This is a statement that appears as divisive as the US election. People are with pro-Bitcoin or they scream ‘tulips’ as loud as they can. It’s hard to find someone who understands the technology that remains ambivalent. The progressive see it as a foil against common monetary policy & the constant usage of quantitative easing, the steroid injections lowering savings rates & pumping the stock markets. The more conservative see it as nothing more than speculation, the modern day equivalent of the Tulip Mania of 1637, but does it have value.
Bitcoiner’s have a minimum value argument. Currently ‘miners’ run complex calculations on computers to secure the network and process transactions, for doing this they are rewarded in Bitcoin. The amount of electricity and computer hardware required to secure the network will provide a minimum value to these coins before being sold at a loss.
Nocoiner’s have a much simpler argument, if it does not exist, it does not have value. They firmly believe that Bitcoin is a pyramid scheme and is based on the greater fool theory are they correct? or has this paradigm shift simply passed them by.
In Sapiens a brief history of Humankind by Yuval Noah Harari he discusses and partly attributes the success of Homosapiens to their ability to believe in a common myth. He says that ‘Any large-scale human cooperation – whether a modern state, a medieval church, an ancient city or an archaic tribe – is rooted in common myths that exist only in peoples collective imagination.’ By believing in these common myths two people from around the world can come together and agree on the topic in hand.
If two Catholics from different countries come together to discuss religion they will both be able to talk about the saints and their deeds, yet outside of the human imagination gods do not exist, nor nations, nor does money but they exist for these two people because they believe it does. The paraphrasing above gives an insight into the imagined realities of Humans (Sapiens discusses the topic in greater detail) but simply put If enough people believe in a common myth then it becomes reality.
The older generation of investors and speculators believe in safety of gold. It is a physical asset and used to be basis for numerous currencies. Beyond investing it has use in jewellery and electronics, but is largely used as a store of wealth hedging against the stock markets & inflation. Gold is not finite, it is constantly being mined & recycled & with space travel being developed further vast quantities that were out of reach are now fathomable within generations. Its value, once seemingly secure is under threat.
The younger generation see Bitcoin as a way to increase wealth in a society that is rigged against them. They have no avenues in the current system, Jobs are lower paying, housing assets are spiraling out of control & wealth is horded by the older generations. Bitcoin provides them with an avenue. They are the leaders in a new field of investment and speculation. They are decentralised which means the control is with them, not with the establishment, it appeals to them as something they have on their own, something the older generation do not yet comprehend.
If the younger generation believe that Bitcoin not only has value but this value will increase, then it has a possibility to do so. It is a purely finite asset that is easily stored and transferred & you can carry round your entire wealth with a phone and twelve simple words.
Every boom and bust of the market expands its appeal with younger speculators, they are willing to reach for the stars with their meagre investments because the usual markets tell them that that money in 50 years will not be worth anywhere near the amount they need it to be. More people will see the return on Bitcoin and believe in it. The more people that believe in it, the stronger its value will become.
Big businesses are starting to see this trend and are looking to provide services to these New-coiners with Paypal recently offering a closed purchase system. Companies are seeing the value of speculating on Bitcoin with Microstrategy betting big on Bitcoin with their spare cash instead of paying dividends and it paid off.
Bitcoin has value because enough people believe it does, eventually ‘old money’ will have to take notice with both their heads then their wallets. Bitcoin has the ability to be the greatest transfer of wealth in the history of the world and its coming.