Indeed I tend to agree on the internet comparison. The only fear I have cryptos are just one of the developments of the internet.
We do everything on the internet : meet friends, buy medicine, learn stuff. So what is so special about internet money ?
I mean it's handy to have an easy currency on the internet but does it make sense to put any value in the token itself ?
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"Does it make sense to put any value in the token itself?" was your question. Well does it make sense that an artist can put a few strokes of paint on a canvass and fetch $1 million for that painting? As Carl Menger and the Austrian economic school teach, value is subjective. That means each individual finds value according to his own preferences, perception, needs, desires, etc. So given that so many people (and this is growing everyday) find value in bitcoin and cryptocurrencies is enough indication to me that it has some use as people are willing to trade dollars for BTC. We do not have to define why bitcoin is valuable, we just need to observe that people do find it valuable and also that we can find the value in it for ourselves (I gave some examples of this above).
Indeed people are putting value to the tokens. Even fiat money is worth what people attribute to it.
But what if there is a killer blockchain fully linked to dollar (so infinite supply). Do we really need that extra currency with his own volatility.
Isnt the blockchain technology enough ?
That's in fact my biggest fear. We adopt blockchain but just link it to an existing fiat currency.
Backing a cryptcurrency with fiat money isn't really employing the model of blockchain technology. Namely, blockchain money is by nature decentralised. Some central banks like the Bank of Canada attempted to call their version of cryptocurrency (CAD-coin) as using blockchain technology, but in fact these schemes aren't decentralised at all. It is still one entity controlling the money supply. It seems they are just trying to jump on the crypto bandwagon or trying to co-op the movement. I say good luck with that.
Remember fiat money is simply money by decree (of a government). With bitcoin, there is no authority forcing anyone to use it. With fiat, governments force their subject to settle contracts, pay taxes and receive benefits with only that decreed money. That is, there do not allow a free market (think: competition) in money. Cryptocurrencies can change all of that.
As it stands the volatility as people perceive it lies in the exchange rate of cryptos to existing fiat currencies. In a world of no fiat and many cryptos there would still be volatility and arbitrage opportunities just as there is today in the forex market.
So I wouldn't fear blockchain fiat as I think that is a dead-end for governments, my main concern is that crypto applications aren't yet simplified enough for the common layman. If we make improvements here along with the scaling debate mention earlier, there can be some real opportunity in terms of massive adoption. Time will tell.
Very clear man. And to be honest I'm fully with you on this.
Massive adoption is indeed another issue. But ok this was the same with internet. In the beginning it was just us dialing in with our Modems.
I still remember the exciting sound and feelings :-)
Indeed. I too remember the excitement I got when I purchased my 56k modem. Pages loaded so much faster thank my old 33.6k :) Now look at us with our fancy broadband.