Bitcoin (BTC)–When Satoshi Nakamoto, creator of Bitcoin, first released the currency to the world in 2009, his intention was to give people an option to transact with a tender that superseded government fiat. As opposed to following the traditional route of physical tender, one based in principles of previous centuries, Nakamoto combined the power of the computing age with the math behind cryptography to create the first, truly modern form of currency.
Ways to Talk About Bitcoin
Since that time, thousands of cryptocurrencies have popped up on the market, ranging from outright scams and vaporware to novel projects that build upon what Bitcoin was first able to establish. The confusion of the market and complexity of the technology has given rise to a number of media detractors, including this article which labeled Bitcoin as the “greatest scam in history.” As time passes, it’s becoming clear that certain factions are forming in the cryptospace, with each group out for its own set of motivation:
- The Ideology Believer. Bitcoin and cryptocurrency has been wrapped up in libertarian beliefs since inception. Decentralization and possession of a tender that operates outside of government fiat is a substantial tool for anyone looking to reduce the role of overbearing political powers in their life. For these people, Bitcoin provides an outlet of freedom, security and privacy that is not afforded through the traditional banking route. Roger Ver, one of the most exemplary and outspoken libertarian figures in the industry, claims that he supports Bitcoin as a method for world peace: without funding governments, through fiat and taxes, he is no longer a participant in the wars arbitrated between political and geographic powers. With the situation escalating in Syria, his stance could become a beacon for more Bitcoin converts.
- The Casual Observer. There are a lot of people in Bitcoin that have no interest in the underlying technology, no interest in the principles of cryptography or libertarian applications, and are only tangentially concerned with price movement. These are people who see Bitcoin as a novelty, a distraction in the digital age like social media and gaming that they would like to be apart of. They don’t invest enough to be at risk of the volatile price swings, but they also wouldn’t mind taking a piece of the profit. These people are not out to trade Bitcoin or to promote the technology. Instead, they want a piece of the excitement that is sweeping the world in certain circles, with a take-it-or-leave-it approach to the little details. These people represent the greatest potential market for Bitcoin growth. People who are willing to buy, send and pay for Bitcoin because of the action itself (using an address as opposed to debit card, having a miniscule fraction of a whole coin, something different from regular money, etc.) are the people that are going to drive real world implementation and use-cases as opposed to holding for long-term appreciation.
- The Tech Enthusiast. If the casual observer is the most important figure in terms of growth and adoption, the tech enthusiast is the one who will drive the industry forward in terms of usability. The tech enthusiast is concerned more with the utility of Bitcoin and cryptocurrency than price appreciation. They see their investment in Bitcoin as a logical extension of disruptive technology and the appreciation in price is simply the reward of being an early adopter. To this group, traditional fiat is outdated and limited in its use compared to the possibilities of Bitcoin.
- The Price Speculator & Amateur Investor. Overwhelmingly, the industry was plagued at the end of last year with an influx of price speculators and people looking to get rich overnight. This led to vastly overbought conditions, in particular by investors who had been swept up in the cyclical nature of a bull market. The media fueled the frenzy, with popular outlets like CNN and CNBC changing their tune from the evils of Bitcoin to the millions that were being made (unsurprisingly, these outlets soon turned negative as the price turned downwards). The problem with crypto price speculating is not the pursuit of profit, which brings large investors, hedge-fund interest and other influxes of capital that help cryptocurrency reach greater market saturation. The real problem is that people forget these are currencies. Wences Casares, CEO of Bitcoin wallet Xapo, has long gone on record saying that Bitcoin should function as a digital asset: secure, scarce, and capable of appreciating overtime. But for most of the market, Bitcoin and other cryptos represent a replacement for currency and are built with the function to do so. Without the ability to use these currencies, Bitcoin loses any intrinsic value, the general public gets annoyed with the empty hype surrounding crypto, and short-term investors begin to doubt their choices.
The Real Problem with Price Speculation
The problem with price speculators in Bitcoin is how it shifts the purpose of the technology to something that closely resembles a ponzi scheme, and by extension, another form of dot.com bubble and tulip mania. If the primary use for Bitcoin is only through price speculation, trading and waiting for appreciation profits, there is almost no way to grow the industry organically or get others involved in crypto on an individual basis without actually participating in a ponzi-like model.
Imagine you tell a coworker about Bitcoin. They ask what it’s for. Instead of telling them all the ways they can use Bitcoin as a replacement for fiat, and the advantages of BTC as a modern form of digital tender, you instead focus on the price aspects. Your argument boils down to this: buy Bitcoin today because it will be worth more tomorrow. That is the exact process for a pyramid scheme and emphasizes the value of Bitcoin not in the underlying technology but as a FOMO opportunity.
Bitcoin needs to fill a real world need in order to have a future. It could pose as a superior form of money and one that gives individuals a way to sidestep the process of banks and government fiat. Instead, we have a market that functions on the supposition of an escalator pricing model. The reason to own Bitcoin today is in case someone a year from now will buy it for a much greater price. This line of thinking has deep implications for the industry, the least of which is continued volatility. People buy into cryptocurrency at an unrealistic rate, creating the conditions for a bloated, overvalued industry made primarily of overextended, thereby weak-handed investors. You know the industry has developed bad practices when Coinbase, one of the most popular Bitcoin-buying exchanges in the United States and a company that thrives off of transaction fees, was compelled to send an email reminding users not to spend more than they were willing to lose.
How to Talk about Bitcoin without Price
Price speculation and talk strangles any discussion about Bitcoin or cryptocurrency. Instead of focusing on the myriad uses and potential of Bitcoin in reshaping the world of money, taxes and government practices, discussions surrounding BTC often boil down to hushed excitement over what the price will be six months, six years and six decades from now. That’s not a conversation, but wishful thinking. Investing in cryptocurrency is not like the stock market: there is no share of a productive company backing each purchase; there are no board members and government regulators to protect the interest of investors. The sole value of Bitcoin comes from what the next person in line is willing to pay for it.
The only way Bitcoin reaches adoptive saturation and becomes usable in everyday life is through deeper understanding of what the currency is and what it can do. There is a substantial group of untrained, non-tech savvy investors and crypto enthusiasts who would be better off spending their time promoting Bitcoin and the benefits of crypto as opposed to fighting faction wars against “rival” cryptocurrencies. Likewise, focusing on price to those new to cryptocurrency fills them with unrealistic expectations and further extends the infection of speculative fervor.
People need to see Bitcoin as a currency, a legitimate, digital currency that offers greater protection and global usability over government fiat. Instead of buying or investing into Bitcoin, supporters of the currency should see their transaction as exchanging one currency for a prefered other. The appreciative gains of Bitcoin are less the product of sound investment strategy than the reward for being an early adopter and taking a risk on a technology that could very well fail spectacularly.
The point where cryptocurrency really hits critical mass adoption is when the headlines are filled with stories of new companies accepting Bitcoin, new developers creating for BTC, and less about the latest price movement.