By CCN.com: “I do believe it will go to zero. I think it’s a great technology but I don’t believe it’s a currency. It’s not based on anything,” said Jeff Schumacher, founder of BCG Digital Ventures, of the Bitcoin price during a CNBC-hosted panel in Davos, Switzerland.
To name just some–– it’s based on the largest deployment of public key cryptography in history, by civilians, to secure the network of a deadly clever system architecture for creating the world’s first open source, decentralized, peer-to-peer bank with no need to trust a banking institution.
It’s so gratifying for the most devastating critics of America’s socialist central banking system, the Federal Reserve, to hear all these mainstream media experts claim that Bitcoin isn’t a real currency by listing off reasons that are also characteristics of the Fed.
Sometimes even more true about the Fed than about Bitcoin.
In the article linked above, you will find the tired trope that what’s really exciting isn’t Bitcoin, but the underlying technology– blockchain.
Wrong. The blockchain is only one part of the Bitcoin network architecture.
And besides, if we’re going to put the emphasis on the blockchain, then which blockchain is a very relevant question. Corporate employees creating intra-company “blockchains” to ride the hype train aren’t making anything like Bitcoin. Those blockchains are just boring old databases.
Bitcoin is the Internet of Money.
What’s most interesting about Bitcoin isn’t the blockchain, although that is an interesting and important part of how Bitcoin works.
What’s most interesting about it is that it’s a private currency and banking system that offers different product features than those offered by central banks, and they’re excellent features.
To be clear, it is my opinion that they’re excellent features.
But it’s a fact that Bitcoin’s innovative product features have created the first viable global market for private currency by making Bitcoin a highly valued and sought after commodity.
And it’s interesting that Bitcoin was able to get away with doing this.
Bitcoin has the longest, strongest blockchain, the biggest network with the most market capitalization and the most stakeholders in it. They have weathered, managed, and learned from the challenges of being the biggest, most successful cryptocurrency.
Critics talk about Bitcoin’s electricity usage as if this is a bug of the system, but it is actually an intentional feature. That cost of electricity usage, time, and the opportunity cost of computation are there by design to create a qualified node to participate in a network that maintains the entire record of a massive, public, digital ledger of accounts and transactions on each node.
Not a lot of people think about Bitcoin this way or discuss it this way, but one of its very novel, strange, and useful features is that a bitcoin is something digital that one person (or computer) can have and keep, but it is impossible for them to make a copy of it. You can make a copy of a digital music file, an image, a string of text, but you cannot make a copy of a bitcoin.
The fact that bitcoin can’t be duplicated means it’s something the Federal Reserve Open Market committee can’t just go and decide tomorrow to make more of.
That’s why the intrinsic value of the U.S. Dollar is actually zero, because of its infinite liquidity, which is not only theoretically correct, but accelerating toward imminently manifest over the last decade of monetary policy, as the Fed loosens the spigots to cosmic proportions.
But Bitcoin isn’t a monetary black hole like the fiat currencies of central banks. Its intrinsic value is one, not zero. It’s one, unique, inimitable digital artifact manufactured by an open, public, peer-to-peer, decentralized network, that cannot be reproduced by anyone.
One of the most important reasons why Bitcoin won’t go to zero, is because the government can’t stop it. A number of other attempts to create private currency in the United States have been met with serious federal muscle including raids on the companies that have tried it, seizures of their property, criminal charges for various financial crimes, and federal prosecution.
But Bitcoin has survived and thrived because it’s a decentralized software/hardware/human machine. There’s nowhere to deal it a fatal blow. No leader. No official headquarters.
Bitcoin is going to live a long life as a highly valued currency and bank.
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