Today was quite an eventful day for me, had the opportunity to talk about Hive and cryptocurrency to some one who has no idea what cryptocurrency . He asked some questions which I found impressive, I wouldn’t blame him because being vigilant is a trait you must possess when you are dealing with finance. The impressive question he asked me was, what if the government shuts down cryptocurrencies and everyone had to withdraw their money or lose their money because they invested in something they can’t see which is on the internet.
In my opinion, that was an impressive question this person asked, because they obviously know nothing about cryptocurrency. I started by asking if he knew what decentralization meant, he didn’t know. Decentralization is what gives the people power. Decentralization is power given to the people without a single entity controlling it. Now that the people possess this power, the government can’t control it. The government can only control fiat(paper money) because they are the ones issuing it, but cryptocurrencies are not issued by the government, they are not physical, they are digital, the only way the government can kill the cryptocurrency is by shutting down the internet. Blockchain is the technology behind cryptocurrency, making it almost impossible to hack or being compromised.
When a particular set of people decide that a particular something should have value, this thing will have value amongst them. I used the school lunch card as an example, fortunately this person went to a Nigerian School. There are some Nigerian schools that give a lunch card, this lunch card has a value that when you take them to the school cafe, you are being given what you want and the value will be subtracted from your lunch card.
Let’s say the value of your lunch card is $100, every day you spend $5 from your lunch card, this $5 will be subtracted from your lunch card every time you spend it. If you would like to spend $20 per day on your lunch card, it all depends on you. Now this lunch card only has value within the school premises, outside the school premises, the lunch card is useless. This is because everyone within the school environment has decided to give the lunch card a value. I asked him, why do you think the fiat has value?, fiat has value because the government which are the people in power said so. Their value is determined by what the government do or decide through money policy. The government can decide to print as many fiat as they want out of thin air. But with cryptocurrencies, we have miners. Blogging and curating content on Hive can be regarded as mining also, the difference between hive and bitcoin is the mechanism. Bitcoin is more complex since it’s on proof of work mechanism while Hive is simpler because it’s on DPOS(Delegated Proof of Stake) mechanism.
The cryptocurrency community has decided that cryptocurrency should have value and we have all accepted it. This has made it easier for us to transact without third party or permission from the government. We are now controlling our demand and supply ourselves without the government. The blockchain technology works on smart contract that eliminates the third party. So the government can’t wake up one day and shut it down, if they could, they would have done that a long time ago.
He asked how these coins gain their value, I was so glad to explain demand and supply. Cryptocurrencies gain their values through the community activities and their involvements.
Practical example is the NFT price spike(obviously this person has no idea what NFTs are, but am using this analogy for you reading this).
The more people are demanding these coins and using them the more the coin gains value. These coins are deflationary, meaning they get burnt. This act reduces their supply, thereby making them scarce.
This person looked convinced and decided to do more research about cryptocurrency. Although they promised to check hive, I know it’s not easy to fully make up your mind in a day and decide to buy some hive and stake. But I will try my best to recruit this person into hive and continue my mission on introducing more new users into Hive.