Ever since humanity began, multiple human needs took different shapes. One such need was of socializing. History suggests that there hasn’t been a single instance where homo-sapiens could thrive without a society. This is engraved in our DNA so deep that at times we push logical boundaries to conform with the norms set by these very societies. As society became more complex, these norms forked and we came up with sub–communities under the common umbrella of humanity. Today, we plan to address one such community of cryptocurrencies. Specifically: Bitcoin. The burning question of the hour: Is Bitcoin Dead?
Bitcoin has turned 12 this year. And as they say in the crypto space, every 3 crypto months are equal to 1 year of financial world. With that logic, your beloved BTC is about 48 years old. While this number is still young as compared to other asset classes, but given the heavy reliance on ever changing technology, BTC seems to be a thing of past for many. But I am a Bitcoin purist. I don’t think that anything is going to replace Bitcoin any time soon. So today, we understand the reasons why these conversations are coming up. Also, we’d understand why BTC is going to hold the crypto throne.
Why is Bitcoin Becoming Obsolete?
Crazy world right? Using words like obsolete for something that’s just a decade old is something unheard of. Let’s understand why!
Creators of Bitcoin very carefully evaluated and pin pointed the flaws in the current financial system. They used blockchain technology to come up with the world’s first peer to peer, public, decentralized transaction system.
Imagine you have to send me Rs. 1000 through UPI. You first reach out to Google Pay and ask Google to initiate the transaction on your behalf. Your Google in turn talks to your bank saying that you have to send Rs. 1000 to me. Your bank then talks to my bank. And when my bank receives money, it has to relay that information to Google so that I can be notified of the same. That’s a lot of friction and intermediaries who now have a lot of data about you and me both.
Bitcoin aimed to do away with all this through a system that is governing itself using technology.
But unfortunately, that is it for Bitcoin. That’s all it can do. A decentralized ledger. Nothing more, nothing less.
Birth of Ethereum:
A few years down the line after BTC was launched, a 19 year old boy named Vitalik Buterin had this crazy idea. He thought if money can be decentralized and maintained without any intermediary, why can’t everything else.
There is a legend that goes around that Vitalik had this idea while playing a game. In that game, he had a specific sword he used to play with. One fine day, creators of the game removed that sword. At that point he realized that we live on a mercy of set of central authorities.
At that point he borrowed the technology from Bitcoin and decided to come up with a platform that would enable people to create decentralized applications. Imagine a scenario where you are connecting with driver without Uber keeping the commission.
Is Bitcoin Dead?
It’s logical to think this way right? If you have replicated the technology that powers BTC and turbo charged it 100x, its likely to kill bitcoin. And that’s what the community is pondering over, for a while now. But I don’t think it’s going to be as easy as they might think. Here are a few reasons I think so:
A. Network Effect:
When we flocked to the likes of Signal and Telegram, we found it really hard to find other people on the platform. No body wants to be on a social media platform all alone.
Enter: Network effect. A situation where the value of your product, service or platform depends on the number of buyers, sellers, users who leverage it. Typically more the number of people, greater is the network effect and greater is the value created by the offering.
Right now Bitcoin has the most number of transactions in the cryptoverse. Every new entrant in the crypto space starts their journey with Bitcoin (at least that’s what I would like to hope).
Apart from that, dominance of Bitcoin on the crypto market by market capitalization is nearly 60%. So, if someone were to topple BTC for the first place, it would take a significant effort and price surge. While that may be happening in tandem with the likes of ETH, but creating a community does take time.
B. Irrational Exuberance:
This always brings me back to the infamous quote by Steve Jobs:
“People who are crazy enough to think that they can change the world are actually the ones that do!”Click to Tweet
You need a significant tinge of irrationality when you are driving the adoption of something that is challenging the status quo big time. And in case of BTC, you’d find multiple such examples where people have gone past the boundaries to prove their loyalty for BTC.
In one of the example, a man named Didi Taihuttu, his wife and three kids bet on Bitcoin like no one else could. In 2017, this Dutch family liquidated all they had and put it in Bitcoin. By all, I mean the business, house, belongings, other assets, everything!
I wonder if any other asset class has seen this level of craziness.
C. Big Money
No matter how much we hate it, but in order to drive an asset class, you need rich people’s money. They are the ones that bring in the sums that have the potential of taking the market to the next level. In case of Bitcoin, you would find plenty of such examples:
- Elon Musk and his company Tesla
- Marc Cuban
- Kevin O’ Leary
- Winklevoss Twins
- Russel Okung
Of course there are many such investors in other projects too, but Bitcoin has always been the first preference of anyone planning to park in crypto space.
Have you started your crypto journey? If yes, where did you start it from? Well, that might just prove my point. Do you think Ethereum will overtake BTC? Is Bitcoin dead?
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Until next time..
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