Future of Bitcoin | What do cryptocurrencies mean to us?
Crypto has had a very debatable journey for a couple of years so far. Why is it so? What does it mean to us, the common being? Let’s try to make sense of the arguments on both sides. Let’s try to unfold the story slowly and steadily.
PS: Don’t continue if you’re in a hurry. Save the story for later and continue with a proper flow.
Before we dive deeper lets understand the basics.
Prof. Yuval Noah Harari, which you must have heard/known as the author of some interesting books,
He made me(amongst many others) familiarize with a very unique functioning of humans, that made us outgrow our fellow animals. He refers to the ability of humans to coordinate, coordinate on large scale that no other creatures can accomplish(of course many animals live and grow in groups, but either the ‘size of group’ or the ‘coordination’ disbalances when the other parameter changes). The ability of humans to tell a story and to agree on believing in makes it possible, the mass coordination, which distinguishes us from others.
For starters, try convincing a chimpanzee to give his banana in return of a dozen more in future. It is highly unlikely that you’ll be successful in this task. Now, a slight change in scenario, lets imagine a person in the chimps place. Would it be possible to convince a person to give-up their banana, which can be anything valuable to them, their hard-earned savings, their car; in expectation of future returns. If you look around, you’ll see many people, even we, at some point might have undertook such a deal.
Now, I know there’s nothing bad in believing in such deals, at least until they sound perfectly logical. Perhaps this might be one of the reason why mankind has been able to develop itself as compared to other creatures. By believing in stories.
Making stories and collectively believing in them has been evidently followed by humans since long. Let’s consider the biggest and most accepted story, the story of money. Reach your pocket and take out a note in your hand and abstractly think of it. It’s nothing but just a piece of paper. It has gained significance only because ‘someone’ is willing to take it in exchange for a service or a product. For example depending on the amount, you may buy grains, fruits, even gold; get your car washed and much more. Now, try thinking why would that ‘someone’ take a piece of paper in exchange of grains, fruits, gold or a car wash. This is because, they know that ‘someone’ further is willing to take that piece of paper in exchange for something they possess, and so on. Take a look at the bigger picture. And try imagining the whole chain, the trust in people about the want for this paper has made them believe in it as well. So, can it be said that money is just a story that everyone has mutually decided to believe in?
There maybe many views in or against the ideas mentioned above. But, it is evident that the stories similar to that of money are being believed and practiced long enough that challenging them might mean challenging the very fundamentals that we all desperately want to believe in or feel a part of.
Now, lets come back to our original question. The future of crypto?
What is crypto? It is an implementation of a technology called the blockchain. Speaking of the technology/concept of blockchain, it is evident that the technology will survive no matter what lies ahead for cryptocurrencies.
Why do I say that? In the history of mankind it is been observed that the adaptation or evolution of a new technology takes place in multiple phases, they are as follows:
- An idea, the dream.
- The ignorance, ambiguity in it.
- The discovery, hope of creating a reality.
- The hope, future changing capacities.
- The hype, all future depends on it.
- The bubble, fear of letting out, over saturation.
- The burst, final equilibrium after saturation.
- The true rise, focusing on implementation rather than technology itself.
All the above mentioned stages might not happen in the same order, it is even possible that few or even many of them don’t happen at all. But the flow might be somewhat similar.
Consider the example of internet. The ideation, the ignorance, the discovery, the hope, the hype, the bubble, specially the burst and finally the true rise. First the concept was being criticized for being too complex for daily use and for people to understand, which it still is(but does it make us avoid it? Of course not!). Then, the adaptation phase started wherein people believed its significance. Then, the hype, wherein the fear of missing out created a bubble, the ‘dot com’ bubble and then the burst. The bubble burst is basically a good stage for ideas because they force one to stretch imaginations and survive, resulting in a genuine implementation being discovered. The ignorance or doubts in a technology or in an idea, in general, are through out. No matter what stage it is in doubts are always present. But there is nothing bad in doubting ideas, they are the reason why people strive further to resolve those doubts, genuine doubts.
Today all of us use internet, without knowing everything about the underlying technology. We don’t care if the data is transferred using data packets, what type of protocol is used while establishing connection, where is the server located which is currently displaying the website. Rather what we care about is whether we are able to continue our work, a quick google search, browsing through YouTube, and so on. The technology is said to be well developed when we use it without knowing(or caring) about what’s happening behind the curtains.
Now, you might be thinking, ‘fine, got it. Blockchain technology is here to stay. But what about crypto?’.
Like money crypto is story. A story in its infancy. The probability of us saying these two sentences in future about ten to twenty years are almost fifty-fifty:
- “Wow! I was smart enough to invest in crypto twenty years ago?”
- “Wow! I was smart enough to not to invest in crypto.”
(I’ll be updating the blog 20 years later to see if I was smart enough with my decision, which I’ll be sharing then i.e. on 5th of August 2041)
The story of crypto has started to grow. The more people believe in it, the better for the complete ecosystem. When people are confident enough to sell an article is when they buy it. So is with crypto. When people are confident enough that they can sell a cryptocurrency whenever they feel, is when they will buy it without hesitation. And this would bring about stability in the crypto space.
Consider, the story of Bitcoin, the most known cryptocurrency. It has seen a mixed reaction from people as well as nations. Being allowed in the nations like the U.S., Canada, Australia as well as being declared as legal tender(i.e. to make it obligatory for all those possible to except Bitcoin) in El Salvador. Whereas, it has faced objection from nations like Russia and China.
The argument on both sides is quite valid. Free will for customers, to purchase assets of their choice. And on the other hand, avoiding the destabilization of economies due to some unpredictable, internet currency. Also the risk appetite of the nation, its economic status and many more factors contribute to their stance.
Like discussed earlier, the effectiveness can be decided by the factors that might be instrumental in making people much more comfortable about the value being preserved. For example, if monopolies like Amazon, start supporting and accepting cryptocurrency it might mean for many individuals, as the beginning of the new age money.
The whole point of this blog is not to convince you to buy cryptocurrencies, promising them to be an equivalent of the ‘internet’ of our age. Rather the point is to make you aware of the benefits along with the disadvantages of it. To make you understand the upsides as well as the downside and the risk associated with it.
Also a very important point to discuss in the whole set of equation, is the role of bad actors. Many bad actors are benefiting from the complex nature of the technology. They tend to profit from fraudulent but are hurting the potential and perceived image of the true underlying technology. It is also our responsibility, the consumers, to be very careful with our resources, time and money.
Human nature is a very silly one. People on either side of the crypto debate will try to enforce their views on a broader audience. Twenty years from now either of them would be right and would credit their intelligence and so shall the other group if positioned in the same situation. It is our reasoning that might help us determine our stance in future. Be on either side it is our ignorance that shall win or mar us. Let us all try to appreciate the efforts towards betterment of our society and also that of the environment around us.
Let me know your thoughts in the comment section below. Do share it with your friends, only if you found it to be useful.
Any suggestions are truly welcomed!
Disclaimer: This is not a financial advice and only authors view regarding the topic. Any opinions expressed must not be considered obligatory. We suggest undertaking your own research and professional advice for any investments.