UK News giants, The Independent have published an article titled ‘Cryptocurrencies are about to become worthless - and this is what will happen when they crash.’ We want to quickly discuss why The Independent are wrong. Obviously.
“Anything that is so volatile cannot be a satisfactory unit of account. It is itself stable so you can’t measure other values against it. It can be a medium of exchange but you would have to fix the transaction price instantly, and in any case, the capacity of even an established cryptocurrency to handle a mass of transactions is limited. As for store of value, well, it clearly isn’t.”
Okay, so first of all, they are stating that there is an issue in the way cryptocurrency is unstable and therefore cannot be used as a store of value. Now of course, when we look at today’s markets this may indeed be the case, it’s difficult to see Bitcoin used as a store of value because it’s simply so volatile. However, what this fails to recognise is that when Bitcoin and cryptocurrency become more mature, it will start to hold value and will become less volatile. I think what The Independent mean to say here is that Bitcoin is not a suitable store of value… yet.
The ‘wrong-ness’ only seems to continue:
“To claim that something worth thousands of dollars now could be worth nothing at some stage in the future, might seem both shocking and unreal. Yet there are many instances where a prized asset becomes valueless, or almost so. Victorian furniture, old postage stamps. In between are assets that have fashionable sectors and unfashionable ones: a 1950s Rolex wristwatch vis-à-vis an 1890s gold pocket watch. One is worth thousands, the other just the weight of gold.”
The problem here is that the article really doesn’t seem to account for the fact that Bitcoin and cryptocurrencies are built upon an evolving technology. Unlike Victorian furniture and old postage stamps, that are fixed in their time of origin and thus have a novelty appeal, cryptocurrency, however, is growing, it’s expanding and it is a technological revolution, not a fad based on old tastes and desires.
“If you cannot spend a bitcoin, then it does indeed become useless. You cannot put it on the wall, or wear it on your wrist. Anyone who holds them will scramble for the exit, raising whatever cash they can. And there is at least an even chance that this is what is happening now.”
Need we say anymore? You can already spend Bitcoin, you can technically even wear it on your wrist thanks to wearable technology, but perhaps I'm splitting hairs here.
What all of this means
This is an example of a mainstream media outlet jumping on a hype train generated by the bear market. Okay, so many people do believe Bitcoin is going to burn out one day, however, as people who study this industry day in and day out, we can appreciate that the events of this week, this month and this year do not suggest that Bitcoin is a failing concept. Actually, cryptocurrency hasn’t even really been born yet. It’s still in an embryo stage, a stage that it will grow and develop from, thanks to the innovation that is blockchain technology.
Please check out the article by The Independent, very clear points are made out in a well written and concise piece. The problem, however, is that the writer seems to literally disregard most of the technology and the culture behind technology. You can’t compare Bitcoin with an old postage stamp, they are from two very different eras and represent very different things. Cryptocurrency is still the future! Believe us, not them!