Bitcoin bubble

Although the market is positive overall, at the time of writing, the sentiment is quite negative. Maybe due to the high expectations over Consensus, which did not create that much demand over bitcoin, at least not as much as it happened during previous years.

I understand it’s your money that is at stake and the market has been quite bearish. But it’s also mine and everyone else’s who decided to change from fiat-currency to cryptocurrency. To most people you know bitcoin is an investment vehicle; maybe a bit more worrying, is the fact that the focus is not even bitcoin anymore, it’s mostly altcoins. Where else we could we get those massive gains (bruh)?

But greed comes at a cost.

I love new ideas, new projects, new ways of thinking and innovation in general. I also love the concept of decentralizing trust and money and the super-power/super-responsibility that comes with it.  Obviously, the debate is considerably more interesting when the total marketcap of (insert top-10 project name) is worth billions.

At some point we need to stop and ask ourselves, how happy are we with the actual progress of the cryptocurrency space? So many companies have surged, yet where is the real change? Is there a bubble or is the market undervalued? Is price aligned with technology development and adoption, in any way?

More importantly:

Can you still go to the moon?

–this article shouldn’t be taken as financial advisement as it represents my personal opinion and views. I have savings invested in cryptocurrency so take whatever I write with a grain of salt. Do not invest what you cannot afford to lose and always read as much as possible about a project before investing. Never forget: with great power, comes great responsibility. Being your own bank means you’re always responsible for your own money–

I have absolutely no idea, plus I couldn’t care less. Don’t take me wrong, I hope the market turns bullish and we do see a massive bull-run, breaking the CME futures market trend of keeping Bitcoin below 10k. I hope all projects deliver upon their promises. I hope price, technology development and business development align themselves. My desire is that everything works out just fine and everyone who invested takes home some profit.

The problem is, of course, reality works a little bit differently.

Maybe in a different universe where we make no bad choices and aren’t greedy by nature, that could happen.

What I see is many projects being clearly overvalued, a definite lack of research on actual proven concepts and too much money wasted on marketing campaigns, ads, advisors, ICO trackers, paid promotional content instead of focusing on actual product development and fixing important issues.

“In order to make money, you need to spend money”

Sure. Welcome to the VC western mentality world. You either think big or go home, right?

No. That’s not why I joined cryptocurrency.

I do want to make money, get rich and don’t have to worry about anything else for the rest of my days, focusing only at doing what I love. But there are many ways of achieving that goal. You don’t need 1000 BTC to start a decentralizing (whatever business) platform with economic incentives. Or at least you shouldn’t. One of the things that drive my passion towards cryptocurrency is what’s about to come: when people with an actual need for the technology start participating, hordes at a time.

Sure, our gains are important. But there’s something way bigger coming which will influence the entire marketcap.

Imagine when those 33% unbanked people around the world realize they can simply download an app and get paid in a currency accepted everywhere. The true beauty of bitcoin and other cryptocurrencies remains to be its decentralized, permissionless and transparent nature.

But in order for that to happen, we might need to put greed aside for a second and think of ways of better-redistributing money. If you don’t see how that is important for your personal gain, let me clarify.

Think of what happens when you include 2.3 billion people on the financial system.

Can you even do it?

I cannot conceptualize the impact on our daily lives, but from a financial standpoint, this is what I see: 2.3 billion more customers for every business, potentially. By financially including people who did not have a chance to participate in the world economy, you can now reach new customers everywhere; because the means of exchanging are borderless and permissionless, no one can be blocked from exchanging value and services. The digitalization of the world, via mobile smart-phones with internet access, could change how we do business forever.

For example, if you do business in Africa or Latin American countries you might know it’s near impossible to take money away, due to the many currency-related restrictions. You can now hop over that problem, just by transacting in cryptocurrency.

Or maybe if you’re willing to train a whole new workforce, who needs much less cash to sustain an acceptable standard of living. It might not be easy but with the right set of tools, motivation and people we might see new specialized businesses flourishing through developing countries.

How will cryptocurrency change jobs and economies worldwide?

In order to get to the bottom of that question, first we need to worry about adoption.

I personally believe there are 3 reasons that could lead to potentially increasing worldwide adoption of cryptocurrency:

  1. A Better User Interface;
  2. A Better redistribution of money;
  3. Standardized multisig/escrow contracts.

If you think I forgot about scalability, transaction fees or block size, please rest assured I haven’t. To me those aren’t real problems; as the network grows in security (more miners), user adoption and developer community, I believe we will see those issues getting resolved. Some others will appear, of course, but that’s the nature of innovation.

You need to break stuff in order to build new things so it’s not the tech problems that frighten me, to be honest; the values and paths we choose to support our decision-making, that is what concerns me. But we’ll get into that in a bit.

So, why is User Interface at the top? Simple answer: would you be able to use the internet without DNS being active? If you do not understand the question, let me rephrase it: how easy would it be to, instead of accessing https://www.ccn.com, you would have to know a bunch of different IP addresses to be able to connect to the provider website? I’m sure you wouldn’t like that at all.

Killer user-friendly apps, which make the bridge between the infrastructure and the user are the key which might unlock this puzzle.

The first real challenge is making cryptocurrency indistinguishable from digital fiat-currency. We need ways to safe-guard users from making bad decisions, like not keeping their private keys safe, accessing websites via ads, or keeping their entire assets in a single place. To achieve that, we have two main schools of thought to follow.

  1. Learning by doing or,
  2. Regulating the markets.

As regulation is usually the way to avoid, especially during the early development stages of any new technology, we should educate people and allow them to make bad decisions. It’s hard to lose your money, I have been there. I have also been scammed, tricked, made bad decisions on where to store my money, lost private keys and so on. What’s the only good thing about it? Each time I failed I learned something that helped me making better decisions in the future.

What “experts” usually don’t say is that you shouldn’t be afraid to fail, especially if you’re starting in a new field.

Consider the following: the sooner you fail the sooner you learn. This is, if I had not made all those mistakes back in the day, I would probably do them later on. And I could have lost way, way more money!

The hardest lesson we all learn with time is that there are no safeguards in real-life. A stupid comment on twitter can lose you your job; a click in the wrong ad can infect your laptop; just being in the wrong place at the wrong time can change your life drastically.

We need to accept we don’t control most things that come our way. We’re either prepared to deal with them or we’re not. One thing I’m pretty sure of: blocking people from investing because it’s in their best interest is just dumb.

Why?

For one, how is it ok we allow some guys sitting at a table somewhere think they know better? Oh I see, they’re “protecting” us. If it isn’t morally wrong or illegal, don’t even try to tell me what to do. Let me do stupid stuff and make incredibly irrational decisions. That’s how I learn.

I mean..

If it’s ok to gamble, it should be ok to buy cryptocurrency.

If it’s ok to share my data with the highest bidder, it should be ok to let me monetize it as I see fit.

Secondly, everyone makes bad decisions at some point. No exceptions here. If someone tells you how certain they are about a certain event, run like the wind. Honestly, nothing is for certain, much less an unregulated market subject to the will of the whales and institutional investors. I mean, when JP Morgan comes out saying “We’re considering entering the crypto market” it means they’re already in, as most of you know.

People are greedy by nature, right? Banks, institutions, corporations, any type of organization are just groups of people trying to get the maximum utility of each play.

Sometimes, even the greatest people make the most stupid mistakes.

Do you follow, for example, the brilliant Andreas Antonopoulos? I’m sure if you do, you think highly of him. Did you know his co-author on “Mastering Bitcoin”, a blockchain bibble for so many crypto-enthusiasts, was the person responsible for creating Parity? Which got hacked not so long ago?

Do you think he was an idiot for trusting such a person to be his co-author?

This is the harsh truth you don’t read many times. People make mistakes and bad things happen. What matters are the intentions and values on which decisions were made.

Either a commercial airplane pilot who wasn’t able to account for time correctly or a doctor who failed to diagnose a disease, people sometimes make bad decisions that lead to destructive outcomes. Those events, however, can have a positive impact on future generations, because Human Beings have the capability to learn from theirs and others’ mistakes. Critical thinking is key for cryptocurrency, as we cannot impose too many regulations on something that is already internally regulated. That’s why Bitcoin works, as its internal consensus mechanics promote good behaviour and punish bad actors.

If you wonder why we might need to slow down on regulation think of what the current state of finance is doing to the world. There is a clear separation and segregation of classes as the rich can invest while the poor can only work for a pay-check.

Screw that. Make money work for you. This is not a new idea, not even related to cryptocurrency at all, but it’s an important mmindsetto have. Maybe the story of rich-dad, poor-dad can be an inspiration to you, regarding how to look at money.

Now, let’s get back on track at the question at hand.

How can we better redistribute money?

–I hope you don’t judge my rant too seriously; sometimes we just need to let it all out—

Bitcoin initiated a process of rewarding participants for securing the network. That’s already pretty cool and quite an achievement, but we need to aim at doing it better. Right now you need special hardware to maintain the security of the network. In time, I hope the mechanics change in order to allow for more people to be rewarded for maintaining the network’s security. Real change, in my opinion, will come from different proof-of-consensus. For example, there might be a different implementation that requires all participants to secure the network. This is, anyone who participates needs to validate transactions at some point, getting rewarded to do it.

Currently ,the logic dictates you need to spend energy to maintain the network’s security, which is a fair trade-off. But other logics might appear with different goals. What if instead of energy you staked your time or attention? You do not need a massive data structure change, like switching from a blockchain to a DAG or Hashgraph, to improve consensus mechanics by giving more rewards to users.

If everyone agrees to a change in the protocol rules you can potentially just fork bitcoin into a new proof-of-work mechanic, rewarding everyone who already participates in the current bitcoin blockchain (like bitcoin cash, private, gold etc).

There are of course opinions against keeping doing hardforks, as it potentially “steals” hashing power from the main network. But hey, that’s a feature of decentralization. People should be able to do whatever the hell they want. If someone believes they have a better way of reaching consensus, let them try. I understand the current feeling is many projects are just forking Bitcoin so that founders and early adopters get rich quick.

Is that a lie? I doubt it. Again, we humans are quite greedy. That doesn’t refute the fact hardforks can have a potential good outcome!

If the overall goal is to improve the network, adoption and user reward why wouldn’t you do it?! I hope people try new things, as it’s the only way to achieve the best possible outcome for everybody.

let’s get crazy for a second, shall we?

Tokenizing the world economy

Another potential solution is if businesses everywhere start adopting a different mentality. What if instead of giving people equity, you can give them a direct way to make money by using your product/services? I understand it’s hard to conceptualize a token which has no real value, as it’s not connected to an organization’s equity, but try to see it from a different perspective: you can now  purposely give away tokens to users, for free, as they use your product or service. Those tokens could let them vote upon governance, reward them with a fixed income or allow them to donate back tokens so you can build new features or maximize your business utility.

The goal here would be to directly redistribute gains, for example, among the people who support your network: users.

Those users can be anyone, your suppliers, buyers, employees, investors, etc. Everyone who interacts with your business could potentially be rewarded for participating.

Imagine not having just a source of income, but potentially dozens at the same time, just from sharing your data, buying products, using services or interacting with a network. We could completely shift how the world works by literally giving back to your network. We now have a chance to shift from measuring wealth in profits to measuring wealth in network users. Because all users would have tokens!

As crypto-assets are inter-changeable, everyone can easily exchange them for digital cash. Or any other digital asset you see fit. Maybe instead of having 150 currencies, we will end up with hundreds or thousands of digital assets, all of which could potentially be exchanged amongst themselves.

We now come to the final point that can greatly influence overall adoption.

Standardized multisig/escrow contracts

Although this point would definitely work “under the blockchain hood”, its key for people to trust each other. Meaning, only with standardized and trusted contracts deployed, which use a very easy and friendly interface, we actually have a chance of people trusting the entire system. It’s pretty cocky to say “the blockchain can’t be hacked” when software and websites built over it, could.

We can’t forget we still live in an analogue world. People still lookup to institutions and governments for guidance and expect them to behave according to everyone’s best interest and their intrinsic values.

The issue is that sometimes, leaders forget those values they swore to abide to when making decisions and base them solely on personal gain. To destroy that mentality we also need a solid and stable infrastructure aligned with a set of organizations lead by people who do not care about personal gain. Hence I understand the role Vitalik, David, Dan or Charles play at their projects.

How achievable is that goal?

It will depend, again, on all of us. If we promote and invest in projects just for gains, not caring about the purpose or goal, then I don’t see a real future. If we make an effort to bet on projects and people who put the benefit of the many ahead of their own, then I do. I think it’s up to us to let good projects and ideas live, bad ones to die and mistakes to happen.

Someone said if we do good deeds the world responds in kind.

For more than 2 centuries we had a system that only worked in some parts of the world, it wasn’t all inclusive, it was permissioned and required people to identify themselves to participate. We had a system that did not work 24/7 nor did it reward participants. Come to think about it, no one born after 2008 will ever live in a world where fiat-money is the only option. That’s somehow reassuring.

Things have changed and we all must make an effort to turn this market into a huge success. From investors, to developers and from miners to users, it’s up to all of us as individuals to promote good agents and to punish bad actors.

Don’t forget: the more selfish your actions are the worst the overall outcome for the most. I understand that for some of us to win, others need to lose; that’s just how balance works. Except this time the winners can be the many and the losers the few.

I know it’s a bit of a stretch, but who knows? With a different attitude comes a different outcome.

Is Bitcoin a bubble?

No. Our immense greed and money lust is. If you fear the market will collapse think of the Internet bubble.

Do you remember how it ended?

Great. Now think of how you’re reading this article.

No bubble will destroy bitcoin, we’ve been there already. Now, if there is a bubble it means we weren’t able to control our greed for quick profits and allowed for enormous over-valued silly projects to emerge. Just like during the 2000s.

The only good thing is that with any failure comes an important lesson.

My only conclusion is that Bitcoin is the new digital internet money. No one was ever able to stop P2P file-sharing; do you really expect cryptocurrency will be any different? If there’s a 51% attack, the network simply forks. Or you switch to a different cryptocurrency.

I mean, do you really want to kill Bitcoin?

Try shutting down the internet.

Bitcoin isn’t the bubble. We are.

Featured image from Shutterstock.