Op-Ed: Bitcoin Turns Ten; Still Doesn’t Care What Skeptics Think

 

This article is provided for information and education purposes only and is not intended as investment advice. Readers are encouraged to do their own research and consult a professional before making any investment decisions.

 

Today, October 31st, marks the ten-year anniversary since the pseudonymous Satoshi Nakamoto released the Bitcoin whitepaper.

At its launch, few people would have argued that the idea of decentralized peer-to-peer digital cash would equate to anything more than a digital version of Monopoly money. And yet, a decade on, Nakamoto’s concept has spawned a burgeoning industry of FinTech innovation, with Bitcoin becoming one of the fastest growing and hyped investments of all time.

To illustrate the observed “Time-Value of Bitcoin” or TVB, compared to the Time-Value of Money (TVM) — which states that money tends to be worth more today than it is in the future due to lost interest on the principal — the first Bitcoin payment involved two pizzas costing 10,000 Bitcoin’s (around $25) back in 2010. Today, those Bitcoin’s are worth around $63 million. In addition, there now exists multi-billion-dollar companies like Coinbase built around Bitcoin and its offspring.

But not everyone is convinced. Bitcoin - and other cryptocurrencies – continue to be criticized by naysayers for volatility and as-yet unsolved issues that would make digital currency superior in every respect to centralized money, without giving respect to its relative infancy.

On Monday, former Fed Chairman Janet Yellen said that Bitcoin was “anything but” a useful store of value, but ceded that she was aware of other existing cryptocurrencies that could yield something more appealing down the line.

One attendee took to twitter to point out that Yellen was just robotically spewing the same scripted “FUD” (Fear, Uncertainty, and Doubt) of other naysayers like Nouriel Roubini, who recently called Bitcoin the “mother of all scams” in his testimony to congress earlier this month.

“Janet Yellen just delivered a 5 minute rant against Bitcoin to Montreal financial industry VIPs. She went through all of Nouriel’s talking points. The Official NPC* guidelines to Bitcoin FUD, courtesy of the FED. Buy Bitcoin. Audit the Fed.” - Francis Pouliot, Twitter, 30/10/2018

Like many things, the truth is usually found somewhere in the middle. Bitcoin today is not yet the “mainstream” currency that many people one day hope it will become — and it would be unreasonable to expect such a cultural shift in attitudes to money in such a short amount of time. But what Bitcoin has done, by its tenth birthday, is bring our ideas and attitudes about money into the forefront of mainstream discourse — which isn’t bad for a new concept that would allow anybody in the world to transact directly with one another without using middlemen for the first time in history on its first day.

It is difficult to blame people with lower risk tolerance for not wanting to jump into the pool before everyone else, but that doesn’t make it reasonable for anyone to vehemently lobby against the choices of some among us who have a different idea about what is valuable. As Francis Poulit said of Bitcoin on Twitter: “Build it, and they will come - when they need it”.

The biggest strength of decentralized and distributed systems is that there is little that any central authority can do to exert control over the system itself. Not everyone has to like it, and too bad if they don’t.

Bitcoin, like the honey badger, doesn’t care.

 

*NPC refers to Non-Playable Characters, a video game term used to describe computer-controlled characters that progress the narrative by regurgitating scripted lines, absent thinking.  

Author: Timothy Goggin

Timothy Goggin is an economic analyst with an interest in the application of moral philosophy and decentralized systems. He studied economics at the Business School at Victoria University of Wellington, New Zealand. His area of research is the consequential and moral dimensions of implementing digital currencies and the resulting synergies for consumers in the trading environment.

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