Bitcoin Turns 10 – What is Money?Bitcoin Turns 10 – What is Money? https://c-suitenetwork.com/advisors/wp-content/themes/csadvisore/images/empty/thumbnail.jpg 150 150 Chris Rabalais https://secure.gravatar.com/avatar/068c285a3a18ca62614a5a9bcc9da947?s=96&d=mm&r=g
If you walk into any room of entrepreneurs today, you are almost certain to have at least one conversation about Bitcoin, blockchain or some aspect of crypto. A few days ago, Bitcoin officially turned 10 years old offering a moment of reflection on the future of the technology and money in general. The passion for (or against) crypto is as charged as politics these days and it begs the question… Why?
Most people understand that technology is a driver of progress and increased standard of living. Most people also understand the power of the Internet in creating new markets and business opportunity. Bitcoin offered technology to create money with your computer using your home Internet connection. This is something that anyone can do from anywhere and an almost impossible proposition to ignore. Once this message got out, the gold rush was on. The Great Recession of 2008+ was the most dramatic financial downturn in a generation. During periods of extreme economic stress, innovations of all natures and types appear on the scene and the financial markets are no different. “Never underestimate the other person’s need or their greed,” a friend once told me. Credible sources credit the global meltdown with the explosion of crypto coins and tokens. This opens a far larger question…
What is Money?
According to Black’s Law Dictionary, “money” is a generic term and embraces every description of coin or bank-notes recognized by common consent as a representative of value in effecting exchanges of property or payment of debts. “Common consent” and “representative of value” are the keys here. Common consent simply means that there is widespread knowledge and acceptance of the unit in question. In the case of the U.S. Dollar, it is almost universally known and accepted. Representative value is a bit more complex. In the case of the dollar, even in a fiat state, it still represents the national wealth, interests and geographic borders of a land mass. Turning to cryptocurrencies, where is the equivalent?
All or Nothing.
Once you remove the requirement of any physical connection to the real world, there is no upper limit on how many coins can exist with more than 2,000 to date. Crypto-coins are either based on the wealth of the entire Internet or based on nothing at all. The compounding problem of market competition for brand recognition and adoption is certain to ensure that some coins thrive, most die and price stability is a near impossibility.
What is the real problem solved by crypto? Higher quality of life with better jobs? Smaller and more efficient government? If so, there is a much more effective and profitable far less disruptive way to get there. It comes with a built-in distribution system and standing demand to start it all up. More to come…