As it’s all the rage today, I’d like to announce that I’ll be launching my own cryptocurrency next week.
Let’s call it “kingcoin”.
No, that’s too self-serving.
How about “muttcoin”? I’ve always had a soft spot for mixed races.
Yes, it’s perfect, everyone loves dogs.
It will be the biggest thing since fidget spinners.
Congratulations! Everyone reading this will receive a mutcoin when my new coin launches next week.
I will distribute 1 million muttcoins evenly. Feel free to spend them wherever you want (or wherever anyone will accept them!).
What is that? The cashier at Target said they wouldn’t accept our muttcoin?
Tell the doubters that muttcoin has a scarcity value – there will only be one million mutcoins. In addition, the full faith and credit of my desktop computer’s 8GB of RAM is protected.
Also, remember that a decade ago, one bitcoin couldn’t even buy a pack of gum. Now one bitcoin can buy a lifetime supply.
And, like bitcoin, you can safely store muttcoin offline away from hackers and thieves.
It is essentially an exact replica of bitcoin’s properties. Muttcoin has a decentralized ledger with an impossible cryptographic crack, and all transactions are immutable.
Still not convinced that our mutcoins will be worth billions in the future?
Well, it’s understandable. In fact, launching a new cryptocurrency is much more difficult than it sounds, if not downright impossible.
This is why I believe that bitcoin has reached these heights against all odds. And because of its unique user network, it will continue to do so.
Of course, there have been setbacks. But each of these setbacks has ultimately led to higher prices. The recent 60% drop will be no different.
The Miracle of Bitcoin
Bitcoin’s success is based on its ability to create a global network of users willing to transact with it now or store it later. Future prices will be determined by the rate at which the network grows.
Even in the face of wild price swings, bitcoin adoption continues to grow at an exponential rate. There are currently 23 million wallets open worldwide, trailing 21 million bitcoins. Within a few years, the number of wallets may increase to include the 5 billion people on the planet connected to the Internet.
Sometimes the motivation of new crypto converters was speculative; at other times, they sought a store of value away from their home currency. In the past year, new apps like Coinbase have made it even easier to onboard new users.
If you haven’t noticed, this is what people talk about when they buy bitcoin. We all have that friend who won’t shut up after buying bitcoin. Yes, I’m guilty of that, and I’m sure quite a few readers are too.
Perhaps unconsciously, incumbents become crypto-evangelists, as convincing others to buy serves their own self-interest to increase the value of their assets.
Bitcoin evangelism – spreading the good word – is what led to the price increase from $0.001 to a recent price of $10,000.
Who could have imagined that its eponymous founder, fed up with the global banking oligopoly, would launch an intangible digital resource that in less than a decade equaled the value of the world’s largest currencies?
No religion, political movement or technology has ever witnessed such growth rates. Also, humanity has never been so connected.
The idea of money
Bitcoin started as an idea. To be clear, all money – whether it’s shell money used by primitive islanders, a gold bar or a US dollar – started as an idea. It’s that a user network values it equally and would be willing to part with something of equal value for your monetary means.
Money has no intrinsic value; its value is external – it is only what others think it is.
Look at the dollar in your pocket: it’s just a fancy piece of paper with a one-eyed pyramid, a splattered portrait, and the signatures of important people.
To be useful, society must see it as a unit of account, and merchants must be willing to accept it as payment for goods and services.
Bitcoin has shown an incredible ability to reach and connect to a network of millions of users.
A Bitcoin is only worth what the next person is willing to pay. But if the web continues to expand at an exponential rate, limited supply means prices can only move in one direction…up.
Bitcoin’s nine-year rise has been marked by extreme bouts of volatility. There was an 85% correction in January 2015, and others over 60%, including a massive 93% drop in 2011.
Through each of these corrections, however, the network (as measured by the number of wallets) continued to expand at a rapid pace. As some speculators saw their value decimated, new margin investors saw value and became buyers.
Abnormal levels of volatility have actually helped the bitcoin network grow to 23 million users.
Hey, maybe we just need mutcoin price volatility to attract new users…