5 Reasons Alibaba Should Fear Bitcoin

September 21, 2014 13:08 UTC

I’m a Bitcoin contrarian. When the price drops I get giddy. Fear is not something that Bitcoin stalwarts feel on a regular basis. Being on the right side of inevitable change means watching companies struggle with the unknown, that thing that all fear. Bitcoin doesn’t need permission, many are still trying to digest that fact.


1. Alibaba Exists With Permission

Alibaba and every other centralized organization exist within the frameworks provided by governments. Before the Hangzhou e-commerce site can consider the customer it has to answer to politicians, bankers, insurance companies, and shareholders. Alibaba has 1,001 plates it has to keep spinning if it wants to operate in the established global market.

Bitcoin is a permissionless, frictionless payment platform. Any business running on Bitcoin that seeks to compete against Alibaba can do so without the same overhead. Bitcoin is free from tariffs, taxes or the favors owed to the backers of bureaucrats. By this virtue, sellers stand to make higher profits or set lower prices on the comparable Bitcoin powered site. Bitcoin is free trade; voluntary and direct, person-to-person. There are no middlemen to pay off and no hoops to jump through.

2. Bitcoin Will Enable Alibaba 2.0

Alibaba is the America Online of the fledgling global marketplace. Currently, it may be the best but it’s not the future model. Where does Alibaba go next? Sure, the IPO will be big news. The next weeks it may still be a headline bur in a month or so it will be mentioned in passing. Where does it go next? How does it innovate? Of course, Alibaba will add features and new ways to generate revenue but there will be places it cannot touch, limited by interests beyond its control.

Bitcoin is unbridled innovation. Open Bazaar and Dark Market are the prototypes for the high-speed internet phase of online commerce. Why should vendors or software be beholden to a central company at all? Let the software operate the business and have it reinvest costs that would normally go towards salaries and dividends into lowered prices. The next gen marketplaces running on Bitcoin will serve as the model established companies like Alibaba will have to emulate.

3. Alibaba Needs Bitcoin

Alibaba will not exist if it is incapable of offering competitive prices and services. There are always competitors. As the space matures, competitors will affect Alibaba’s margins. Every way of reducing the cost of keeping the lights on and doing business will help keep Alibaba #1. Banks have made no effort to conceal their unwillingness to do business with individuals and companies that use Bitcoin. I am looking forward to the day when Alibaba has to the have “the meeting” where it must explain to lenders that, to continue operating as a business, it must leverage Bitcoin.

Bitcoin does not care if Alibaba fails. Yes, investors looking to make a quick return off one of the largest IPOs in history are pulling their money out of Bitcoin and altcoins to chase the dragon. Isn’t there a famous quote about this?

4. “Buy When There is Blood in the Streets.”

… Even when it’s your own. The cornerstone of contrarian investing is buying low when the price falls. It’s better if it falls due to no fault of the investment itself. The Alibaba IPO makes me happy. Bitcoin is not broken, no killer bug surfaced, and there is no attack. A number of people just think there is more money to be made short term with Alibaba than with Bitcoin. In their eyes Alibaba is a $168B watermelon and Bitcoin is a $5B grape. A small slice of watermelon is more than the entire grape.

There is temporarily less demand for Bitcoin while the speculators play their games. Bitcoin has the potential to grow from a grape into a tree that produces cornucopias. Alibaba will always be a watermelon.

5. Alibaba is Doing All the Work for Bitcoin

The supply chains, infrastructure and global adoption Alibaba builds is just setting the stage for Bitcoin. Everything Alibaba does Bitcoin can do – and better. Bitcoin is backwards compatible with everything they create. The supply lines, storage facilities, shipping companies, manufacturers, vendors and consumers who patronize Alibaba can accept bitcoin and keep doing what they have always done without a single change in their business process.

There is no reason to fear the Alibaba IPO. Bitcoin is not a price on an exchange. It’s the most innovative technology in the history of the world. If you believe in the principles and ideals upon which Bitcoin was founded then now is just one more opportunity to obtain cheap coins before it’s too late.

Images from Shutterstock.

Last modified: September 21, 2014 13:55 UTC

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