Hello again Bloggers,
Well as I’m writing this blog currently $12,826 Australian dollars is able to buy 1x Bitcoin. So how is it possible that this huge amount of money is going towards buying something which is not physically real (you can’t put 1 bitcoin into your pocket) which is also backed up by absolutely nothing??
Is it possible for me to write and send an Email to a friend and then say that my email is now worth $1 million dollars? Well no not really. If that was possible I would be doing nothing all day but writing emails and sending Emails!
Now don’t get me wrong I’m not mocking Bitcoin and I think that’s it’s great that many people are turning over a profit from their investment. I just have some genuine questions that I would like answered. Also note that I am still new to this and I’m very open minded, so if you disagree with what I’m saying please tell me why you disagree?
Like we all know the physically money that is in are pockets is backup by gold metal locked away in a vault somewhere. The physically money in are pockets is just really paper or plastic. It does not cost $20 to make a $20 note remember its just a piece of paper or plastic costing about 10c to print. So why does gold retain its purchasing power? Because it’s rare, gold cannot be manufactured in a lab or in a factory in order to get gold it has to be dug up out of the ground. Gold has been the ultimate wealth retainer throughout human history. When ever there is a recession put your wealth into Gold it’s a safe place to leave it, makes sense why the USA has Fort Knox to back up their US Dollar.
The only scenario that I can think of that would crash the price of gold and effectively making the precious metal completely worthless would be if a huge asteroid came down from space and completely dumped billions of tonnes of gold onto are planet. So every time you opened your front door to start your day there would be gold everywhere that you looked. Everybody that you knew and met had a piece of gold in their pockets. It would mean that the price of gold would crash because every person now has their own piece of gold, it’s now become common place for gold to be everywhere and now it’s no longer rare.
So how does Bitcoin retain its purchasing power and its wealth? Again most of you would know that the total number of Bitcoin that can ever be in circulation is capped at 21 million. It’s this cap number or finite number that allows Bitcoin to hold on to its wealth and the designers of Bitcoin know full well about this. It would be insane for them to let Bitcoin miners release more Bitcoin on to the market and go over the 21 million Bitcoin mark because it would mean that Bitcoin would no longer become rare because everyone now has Bitcoin.
Bitcoin is convenient:
I can send bitcoin to anyone in the world within seconds to their wallet address I cannot do this with gold and also using traditional banking methods of sending money electronically I would have to go to a bank ( the third party) where I would then have to pay banking fees and the transaction would take a few working days to clear.
The problem:
But here is the problem what happens when the last 21 million of bitcoin has been mined? Do people just lose interest and stop investing?
What happens when another cryptocurrency comes on along calling its self-Bitcoin mark 2? Which does exactly the same as the current Bitcoin only a little bit different and a bit better? Does everyone sell their old Bitcoin and start buying this new one?
The main problem that I can see with Bitcoin is that it really is nothing backup by nothing and if you have read some of my other blogs you will see that I’m more interested in the broader potential of Block Chain technology (that’s the technology that allows 1 Bitcoin to go to from person A to person B) and what else can this Block Chain technology be used for other than send Bitcoins to each other.
I believe that the real game changing DApps (Decentralized application) running on Block Chain are going to be the ones that actually do something and have a purpose. In other words they are backed up by something.
I found this list of Dapps on a web page and they are tipped to boom in 2018 because they have purpose. But like I say don’t hold me to it, this is in no way investment advice.
Golem (GNT):
This DApp will use blockchain (running on Ethereum) to connect computers together so that these computers are all share their CUP’s effectively creating a super computer used to help scientists solve the world’s problems.
Steemit (Steem)
This one is where you write blogs about whatever you want and other uses vote on your blogs.
Ethereum (ETH)
My favourite. This one offers a soft platform for all of the DApps to run on. So basically the more DApps that are running on Ethereum the more the price of ETH should go up.
FunFair (Fun)
This DApp allows people to gamble completely securely.
So going back to Bitcoin again I’m not mocking the coin if you have spare money then yes invest in Bitcoin and I hope that you make profit. All I’m saying is have your finger on the trigger because when this crashes I think that it’s going to drop off of a cliff face!
Rob
