When I first looked at Bitcoin it was around the $400 dollar and the only thing I knew about Bitcoin was that criminals used it to buy shit on the dark web. I wasn't the only one that was thinking this either, pretty much everyone around me had a similar description for this virtual currency.
Just like many others, I simply didn't see the value in it. I thought it was a hype and that it wouldn't last.
Lets be honest, who is going to buy a cup of coffee for 0.000274 Bitcoin. It simply doesn't look right. It is a pain in the ass to calculate and I am not even going to mention the transaction fees and speed it will take for such a common purchase.
It just didn't make any sense to me that the value was going up.
What I didn't realize was that the value of bitcoin is not based on what is was originally designed for.
Bitcoin is not really a coin, it is not destined to be a currency the same way as gold is not a currency.
Many argue that Fiat money is so much better because it is backed by gold. Even though though in realty this not really the case but let's just ignore that for now.
You see; gold and Bitcoin are very similar in the characteristics:
- Mining it is difficult and hard work.
- It is impractical to have a physical block of cold in your pocket, let alone buy a cup of coffee with it.
- There is only a limited supply of it, so we can't all have gold coins.
That is why we created fiat, which was essentially an I Owe You for gold.
It is much easier and practical to carry a $100 dollar bill than 2.5 grams of gold. I hope that makes sense to everyone.
So what is it that gives Bitcoin value?
Well, one could argue it is the cost of mining. It will cost you around $4000 dollar in electricity (depending where you are) to mine a Bitcoin. Still roughly $6000 short at the moment. So although this is part of it, it is not the complete picture.
The true value is in the technology.
The blockchain technology is what makes Bitcoin so valuable. Now I can hear you thinking...Bullshit....We have already invented tech that is much faster than the Bitcoin blockchain and it can do more. Just look at Etherium, Litecoin, Neo or at the dozen other infrastructure coins out there.
You are right, if Bitcoin is blockchain 1.0 than currently we are probably around 4.0 technology wise.
However this doesn't matter
The reason why this doesn't matter is because Bitcoin was the first and all other coins are mostly bought with Bitcoin.
That is why every chart looked the same when Bitcoin went down.
Bitcoin is the representation of the blockchain the same way .com is the representation of the internet.
The real question you should be asking is: What is the value of blockchain invention?
The answer is..... about $10500 us dollar at the moment
So why is the invention of the blockchain such a big deal?
The reason why it is such a big deal is because blockchain is the second coming of the internet. It is essentially internet 2.0.
Let me explain.
Each coin works like a little mini-internet.
It is a bunch of computers connected together ( like the internet) creating a little community.
This little community has no kings, presidents or other assholes telling you what to do. Instead, it is decentralized and open-source. In other words, everybody is equal.
Something the real world still has to learn.
Now, bare with me. Each community has it's own niche. Some might deal in real estate, others deal in electricity, some provide building blocks for other communities. You name it, there is a coin that can do it or will be able to to so in the future. There are as many different niches as there are ideas and you can create some sort of blockchain innovation out of all of them.
The value that this blockchain community brings is measured in it's coin. If the community does well, the value of the coin goes up. If they f#ck up, the value goes down. simples right? And that is the beauty of the blockchain, or as I like to call it, internet 2.0
It is bringing the power back to the people. !!
Now, Imagine we had divided the internet in 21 million pieces when it first came out. How much do you think each piece would be worth now ? A Million ?, A Trillion ?
I am not sure but I am certain it would have been a shitload.
So whatever the value of bitcoin is today, It is only a fraction of what it is worth in the future. Not because what it can do but for what it stands for.