Why one day, Cryptocurrencies could outpower Fiat currencies (€, $, ¥)

(Before reading the following, keep in mind that Bitcoin and Cryptocurrencies in general are highly volatile. Be careful, do your own research, and don’t rely on this piece as investment advice)

I’ve started paying attention to the Bitcoin in 2013, which is pretty late in the whole history of cryptocurrencies. Even tho its just a hobby for me, I’m truly fascinated by how the Blockchain & decentralized services are about to drastically change our lives over the next 10 years.

I’ve had several life in the past, in several countries. My friends network is composed by people from many industries. Some of you guys won’t learn anything here, as we spent most of our nights debating about this topic. This piece is mostly for the others, who have interrogations about this whole new thing.

Like few enthusiasts, i believe that one day, Cryptocurrencies will outpower the Dollar/Yen/Euro and that we’ll see Bitcoin keep rising, hitting $20k in the next few months. And probably $100k in the next few years… Why?

1/ The Short-term theory.

Advocates of Bitcoins (Engineers, Builders, Investors, Media) are being larger and louder everyday, creating a massive word of mouth. Due to this noise, the number of people holding and buying Bitcoin is constantly growing, and global interest in crypto is definitely rising. As Bitcoin total number is limited (scarcity / circulating supply) and its structural behavior is close to a social network, more people will have Bitcoin, more the Bitcoin value will goes up. As an example, if you’re the 1st user on Facebook, it sucks. But if when you start, they’re is already a billion people using the service, it should be amazing. This network effect is key to Bitcoin, and since it started growing 8 years ago, it has never stopped (despite big up & down moments). As Bitcoin became a collective consciousness movement, it is almost impossible to drop.

With 70k to 100k new account open per day on Coinbase, it seems that we’re slowly getting closer to the moment everyone involved in the crypto space is waiting for : The critical mass.

Just to give you a sense of this actual growth, this chart from Bloomberg compares “buy Gold” to “Buy Bitcoin” searches request.

Looks like a big shift of interest is happening.

2/ The Long-term theory.

Speaking about gold… It has been the store of value by default since centuries. Over the past decades, biggest businesses were physicals. (brands, factories, transportations, supermarkets, banks).

But nowadays, a majority of the new big businesses are and will be digital (Top market cap’ in the US : Apple, Amazon, Microsoft, Google, Facebook) and its not odd to say that the store of value for the new generations will probably also turn into digital, becoming digital assets. Why not asking a teenagers about gold today ? Try, and you’ll see that they have hard time understanding and explaining why is it valuable.

But yet, Gold is 9 trillion market. Imagine for a minute if Bitcoin capture just 5% of the Gold market, it would value Bitcoin at $25K per unit. If in the next few years, it capture let’s say 20%, which did not seems like a crazy number, Bitcoin could worth $100k per unit.

3/ The « Gate » theory.

When you start paying attention to the Stockmarket, you’re able to chose between +1000 different options of stocks/companies to buy, in dozens of big different stock exchanges (NYSE, Nasdaq, CAC40, Euronext…).

Well, The crypto-world is different, as Bitcoin is basically the main gate to get in. Today, there is not just Bitcoin, but there is +1000 crypto-projects out there. And to start investing in the majority of them, you need Bitcoin first. Let’s say that, in a close future, you even decide to sell all your Bitcoins for other coins. Due to its high embedded number, you’ll still hold even Bitcoin decimals somewhere in a wallet (few dollars of value) and forget about them.

Even tho Bitcoin is not the most technically interesting project in the Cryptocurrency space right now, (hard to scale), there still is a big chance that it will keep rising for a while, more as a store of value than a everyday currency.

4/ The Bitcoin community is (so) strong.

Cypherpunks, Cryptographers, Hackers, Idealists, Anarchists, Liberalists… They are the early builders & backers of Bitcoin, since 2009. They are independent thinkers, have strong convictions and are loyal to their ideology.

Remember back then, November 2013, when Bitcoin peak at almost $1000, and suddenly dropped, and stayed about $250 for a year? What a crash. Honestly, across all industries and type of persons, I don’t know a lot of people who would hold their investment and keep spending time, money, computation power and faith in something that depreciate more 400% for several months in a raw… But the community didn’t gave up. They were loyal. They kept mining and believing on the revolutionary ideology of Bitcoin.

“But wait, it looks like a big bubble, doesn’t it ?“.

I’m hearing this at every diner, Well, as long as people that don’t understand the technical side and societal impact of the Blockchain are investing part of their savings into it, of course, we can call this a Bubble.

That being said, i think that, in this very specific case, speculation might be a good thing. It makes money flow in this market and attracts the best talents in the world, while none of these companies, services or protocols are ready for their consumer phase. This bubble is solving the chicken&eggs problem by creating a huge network effect :

Speculation More money Higher valuation More media attention More Talents More products built Consumer phase starts Revenue phase starts more Talents More products…

In other words, the pool of Capital & Talents joining the Industry helps building the scalable tech’ and protocols that will be the first layer of what will be, later on, the decentralized consumer products of tomorrow. Its gonna take time, but we’ll slowly going from a +90% speculative market as it is today to a less than 10% speculative market over the next 10 years.

Of course, right now, the volatility of this market is scary, but if you look back 50years ago, when gold started being traded freely, it was at least as volatile.

(From 1972 to 1976, gold volatility was as high as Bitcoin volatility today)

“Ok, but Bitcoin is used by dealers & terrorist”.

I’ve also heard this so many times. Well… Nowadays, with the onboarding requirements that all the major exchanges are asking (KYC) and few governmental regulations that might come, Bitcoin is actually way “safer” and way more “traceable” than the classic $100 bills.

I mean, drugs dealers, weapons dealers, terrorists : they all used cash, and mostly US dollars, since decades, to operate in total anonymity and they didn’t waited for Bitcoin to start operating their business.

The funny thing here is that this kind of “introduction” for a new technology to the world looks like deja vu… Ever seen this article ?

Extract from a 1995 newspaper — Newsweek

25 years ago, they were plenty of them. People were afraid of the Internet, and majority of the press was writing about the Internet as “a place for dealers & traffic, where you should never let you kids go”.

In fact, at the very same period, while the Media were busy bashing the Internet, Engineers & Builders were creating web protocols (http, sttp, tcp/ip) in order to allow giants consumer products like Google, Youtube, Amazon, Paypal, Facebook to come, many years later, and shape the Internet that we know today. I think I can see a pattern here :)

It’s not just about Money (€, $, ¥).

Today, Bitcoin and Crypto-currencies are the buzzwords and have all the media attention. Indeed, Bitcoin was the first application using the Blockchain in order to create the first digital peer-to-peer cryptocurrency.

But it is just the top of the iceberg. A way bigger revolution is about to come. Its called the Web3, or decentralized web.

-The Web1 was composed of portals, e-commerce, search (Google & Yahoo!)
-The Web2 was the social layer (blogs, forums, Wikipedia, Facebook, Twitter) -Web3 will be decentralized.

In today’s world, every transaction has an intermediary: the notary in the real estate market, the city hall for marriage, the bank for money transactions. Well, imagine a world without these third parties, exactly like a vending machine. Everything is automatized, safe, and commission- free.

So, instead of institutions, banks and governments. Why don’t we trust Mathematics ?

And this is the key part. Cryptography and the Blockchain technology will allows us to build services & products that are way more secure, trustworthy and fast than Humans, governments & institutions.

Since centuries, our society have known several big lies and major crisis, most of the time caused by greedy firms, and led the people to doubting and hating Politics, WallStreet, banks and modern capitalism.

Occupy Wall Street, September 2011.

But Mathematics can’t lie, cannot be bribed, cannot be corrupted. Mathematics don’t have interests, opinions or preferences…

If it does win overtime (and it might) we’re going to witness a fascinating revolution (the tokenizations of almost everything) that will radically change our Society (From privacy, to Governance, title insurance, communications, real estate transactions, Music industry, banking system, assets exchange, contract engagement, peer to peer commerce and so on…) and create a world where people will finally be truly rewarded for the value they’re creating. When this day will arrive, the world will have changed. A lot.

  • Fiat currencies will be less powerful, only use by laggards, as the majority will use Cryptocurrencies to buy on Amazon, Ebay, Alibaba...
  • We could witness the biggest wealth transfer in human history. The old system is weak and could die. From its ashes a new system could arise.
  • Democracy around the world will be more present, with legitimate vote & real elections through the Blockchain.
  • Online privacy could be preserved.
  • People’s right of ownership in poor countries would finally be respected.
  • The 39% of the world population who still don’t have a access to a bank account could be part of the Ecomony.
  • Etc…

Speaking for myself, a decentralized world is way more adapted to how my generation and the younger one see the world. So why not give it a try ?

As DPR said, “Once you’ve seen what’s possible, how can you do otherwise”.

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