[Originally Published November 28th, 2017 on Wordpress]
INTRODUCTION:
Anything that has amassed a significant amount of popularity within a relatively short period of time could certainly leave the rational individual incredulous. Often, we tend to put up some opposition to entities that provide an alternative to trusted methods, means, and institutions. This was certainly the case regarding currency. If anyone told me that world’s most popular cryptocurrency Bitcoin would be valued at what it is now, back in 2010, I would have probably lambasted them beyond belief. However, seven nearly eight years later the bitcoin faithful would be the ones on the winning side of history. At least they would be as of the current point in time, I digress. Over the past couple of days, I have seen a plethora of news articles stating that the value of a single Bitcoin unit is on the verge of increasing to 10,000.00 USD. While over the past eight years the appearance of the legitimacy of Bitcoin as an alternative to fiat currency has become more resolute there are plenty of skeptics. While skepticism is a healthy reaction to such a new currency alternative, I would tell everyone to be an open-minded skeptic. However, with the steady increase in the value of Bitcoin, it illustrates the potential that cryptocurrencies may not be a mere fad but rather an enduring financial investment. Please note that I am not speaking in definite terms and this is pure speculation on my part.
NEWS STORY:
Per Business Insider, the value of Bitcoin has just reached above 9,900.00 USD. Bitcoin has been on the trajectory to hit the 10,000 USD mark since Thanksgiving. The value of the cryptocurrency has increased by approximately $2,000 since last Friday, with no indications of losing any momentum. Some traders such as CEX digital are already trading Bitcoin at a value of 10,000 per a unit. Renowned hedge funder Michael Novogratz speculates that the value of Bitcoin is far from reaching its apogee and still has the potential for growth. Novogratz told Business Insider that there is a potential for the cryptocurrency to reach 40,000 dollars per a unit by 2018. While the 875 percent increase in value from last year, certainly makes Bitcoin a tantalizing investment, there are certainly still some skeptics on Wall Street. Most notably Jamie Dimon, the CEO of JPMorgan [3].
DISCUSSION:
I would imagine that all that these significant surges in value would be truly joyous for any longtime Bitcoin investor. However, these significant increases in value I would attribute to a build in a safeguard against inflation. Please note that I am not an economist, however, the creator(s) of Bitcoin made it so that there is only a finite amount of Bitcoin to be mine. After the total number of Bitcoins have been extracted no more will be generated thus providing a measure to preserve the rarity and maintain the value. Prior to the advent of fiat currency, the U.S. dollar had its value determined by the backing of gold. Gold yields its value through being a relatively scarce mineral/commodity.
So the projections of the experts in my uneducated opinion do seem to have some veracity to it. Barring some outlandishly awful event such as a hacker finding a way to manipulate the currency, I see a very bright future for anyone who has invested in Bitcoin, especially the early investors. Personally, I could kick myself for not investing 200.00 USD in Bitcoin back in 2009, however, a few issues with that one. First off: I am too much of a skeptic to invest in something that is unknown. Second off: I was completely ignorant to what cryptocurrency was back then. So I suppose maybe if happen to inherit a great abundance of money and Bitcoin has gone bust, I will have to invest.
From my perspective, the significant of Bitcoin goes beyond its contrived value and its potential as a financial investment. To me, the real significance of Bitcoin is that it (along with competing cryptocurrencies) is that it may serve as a feasible alternative to fiat currency. The issue with the fiat currency system that the United States and the majority of the world utilizes is that the currency suffers from high rates of inflation. In the United States, we continue to keep printing more and more money which only further weakens the value of the U.S. dollar. It is important to note that since we stopped using the gold standard, essentially our money is backed by the word of the United States government. A government that is in a trillion of dollars worth of debt, which is what I like to refer to as the “U.S. fiscal Blackhole”. Our government is in this outlandishly large amount of insurmountable debt and still wantonly spends money. Why not when you can frivolously print more and further depreciate the currency even further. I can I really trust that the U.S. dollar is truly worth anything understanding the variables detailed above? It is analogous to providing a car loan to someone who has declared bankruptcy without a co-signer. While that example may seem cartoonish I hope it conveys my point. I really can’t trust that the U.S. dollar is any more than glorified Monopoly money. That is why Bitcoin is so important is that we should have alternatives to our failing dollar. Whether it being gold, silver, jewels, or cryptocurrencies alternatives are needed.
FOOT NOTES:
1. (Video) https://youtu.be/9EJwLXxAJak
2.https://invertedlogicblog.wordpress.com/2017/11/28/political-opinions34-bitcoin-the-cryptocurrency-craze