Bitcoin Thrives Against All Odds
Since it’s currently in vogue right now, I’d like to announce that I’m launching my cryptocurrency next week.
Let’s call it the “king coin.”
Nah, that’s too self-serving.
How about “mutton”? I’ve always had a soft spot for mixed breeds.
Yeah, that’s perfect – everybody loves dogs.
This is going to be the biggest thing since fidget spinners.
Congrats! Everyone reading this is going to receive one mutt coin when my new coin launches next week.
I’m going to evenly distribute 1 million mutt coins. Feel free to spend them wherever you like (or wherever anyone will accept them!).
What’s that? The cashier at Target said they wouldn’t accept our mutt coin.
Tell those doubters that the mutt coin has scarcity value – there will only ever be 1 million mutt coins. On top of that, it’s backed by the full faith and credit of my desktop computer’s 8 GB of RAM.
Also, remind them that a decade ago, a bitcoin couldn’t even buy you a pack of chewing gum. Now one bitcoin can buy a lifetime supply.
And, like bitcoin, you can store mutt coins safely offline away from hackers and thieves.
It’s a replica of bitcoin’s properties. Muttcoin has a decentralized ledger with impossible-to-crack cryptography, and all transactions are immutable.
Still not convinced our mutt coins will be worth billions in the future?
Well, it’s understandable. The fact is, launching a new cryptocurrency is much harder than it appears, if not downright impossible.
That’s why I believe bitcoin has reached these heights against all odds. And because of its unique user network, it will continue to do so.
Sure, there have been setbacks. But each of these setbacks has eventually resulted in higher prices. The recent 60% plunge will be no different.
The Miracle of Bitcoin
Bitcoin’s success rests in its ability to create a global network of users who are either willing to transact with it now or store it for later. Future prices will be determined by the pace of the network growth.
Even in the face of wild price swings, bitcoin adoption continues to grow exponentially. There are now 23 million wallets open globally, chasing 21 million bitcoins. In a few years, the number of wallets can rise to include the 5 billion people on the planet connected to the internet.
Sometimes the new crypto converts’ motivation was speculative; other times they were seeking a store of value away from their domestic currency. In the last year, new applications such as Coinbase have made it even easier to onboard new users.
If you haven’t noticed, when people buy bitcoin, they talk about it. We all have that friend who bought bitcoin and then wouldn’t shut up about it. Yes, I’m guilty of this – and I’m sure quite a few readers are too.
Perhaps subconsciously, holders become crypto-evangelists since convincing others to buy serves their self-interest of increasing the value of their holdings.
Bitcoin evangelizing – spreading the good word – is what miraculously led to a price ascent from $0.001 to a recent price of $10,000.
Who could have imagined that its pseudonymous creator, fed up with the global banking oligopoly, launched an intangible digital resource that rivaled the value of the world’s most significant currencies in less than a decade?
No religion, political movement, or technology has ever witnessed these growth rates. Then again, humanity has never been as connected.
The Idea of Money
Bitcoin started as an idea. To be clear, all money – whether it’s shell money used by primitive islanders, a bar of gold, or a U.S. dollar – started as an idea. It’s the idea that a network of users value it equally and would be willing to part with something of equal value for your form of money.
Money has no intrinsic value; its value is purely extrinsic – only what others think it’s worth.
Take a look at the dollar in your pocket – it’s just a fancy piece of paper with a one-eyed pyramid, a stipple portrait, and signatures of important people.
To be useful, society must view it as a unit of account, and merchants must be willing to accept it as payment for goods and services.
Bitcoin has demonstrated an uncanny ability to reach and connect a network of millions of users.
One bitcoin is only worth what the next person is willing to pay for it. But if the network continues to expand at an exponential rate, the limited supply argues that prices can only move in one direction… higher.
The Bottom Line
Bitcoin’s nine-year ascent has been marked by enormous bouts of volatility. There was an 85% correction in January 2015, and a few others over 60%, including a colossal 93% drawdown in 2011.
Through each of these corrections, however, the network (as measured by the number of wallets) continued to expand at a rapid pace. As some speculators saw their value decimated, new investors on the margin saw the value and became buyers.
The abnormal levels of volatility are actually what helped the bitcoin network grow to 23 million users.
Hey, maybe we just need some price volatility in mutt coin to attract new users…
