Arguing that Bitcoin will never be successful seems to be the cool thing to do every time the market takes a dive. It’s tempting, especially for those whose minds can’t escape the world of government money, asset pricing theories like ICAPM, or the gold bug tangibility demand. Paradigms are sticky, I get it, but the naysayers need to realize that Bitcoin is already massively successful!
Focus on the Assumptions
In Bitcoin’s Wild Ride Shows The Truth: It Is Probably Worth Zero WSJ columnist James Mackintosh argues that Bitcoin should be ultimately worthless because it isn’t likely to completely displace gold or cash in black markets.
Building on two simplistic premises, that Bitcoin could only plausibly have value in black markets or as a replacement for gold, Mackintosh wastes a bunch of time going through childish valuation exercises, e.g. if Bitcoin entirely replaces other currencies in black markets, then its value should be…
Asset prices don’t derive value because of models, models try their best to explain prices we observe in reality. All models are wrong, some are useful! In this case, the Mackintosh Bitcoin Pricing Model (MBPM) is both wrong (Bitcoin is not zero) and it is useless (no forecasting ability). Those two binary variables may make for a cool WSJ opinion piece especially when prices are dropping on bad news, but you wouldn’t want to bet on them.
Ignorance Breeds Criticism
Mish Shedlock is another market commentator who routinely bashes Bitcoin. With every market correction, we can look forward to a deluge of critique pieces, so with the 30% peak-to-trough drop last week with the bad news out of China, Mish did his thing and posted Bitcoin Silliness, Myths, and Fatal Flaws.
Mish takes the same outraged perspective that the idea that Bitcoin could be likened to gold in store of value function is “preposterous.” He simply declares "Gold is gold, nothing else” as if that’s sufficient to dispel any store of value component to pricing. Venezuelans looking to diversify outside of the chaos of their collapsing economic system might disagree, which is why they’re mining Bitcoin.
There’s plenty of stupidity in the crypto industry, and there will likely be a lot of wasted capital going to speculative endeavors by investors who don’t really know, or care, what they’re buying. Mish is right to point out these instances, but such a laundry list doesn’t invalidate many of the potentially disruptive, or just decent, projects in the space, including Bitcoin.
Problems are Opportunities in Free Markets
The fact that within half a week, Bitcoin price is just about right back to where it started should be indicator enough to take these well-timed critiques with a grain of salt. There are certainly issues with Bitcoin and the entire industry, volatility is likely to remain above that of other asset classes, but the great thing about the crypto market is that it’s the freest market in the world and most of these issues are merely entrepreneurial opportunities to solve.
Bitcoin may ultimately end up with zero value, but the verdict is far from out. As of now, Bitcoin is massively successful and need not grow one more user or one more percentage in market capitalization to declare it a success. Continuing to debate whether or not Bitcoin can be successful is for people who don’t know much about it and are too lazy to learn more.
The fact that in just 8 years we’ve gone from nothing to millions of users, tens of thousands of businesses, and $135 billion in market capitalization is more than sufficient for at least people like me who are happy to have new options outside of traditional banking and finance.
Image source: https://chralash.wordpress.com/2013/04/16/eight-bitcoin-inventions-that-will-change-the-world/
Rob Viglione is co-founder of ZenCash, a privacy-oriented cryptocurrency hyperfocused on usability, and President of the Zen Blockchain Foundation where he's helping "Uberize" finance, create a freer, fairer, and nicer world by bringing fintech to the disenfranchised, and pioneer decentralized blockchain-based systems of governance. As a PhD Candidate in Finance, Rob's research interests span cryptofinance, venture capital, and asset pricing. He teaches "Bitcoin & Blockchain Applications in Finance" at UofSC, is President of the Carolina Crypto Club, volunteers to help create startup societies with the Seasteading Institute, and serves as an advisor to Hero Engine World, where they're using a blockchain-based platform, artificial intelligence, and real-time massive scale 3D modeling and scenario simulations to help SmartCities with Disaster Recovery and Emergency Management. He is a passionate libertarian who advocates peace, freedom, and respect for individual life.
Yep ! Very good post for me @finpunk !
I found your post on my daily bitcoin top list and believe your post is undervalued, so I upvoted and resteemed your post !
All the best @minnowhelp
We should just tune out all this bullshit from people about crypto, it took bitcoin 9 years to reach so far and it has still survived and it will keep on flourishing if only we have faith in it!
Yes. it's successful already and it can reach $5000 again irrespective of the rumors around it.
Bitcoin has been a much more massive success than I had envisioned in 2009 when I heard about it. Sure do wish I would have "wasted a few dollars on the fad." (Fun fact: I turned around and spent what SHOULD have been Bitcoin money on Magic: The Gathering Cards...Guess which one is worth more 8 years later.)
It sure does seem to me that the Bears are all past the age of 45. I don't mean to be an "Ageist" or any of that nonsense, but in my experience, most people who make derogatory statements have been long entrenched in the World of Banks.
Great point, i bet that critique clusters nicely over some age hurdle.
And we still in the early stages
Thanks for the post, good info
Maybe not Bitcoin, But cryptocurrencies will become the norm very soon.
In order to create a legal framework for the currency of the Btc and other digital currencies, the Indian Government is now considering the launch of its own currency, which is similar to the currency of the BTC. The Government Digital Currency is to be issued by the Reserve Bank of India (RBI).
Government Indian Betquin
The Indian government is considering a "proposal to introduce its own currency, like the Betquin coin," the Bossines Standard newspaper reported on Saturday. So that this digital currency, which will be managed by the state will be called Lakshmi "Lakshmi," and this name is attributed to the name of the gods of wealth, wealth and prosperity of Hindus. According to close sources:
"The proposal was discussed by a committee of government officials and once the decision was made about the new digital currency, it would be included within the RBI. Some laws, such as the currency code, may be amended. So this process will take a long time. "
The news comes after a speech on digital currencies by Indian Reserve Bank of India (SUD) Executive Director Sudarshan Sen on the day of the India Financial Technology Conference. Hinting at the time that the government may enter its own legal digital currency that will be issued by the Reserve Bank of India. "Now we have a group of people who are looking for digital currencies, as an alternative to the Indian Rupee, so to speak. So we look forward to it very closely. "In addition, he stressed that the central bank is not comfortable with unstable currencies such as BTC.
Work on the regulation of digital currency and BTC
At the same time, the Indian government is working on a legal framework for the currency of the BTCbitcoin-india.jpgand other digital currencies. Last week, the financial controller said that "the government will prepare a regulatory framework for the biotech soon." In April, the Government established itself as a commission to investigate the currency of the Pitcairn. Last month, the financial controller also reported that the committee had submitted its report to the government, recommending the establishment of "strict control" of the digital currency, the news source said, adding that "there is no possibility of immediate restraint", but the government also does not support the promotion For this restriction. The Committee also recommended the establishment of a task force consisting of officers from the Reserve Bank of Australia, the Securities and Exchange Commission of India (SEBI), the Income Tax Service, the Central Council for Taxation and Customs (CBEC) and the Financial Intelligence Unit. According to the news source, financial intelligence will monitor the disadvantages of digital currencies
I used to think the black market was the sleazy underbelly of the country, where you risked your life going there, and getting ripped off was part of it.
However, the black market isn't anything like that. In that market, your reputation is everything. You get what you pay for, and you pay for what you get.
That sleazy area is the white market with con men looking for marks.
On bitcoin vs gold... Gold has lost its value because most of it is owned by banks and rots-children. We do not have any idea how much gold is in the hands of these big players. So we can not gauge the value of any transaction... or, put another way, all of a sudden, someone could flood the gold market crashing the price of gold for years. (its been done)
Gold is also not very useful. Sure, its pretty. But, doing transactions in this internet age, gold just doesn't do squat. In Zimbabwe gold is being used for transactions, only because it is being mined there, and there is an external market for it.
Further, crypto-currencies has just gotten started. Blockchains will replace the entire financial industry. All of it. Wall street will be a row of empty buildings.
I'm pretty sure that interest to bitcoins increase every day among ordinary people. Even if they don't buy bitcoins yet, but they start talking about them. So in near future bitcoins will rock.