The good news, the price has rebounded, hovering around the ~$400 price in the last few weeks as shown below.Â
What is Bitcoin?
As defined by Coindesk:Â
“Bitcoin is a form of digital currency, created and held electronically. No one controls it. Bitcoins arenâ€™t printed, like dollars or euros â€“ theyâ€™re produced by people, and increasingly businesses, running computers all around the world, using software that solves mathematical problems.Â Itâ€™s the first example of a growing category of money known as cryptocurrency.”
â€‹The charts below show two things. First, on the left, it is showing purely the amount of money being moved via Bitcoin in comparison to others. As you can see BTC is currently top 10 in the world (it’s only 7 years old). Â Secondly, on the right, it’s breaking down how many average transactions are happening per day compared to other financial networks.Â
Are you starting to see the trend here? Bitcoin has moved Â beyond the ‘early adopters’, and is moving on to the ‘early majority’. Numbers don’t lie. When an open sourced, decentralized system enters the top 10 in the world in anything it’s time for people to wake up, and start listening.Â
When’s the last time a decentralized system became this large? Ever heard of this thing called the internet?Â
As Bitcoin’s daily transactions, daily volume, and the number of unique users sending money continues to rise, the system gets stronger and stronger. Take a listen to Bitcoin evangelistÂ Andreas Antonopoulos‘ thoughts on this at 49:50.Â
Who Endorses Bitcoin?
â€‹Some of the smartest people in the world understand what is happening. Ashton Kutcher (early stage tech investor), Bill Gates, Peter Thiel (created Paypal), Marc Andreessen (created the internet’s first popular browser Netscape), and many more have endorsed bitcoin as the next biggest revolution in technology. They are not the only ones taking notice. Some large institutions that we use daily are as well.Â
Really smart people aren’t the only ones taking notice. The banks are. Yes, the banks. The same banks that got bailed out by the US Government in 2008, the same banks that have been running the world for decades. They are investing tens of millions of dollars right now into trying to mimic bitcoin’s technology because to be very forthright, they’re scared shitless about Bitcoin.Â
They have started a consortium or sorts, called R3. R3 is trying to mimic Bitcoin’s blockchain technology, the vision is this way they can completely avoid Bitcoin and do it privately themselves. For many different reasons, this doesn’t make a lot of sense. It’s similar to how large companies introduced ‘intranets’ (as stated above from Marc Andreessen) instead of adopting the internet, in the beginning, days.
Members of R3:Â
- J.P. MorganÂ
- Bank of America
- Morgan StanleyÂ
- Royal Bank of CanadaÂ
- Wells FargoÂ
- Northern Trust
- Commonwealth Bank of AustraliaÂ
- & many more….. full list here
Why Are the Banks Afraid of Bitcoin?Â
- It’s decentralized (No one owns it, similarly to the internet. It’s run and operated by Bitcoin nodes & miners)
- It’s incredibly inexpensive to move Bitcoin, literally costs fractions of a pennyÂ (No more wire,Â transfer fees, or paying Western Union)
- It is eliminating online identity theft & fraud (learn more here), making it the most secure money ever created
- â€‹There are no third parties it has to operate with (how our entire banking system is structured creates inefficiencies, see infographic below)â€‹
Does Bitcoin have flaws?Â
Of course. Everything does. The price is unreliably volatile right now. Making it very hard to imagine a merchant using it. There are a lot of companies out there currently solving this problem, who will settle your money in your local currency. Was this supposed to happen? A lot of people say yes. It was Satoshi’s (the mysterious founder, or group of founders) vision to bootstrap Bitcoin, and along the way, it would have some growing pains. The more businesses, persons, and computing power Bitcoin has using it, the more Bitcoin’s price will level out so the rest of the world will use it.
Is it being used for malicious payments (drugs, porn, terrorists)? To an extent, yes, but no more than other currencies. The $100 & $50 bills remain the most fraudulent pieces of currency that’s ever existed, explained here by Bloomberg News.Â
To make sure I’m being fair and not lopsided, there are a bunch of rebuttals and arguments this article spun up against Bitcoin. The glaringly obvious thing? The good outweighs the bad. A merchant not having to pay 3% credit card fees means that you as a consumer can save that 3%. There are limitless possibilities what this technology can do.Â
Why Should I Care About Bitcoin?
Why would I use it when I can swipe my credit card, and get 5% cash back? You’re right. In the developed world, we have it pretty good. Think of a country like the Philippines whereÂ 70% of the population doesn’t have a bank account. Or in Venezuela how their central bank’sÂ currency devalued 69% in one day.Â Â For family members from the US to send money home (overseas), they have to use Western Union or MoneyGram and pay high fees. With Bitcoin, they can send it for practically free (less than pennies currently), and it’s done instantaneously. Bitcoin’s applications will help every financial system in the world, but it seems to be more of immediate help to those who live in developing nations who don’t have a sound central financial system. For these people, Bitcoin can increase their standard of living dramatically.Â
As a concluding point, there is a lot to learn about Bitcoin. It is in my opinion that it will do some great things for this world, but we have a ways to go. Currently Bitcoin is not user friendly, and is not built for any mainstream users yet. There are some companies, founders, and evangelists trying to fix this, but BTC needs more help. You should remember these layers of correct infrastructure take time. Do you remember when the internet first came out? Remember on Good Morning America, when they first talked about it? Watching that video it almost seems unreal that someone could think the internet was a joke.Â
I would suggest takingÂ this course on BitcoinÂ (it’s free), it does a great job of explaining 80% of Bitcoin for 20% of the effort/time. It’s how I got started. There areÂ manyÂ things I’ve left out, hopefully I’ve peaked your interest in Bitcoin, and given you enough fire to check it out. All you should do after reading this post is simply check Bitcoin out. Go to google, and start reading. Ask your friends what they think about it, maybe even buy some.Â You can spend it with more things than you think. Find a complete listÂ here. The bottom line is Bitcoin is cheaper to move and store money, and no third party is in charge of it. That’s why it’s revolutionary.Â