Summary
Bitcoin is worthless.
Separate Bitcoin from blockchain technology.
Bitcoin is not digital gold.
Bitcoin can never be a currency under its current model.
Achieving legitimacy would defeat the very purpose of bitcoin.
Fidelity is introducing Bitcoin (COIN,OTCQX:GBTC) to its platform and CBOE is creating Bitcoin derivatives. These actions seem to imply that Bitcoin has real fundamental value, yet I remain unconvinced. While it is undeniable that the Bitcoin itself has market value, I believe that its high price is nothing but the product of misunderstanding and mania
Proponents of Bitcoin have the following three arguments: 1) Bitcoin’s usage of blockchain technology will revolutionize how the world operates, 2) there is a limited quantity available, much like gold (GLD), and 3) there is a need for a decentralized currency. Combine the above, and Bitcoin is portrayed as a revolutionary technology that serves a real need and a gold-like asset that protects you from the devaluation of fiat currency (i.e. also known as inflation in non-fear mongering terms).
While the arguments contain some level of truth individually, together they fail to demonstrate the fundamental value of Bitcoin. Let’s examine each argument closely.
Bitcoin vs. Blockchain Technology
It is true that Bitcoin popularized blockchain technology, which has the potential to remove the trusted middleman and remove the double-spending problem. Essentially this means that we no longer need to use a trust middleman such as a bank to ensure that each parties do have the assets that they claim to have (e.g. not double spending). Blockchain techhnology makes this happen by storing data in a single public ledger that is constantly verified as "true" by all participants in the network. There is no denying that such technology has the potentially to radically increase productivity, as there is no more need to dedicate time and resource to verify transactions. All of the data will be stored on one public ledger that is maintained by a decentralized network, making it secure.
Blockchain technology can be very useful, but Bitcoin is a completely separate entity from the technology itself. Bitcoin is merely one iteration of the infinite versions of “currency” that one could create using blockchain technology. There is no greater evidence of this when you go on coinmarketcap.com and see that there are literally hundreds of “altcoins” that also use blockchain technology. While the cryptocurrencies differ from each other in some fashion, the underlying infrastructure is the same.
It’s important to differentiate blockchain technology and bitcoin because many Bitcoin investors falsely believe that they are buying the blockchain technology, when in reality, Bitcoin is just the byproduct of the technology itself. The fact that blockchain technology may revolutionize the world (yet to come) has absolutely zero influence on the value of Bitcoin. Using blockchain technology to justify the value of bitcoin is akin to saying that the essay you wrote in your freshman year has tremendous value because it contains the English language.
Fool’s Gold
Because there is a finite supply of Bitcoin and new Bitcoins are getting harder and harder to mine as by design, it’s easy to call Bitcoin “digital gold.” Gold has had value since the dawn of mankind and it’s been used as a form of currency up until the last century. As gold today is no longer pegged to the dollar, its fundamental value should be questioned as well, as I detailed in this article. However, gold has proven itself to be a useful commodity because it is truly unique. It is also viewed as a safe haven assets because in times of chaos, gold will maintain its purchasing power while fiat currencies could become worthless. To be more specific, any real asset will serve the same purpose, but gold is the universal standard given its liquidity.
Bitcoin cannot be equated to gold because as I stated in the previous section, Bitcoin and Bitcoin alternatives can be easily created with blockchain technology.
https://seekingalpha.com/article/4097396-bitcoin-worthless-definitive-guide?page=2
Respect! Someone with a SOUND MIND about the "worth" of BitCoin....
Oh, all BitCoin heroes still valuing their BitCoins in fiat money terms? (double sarc/)
Bitcoin is worthless.
Separate Bitcoin from blockchain technology.
Bitcoin is not digital gold.
Bitcoin can never be a currency under its current model.
Achieving legitimacy would defeat the very purpose of bitcoin.
Fidelity is introducing Bitcoin (COIN,OTCQX:GBTC) to its platform and CBOE is creating Bitcoin derivatives. These actions seem to imply that Bitcoin has real fundamental value, yet I remain unconvinced. While it is undeniable that the Bitcoin itself has market value, I believe that its high price is nothing but the product of misunderstanding and mania
Proponents of Bitcoin have the following three arguments: 1) Bitcoin’s usage of blockchain technology will revolutionize how the world operates, 2) there is a limited quantity available, much like gold (GLD), and 3) there is a need for a decentralized currency. Combine the above, and Bitcoin is portrayed as a revolutionary technology that serves a real need and a gold-like asset that protects you from the devaluation of fiat currency (i.e. also known as inflation in non-fear mongering terms).
While the arguments contain some level of truth individually, together they fail to demonstrate the fundamental value of Bitcoin. Let’s examine each argument closely.
Bitcoin vs. Blockchain Technology
It is true that Bitcoin popularized blockchain technology, which has the potential to remove the trusted middleman and remove the double-spending problem. Essentially this means that we no longer need to use a trust middleman such as a bank to ensure that each parties do have the assets that they claim to have (e.g. not double spending). Blockchain techhnology makes this happen by storing data in a single public ledger that is constantly verified as "true" by all participants in the network. There is no denying that such technology has the potentially to radically increase productivity, as there is no more need to dedicate time and resource to verify transactions. All of the data will be stored on one public ledger that is maintained by a decentralized network, making it secure.
Blockchain technology can be very useful, but Bitcoin is a completely separate entity from the technology itself. Bitcoin is merely one iteration of the infinite versions of “currency” that one could create using blockchain technology. There is no greater evidence of this when you go on coinmarketcap.com and see that there are literally hundreds of “altcoins” that also use blockchain technology. While the cryptocurrencies differ from each other in some fashion, the underlying infrastructure is the same.
It’s important to differentiate blockchain technology and bitcoin because many Bitcoin investors falsely believe that they are buying the blockchain technology, when in reality, Bitcoin is just the byproduct of the technology itself. The fact that blockchain technology may revolutionize the world (yet to come) has absolutely zero influence on the value of Bitcoin. Using blockchain technology to justify the value of bitcoin is akin to saying that the essay you wrote in your freshman year has tremendous value because it contains the English language.
Fool’s Gold
Because there is a finite supply of Bitcoin and new Bitcoins are getting harder and harder to mine as by design, it’s easy to call Bitcoin “digital gold.” Gold has had value since the dawn of mankind and it’s been used as a form of currency up until the last century. As gold today is no longer pegged to the dollar, its fundamental value should be questioned as well, as I detailed in this article. However, gold has proven itself to be a useful commodity because it is truly unique. It is also viewed as a safe haven assets because in times of chaos, gold will maintain its purchasing power while fiat currencies could become worthless. To be more specific, any real asset will serve the same purpose, but gold is the universal standard given its liquidity.
Bitcoin cannot be equated to gold because as I stated in the previous section, Bitcoin and Bitcoin alternatives can be easily created with blockchain technology.
https://seekingalpha.com/article/4097396-bitcoin-worthless-definitive-guide?page=2
Respect! Someone with a SOUND MIND about the "worth" of BitCoin....
Oh, all BitCoin heroes still valuing their BitCoins in fiat money terms? (double sarc/)
I still think I will be able to buy those bitcoin for $1.00 one day. At some point a next level coin is going to come along that will replace all the current coins. It will have a secure network without burning ungodly amounts of electricity, it will handle massive #s of transactions per second, and it will not gain and lose 50% of its value on a regular basis, which will allow it to function as a store of value.
