Traditional investors have struggled to explain Bitcoin since the beginning. Many of them believe Bitcoin has no value because it is no matter and only exists in a virtual space. That argument is as valid as saying the internet has no value. To all the hedge fund managers, venture capitalists, and other equities traders out there: The internet cannot be touched either, does it have no value? Obviously, the response would be much different to that question, which pokes a major hole in their argument. Perhaps they need a history lesson, because they surely believe that gold has value, right? The simple fact is that nobody can deny gold does indeed have tremendous value. For this reason, perhaps you should not be so quick to write off Bitcoin.
Gold, the beautiful highly sought-after attractive piece of metal that we unquestioningly pay absurd amounts of money for. Interesting that nobody questions the value of gold, after all it is ultimately just a piece of metal – even a “precious” metal is still a piece of metal. It is extremely rare for gold to be used for the purchase and sale of goods (anymore). You can’t eat gold, you can’t use it for shelter, you can’t really use gold for any purpose other than to flaunt your wealth and make yourself a target for robbery. The major function of gold in our society today is a store of value, it is a scarce commodity that we all agree is valuable – but why?
Once upon a time, ours was a barter society, meaning that we traded goods for other goods. The process was incredibly complicated because the person you wanted to do trade with needed to want something you were offering in exchange for their goods. Our ancestors were tasked with developing a universally acceptable medium of exchange that could replace the barter system once and for all. They came up with gold because it was rare enough that not everyone could produce it, but available enough to enable commerce. Gold was a fantastic innovation at one time, it revolutionized the way we do trade and store value.
Fast forward to the development of Bitcoin. Since the innovation of gold, our society has split apart the monetary systems and each government mints its own currency. That has not only complicated international trade and made foreign transactions costly and challenging, it has also caused serious issues for emerging economies. The emerging economies within third-world countries struggle greatly to exit poverty largely in part due to the failures of their monetary systems. Their national currency undergoes constant hyperinflation and the value of their currency often falls to nothing. Look at what has happened in Brazil over the past few decades, they have had to totally throw out their currency three times due to hyperinflation. This happens all over the world and people in these countries have no chance to build any sort of wealth because they have no where to store it. Bitcoin and other cryptocurrencies change the game, not only for emerging economies, but the world economy as a whole by breaking down traditional barriers.
Bitcoin is quite possibly just as innovative and essential to the world as gold once was. The world needs a borderless self-sustaining universal electronic currency, especially those struggling from poor economic conditions and resources. Thanks to events like the U.S. mortgage and loan crisis, the Cypress banking disaster and more, we have a large group forming within our society who want an alternative to traditional currency. There are several major economic factors moving the adoption of Bitcoin and other cryptocurrencies forward. From a historic perspective, Bitcoin is solving some of the world’s most significant issues and does so at just the time in human history that we really need it. To completely write of Bitcoin as nothing more than a hype-driven bubble is simply wrong.