Why Bitcoin is not a bubble
I wil attempt to explain why Bitcoin is not a bubble, in simple basic points.
Although Bitcoin is used as a store of value – a form of investment. Bitcoin was never actually designed to be an investment. Its investment nature comes from its feature of limited supply of coins as discussed in a previous blog:
Bitcoin was always designed as a digital currency – It was designed as a form of money – simple money to enable money transfer and trade without a “middle-man”. The “middle-man” is a limitation – once you remove the “middle-man”, you suddenly get a limitless, scalable, global system.
This is the most important use that most people do not understand and critics overlook. Bitcoin is a program based on blockchain technology. Smart contracts can be written on blockchains – we have seen Ethereum and other Cryptocurrencies emerge with this functionality.
This is the future of how people will interact and trade, with programmable money. Imagine ordering an item on eBay and paying with programmed money (smart contract), the contract can state: 10% of the funds are payable upon order shipment (confirmed with an order number), the rest is payable when i receive and sign off the shipment. If i don’t receive the shipment, money returns to me the buyer.
Imagine donating money to charity and programming it in a smart contract – the money can only be used to buy food items in country A within a certain period of time. If that money is not spent, it comes back to your wallet.
Imagine the future of lotteries – in trust-less systems with programs that manage payout, buying a house, exchanging any sort of goods with strangers in opposite ends of the world. The use cases are endless
Micro transactions + Programable money
Now we are entering the world of Internet of Things (IoT). Practically IoT would not be possible without programmable money, but the second requirement is the ability to process micro transactions. Small transactions, quickly and for free. Enter IOTA currency specifically designed for this function.
Now you can program your phone to pay for data as it uses it, or program your fridge to order groceries from the cheapest supermarket as you need it. You need a smart contract to ensure your money can only be spent for the programmed purpose you have requested. Only cryptocurrency can do that – because its a program.
You can’t give your credit card or bank account details to your fridge, but you can write a smart contract that is secure on a blockchain or tangle in the case of IOTA.
All these use cases for Cryptocurrencies are just going to get bigger and bigger with time, hence the demand will grow. At some point in the future, everyone will use Cryptocurrency, even if they don’t know it. It will operate in the background of your smart fridge, you won’t know you own Cryptocurrency, you will just see a bill in rands.
Or you will see a bill in digital rands, as more and more countries are waking up to this Crypto revolution – countries are already investigating ways to create government digital currency. In all honesty, we already use digital money but not in blockchain or Cryptocurrency format. Governments will create state owned and managed Cryptocurrencies, perhaps your ID number will be your public key, and your wealth will be stored under your key. All transactions you ever do, will be recorded on the blockchain – tax will be automatic. Maybe Bitcoin will be a collectable coin like art ?
All the things we could do with blockchain . . . . . .
Bitcoin is not a bubble
Bitcoin was the first and for a long time will remain the bank of Cryptocurrencies. The central means of exchange between all these different applications and blockchains. Bitcoin is being developed daily to have new layers and applications that will be able to process micro-transactions instantly like the lightning network etc . . . this is just the beginning.
My favorite Bitcoin quote “Bitcoin will do to banks what email did to the postal industry” – Rick Falkvinge
Therefore Bitcoin is not a bubble that will burst soon, people calling it a bubble don’t quite understand Bitcoin, they only identify the “investment” nature of it and focus on traditional definitions of investments and miss the real world uses cases that have been driving Bitcoin’s enormous growth.
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