Bitcoins are UNDERvalued
This got written in august 2017. It´s fascinating to see the development, the opinions and the change in the acceptance since than.
Every now and than in the history of mankind a new idea had a disruptive impact on the world as it was known until then. Some examples are heliocentrism, parliamentarism, the car, electricity, the internet, and now the blockchain, the technology that made the first crypto currencies possible. (The blockchain is the public ledger of Bitcoin, including in itself all transactions ever done )
Every time, a long time established system gets shell-shocked in its foundation, it´s a huge commotion and the ones who are in charge are eager to point out all disadvantages that the new system could bring, reminding everybody about the high quality standards of the Status Quo.
Everything has its time, but sooner or later becomes obsolete, maybe even the ubiquitous Central Bank system. It won´t happen soon, but if nothing is adjusted correctly, it could become redundant and a victim of changes.
We currently witness what Ghandi observed decades ago: “First they ignore you, then they laugh at you, then they fight you, then they accept you.”.
That´s what currently happens to Cryptos!
For what it´s worth
Fiat money is just a piece of paper, made legal tender by a government decree! The fact that a shop agrees with me that a specific piece of paper has a certain value allows me to buy a good. I could apply the same system to a pack of rice or my underwear! If a shop agrees that my underwear is worth 20.- USD, then I can buy stuff at that shop worth 20.- USD with my underwear as payment.
Value is perceived by the receiver. In monetarily measurments, value comes from people, not from the good itself. The more people trust in it and use it on a regular daily basis, the more accepted it becomes and the more trust in its value establishes.
Fiat money has just as much intrinsic value as a crypto currency! This is the case since Nixon erased the gold standard that bonded the Dollar price to the one of Gold and made the US-Dollar a currency based on trust in the name of the currency and the underlying economy.
From a different perspective, do we even need the interference of legislative power? As economist Carl Menger said: “Certain commodities came to be money quite naturally, as the result of economic relationships that were independent of the power of the state.” Means, we don´t necessarily need a controlling governmental instance. Value is an independent thing based on the circumstances of a trade.
But are cryptos a commodity, do they have a natural foundation? First of all, a crypto currency is a software code, which is transported from node to node via electricity. Electricity is electrons jumping from atomic shell to atomic shell, therefore a “natural” thing. Same happens within a lightning.
So what is the “true” value of a Bitcoin/Blockchain? It is a new start, a paradigm shift, an idea, an ideology, not only just a simply currency or technology. The number of “believers” increase daily, and a change in global perception of currencies is inevitable.
Smart ass but non-authoritative arguments against Cryptos
Cryptos are a bubble, just like tulips or dot.com
Given. not all Coins will survive, it will be a natural, economical selection. A survival of the fittest, the smartest and most developed. But just as with the dot.com companies, the ones with the most impact, the most value for its clients will gain the acceptance of the public and stay.
They are instable, have wild fluctuation and investing is just gambling
Yes, fluctuations are possible, but remember the impact Chinas ban had? Almost none. Same with the cancellation of the Segwit2x software update. And even if tomorrow the value of Bitcoin crashes down to meager 15% of its current state, it would still have a remarkable increase measured from the beginning of the year.
It´s hard to get them
Not true. There are already ATMs and physical shops where you can buy them.
The technology is not advanced enough yet
In opposite to Fiat money, the Crypto world is always in progress, always developing, always on a strive to become better. From an investors point of view, since we are already at 10K, procrastination is high-likely the wrong approach.
Additional Info: Miners can vote for or against upgrades to the Bitcoin code. A software update in the code is called a Softfork, in opposite to a Hardfork where the Code is bisected and a new Currency arise.
It´s used for illegal activities and just good for the Dark-Net:
So we didn´t had crime before the invention of Bitcoin? Seriously, the darknet existed before the invention of Bitcoin and the business was good before too. Transfering money anonymously is still possible without Bictoin, using Western Union and currencies like Euros or Dollars. Should we ban those too?
Cryptos have no value
As stated above, no major currency in the world has an intrinsic value.
They will disappear soon
Ever thought about the how long the average lifetime of a currency is? It´s 38 years! The Euro exists since 22 years, the Bitcoin since 9. Not so distant though. Who will last longer? A currency that is based on a local, questionable political system or one that is based on an invention that could bring benefits to the whole world? Remember that with BTC micro-transactions are possible and they are for free!
What about Inflation / Deflation?
21 million Bitcoin could exists overall, 4 millionen already lost due to forgotten passwords and keys as well as death of the owner. Whats happen in the next years, is, that this “trend” will continue, so think about the long-term potential.
While you can read about “a remarkable 10x gain since the turn of the year”, maybe this was just the start and “Bitcoin is undervalued” will become an euphemism.
Therefore confirmed! All arguments proven invalid!
Central Banks Dilemma
Who has the biggest disadvantage in a takeover of cryptos? Central Banks
In a world where almost every country in the world, has a central bank, even North Korea and Syria have one, it´s obvious that there is a fierce resistance on a high level. What could be more devastating for a CB-system than a decentralized collective of voluntary nodes collaborating together towards the common goal? A goal which would take away the omnipotent power of the banks.
The conglomerate of decentralization, cryptography, non-alterable but open and completly traceable systems must be like taken out of a nightmare for some.
Which might lead us to the next questions. Was it a coincidence that cryptos came out exactly now? Was it somehow intentionally or just the trespassing of a point of no return of distribution and acceptance? Maybe it was simply necessary to create such thing as a crypto currency to revolutionize a system that just benefits a few and puts the majority in a depending position.
Of Winners and Losers
While some future oriented governments already applied regulatory and support of crypto currencies, like Japan where Bitcoin is already legal tender or Singapore which was one of the first to install a legal setup for ICOs, others are lacking behind or even feel threatened by the new technology.
The most prominent bad news came from China. They shot down all their Crypto Currency Exchanges and banned chinese mainlanders from trading them.
What happend? The price of Bitcoin got a little dimple in its chart pattern and continued the rise. It was like a Boxer getting a tough uppercut, but it´s just one of the many beatings he had to take for victory. In our case, the banned and closed Exchanges opened soon after the ban in Taiwan, Hong Kong or Singapore again. No big deal.
Beside that, an Exchange that allows CHY to Bitcoin trading could get the approval of the government. The last words are not spoken yet.
USA: With the election of Donald Trump as POTUS, the United States had some other changes to talk about. Just as with many other countries, the old fashioned Banks and finance institutes are heavely lobbying against it, while a new generation of investors start to embrace the idea.
Slowly but steadily, the Crypto Currency movement starts to gain a momentum in the land of the free. Some of the most distinctive supporters are Elon Musk and the Winklevoss Twins. The later already working on a SEC regulating Crypto ETF.
The next step of acceptance and probably the most important one came with the news thatthe Chicago Mercantile Exchange (CME Group) will issue a Bitcoin Future in december 2017 and the Nasdaq Inc. thinks about doing the same in 2018! Yes, this NASDAQ! Quote from Charles Hayter, chief executive officer of CryptoCompare. “This opens up the doors to exchange traded funds and institutional money.”
EU: Mario, print more money!! And then lets regulate the hell out of crypto currencies and controll them to death, release negative propaganda and then keep on working on more urgent agendas. Like for to regulate the size and shape of tractor seats, what kind of light bulbs should be used, how many degree of bend a banana can have or work on the ban of doner kebab.
Some random examples of other countries:
Estonia: Just as Japan (J-Coin), Estonia thought about issueing an own Crypto-Coin, an “Estcoin. Unfortunately the country is part of the EU so Mario Draghi turned it down, continuing printing money for the next 1000 years.
Kazakhstan: News in october from Asana that a governmentaly supported Coin could be issued soon
Urugay: First latin american country with a physical crypto exchange, in the capital city of Montevideo
Summits and Events:
Blockchain Expo in Silicon Valley, 12.500 attendands
Blockchain Summits in Dubai, HongKong, Bangalore, London and cities in the USA
The North American Bitcoin Conference in Miami in early 2018
A few of the many more events are in the links below
Conclusion
Bitcoin is the most prominent crypto currency, but almost all people who know what they are talking about agree that it´s not the best solution, no matter how much hardforks follow. Vitalik Buterin and his Ethereum blockchain are on a good way (e . g. from switching from Proof of Stake. vs. Proof of work) same goes for Ripple, Dash, IOTA.
The blockchain revolution just has started, provided by the fact that the next generation is ready to go. For example, Hashgraph is a data structure and mathematical algorithm that is faster and even more secure than the blockchain.Same goes for IOTA.Those two, Ethereum and the continuesly development of the system underlying this technology will lead to a future where crypto currencies are a common part of our daily lives, it´s poised to be, like it or not!
