What Makes Bitcoin so Groundbreaking and How to Take it Forward
Darwin's law of natural selection, commonly known as the survival of the fittest, defines it as the "principle by which each slight variation [of a trait], if useful, is preserved”.
The changing environment creates a need for constant adoption and evolution, and those who can’t adapt will face the possibility of elimination and extinction.
Gresham’s law states that “bad money drives out good money,” meaning that given a choice of commodity of money, people will tend to use depreciating “bad” money to buy goods and services and put under the pillow “good” money that is appreciating or holding its value.
This statement generated a lot of interest among economists, and many of them tried to prove the contrary.
As a result, multiple scientific works and research papers have emerged. For example, the authors of “Good money drives out bad: a note on free coinage and Gresham’s law in the Chinese Han dynasty” argue
that when there is no fixed exchange rate between good and bad money, and when the government encourages free coinage, then it is possible for good money to drive out bad.
There is no reason to beat around the bush; that is why we should look at the gold. For many years, it was superior to many other currencies, mainly because it's rare and doesn’t corrode.
With the transition to paper money, it took one hundred years to replace the gold. Digital money or bitcoin
, in turn, has succeeded in this task much faster, but that can be also contributed to the hype around it, just like the dotcom bubble.
Curiously, Commodity Futures Trading Commission considers bitcoin as a commodity and regulates it the same way it regulates gold or gold markets.
If you think of Facebook credits
, Microsoft points, World of Warcraft gold or even the dollars in your PayPal account, you will find out that digital currencies appeared and have been circulating among us for quite some time.
So the question is: What is so special about bitcoin?
Bitcoin is a decentralized cryptocurrency that runs on a peer-to-peer network and does not have central entity or administrator for the currency like a bank or government, such as the Federal Reserve for the US dollar.
In other words, with bitcoin you don’t have to trust anyone, because it solves the problem of manipulation by eliminating the need for a trusted third party.
The problem arises from the fact that in order to actually use bitcoin, people have to rely on third parties, such as crypto-exchanges and payment methods.
It is true that if you want to send bitcoin to someone else’s account, you do not need third-party intermediary but in case you want to liquidate it (pass btc to us dollar, for example) the kyc procedure should be passed and commision paid.
According to an interview
, Jerry Brito, an executive director of Coin
Center, has said to the American Enterprise Institute: “What bitcoin created
was digital scarcity. Before scarcity only existed physically: I would give you
a $100 bill, thus you would have it, whereas I would not.
Digitally, this scarcity approach hasn’t been applied before the blockchain, which is why it’s trivial to make a million copies of a movie or a song.”
The community should now focus on the bitcoin integration as an actual payment method. People should also keep in mind that bitcoin doesn’t represent dollars.
Bitcoin is just a bitcoin. Digital tokens, in turn, do represent some sort of value, because they allow you to do different things or theoretically they are supposed to do it. In other words, digital tokens represent an asset or a utility.
Now, why is then the cryptocurrency market in worse situation than in 2017? There are several reasons for that, some of them being regulations and prohibitions.
Many countries are scared of losing control over money supply, as a result, they impede btc integration and usage. What should we expect in 2020?
Despite the fact that BTC supply is limited, its price is still trapped in bearish sentiment. In order to solve it, the crypto community should start working on the BTC integration to as many places as possible.
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