need any system like this.
Useless, dangerous or both?
The main argument is that regulations that exist in the financial world were enacted there to protect the retail consumer and therefore a system like BTC that enables an individual to send any amount of money to the other side of the globe is redundant and dangerous because it encourages criminal and terrorist related uses. Accordingly, they argue that BTC is worthless and that it is the largest bubble in the history of the humankind worse than the tulip phenomena that occurred in the Netherlands 450 years ago. (https://www.bloomberg.com/news/articles/2018-02-02/roubini-says-bitcoin-is-the-biggest-bubble-in-human-history).
On the other hand Banks view BTC in a negative light and recently barred consumers to use their credit cards to buy or sell BTC on exchanges. Accusations of wash trades and price manipulation of individuals related to BTC trading that use these techniques to pump and dump the BTC price is another popular factor when it comes to the bashing of people that trade or develop crypto-currencies implying that BTC is infested with hackers and cyber-punks that live on the fringe of society whose hidden agenda is to use BTC as way to bring down the current economic system and replace it with something much more chaotic and dangerous.
In the face of this criticisms and the constant bashing from the authorities and main economists the voice of BTC proponents is nowhere to be found. One argument to explain the value of BTC and its usefulness is to claim that it can serve as a store of value because of its limited amount and the well-defined mining protocol. Unfortunately, this argument has a serious flaw, as it is hard to argue that BTC is a store of value when the swing in one year can be up to 80-90%. It’s true that it may prove an excellent store of value in time of rampant inflation but so is any other hard commodity asset (like real estate), which is far easier to access and is understandable and tangible for many more people.
True Value Explained
To answer what BTC’s value is, let us remember that one of the reasons BTC was introduced was to circumvent the current banking system and create a reliable peer to peer payment between individuals. Satoshi, the mysterious creator of the system implied that because of the crisis in 2008 the banking system couldn’t serve as a reliable agent and suggested the BTC system as a replacement while creating a one of its kind structure which treats money as an email and enables a transfer of value from individual to an individual (peer to peer payment) bypassing the banking system as we know it.
The important feature of Satoshi’s invention was a breakthrough in computer science as he replaced a third party that handles payments with a decentralized system of internet nodes which handle and verify the peer to peer transactions that occur within the BTC system. Before the introduction of BTC nobody thought that such a decentralized system is even possible and nobody asked the question whether we need third parties at all to handle transactions like payments, document verification etc.
The fundamental transformational feature
In my view this is the fundamental transformational feature of BTC. We start to ask ourselves how important are centralized parties to our lives. Centralized parties surround us without us even noticing it. What is Facebook, banks and the DMV agency that stores our driving license data? Satoshi showed us that there is an alternative and now questions being asked whether we really need those institutions that were a fabric of our society for hundred of years.
As with any potentially transformational event its value isn’t clear to its contemporaries. Consider the biggest events in human history like the formation of the US. Has anybody thought that this event would set up a chain of events that will lead to the most powerful and richest nation in human history? How could you quantify and value this event if you were offered to buy a share in it? It is obvious that for the contemporaries of those historic days views would diverge wildly.If you were say a soldier in one of Washington’s armies it would not have been that obvious that the epic struggle would have a happy ending.
BTC is similar to such an epic event and that’s why it so polarizing and has such a wild ride. Every story, every news be it positive or negative affects the emotions of individuals and it’s not all clear how it will unfold. But the real value of BTC is that as a society we ask those questions about decentralization, about the necessity of centralized institutions now when Satoshi showed us that decentralized systems are possible.
Sign up for more articles by visiting the original source: https://cryptolo.io/cryptoblog/index.php/the-fundamental-transformational-feature-of-btc/
