Its nearing the end of 2017 and the digital gold rush seems to be in full swing. Unless you’ve been living under a rock for last 8 years, then the rocketing price of bitcoin (and bitcoin technology itself) would most certainly have caught your attention at the least.
Bitcoin is indeed interesting in many regards, its not entirely novel as a few years earlier in 1998 Nick Szabo had created something called “bit gold” which was a distributed digital cryptocurrency (potentially the first of its kind) . The creator of bitcoin however is still unknown, whilst there does exist multiple theories they are all just speculation, which is rather apt as bitcoins themselves are pretty much nothing more than just pure speculation (oh the irony).
The idea in general is not a bad one, using a decentralised public ledger (aka “blockchain”) and its related independent verification via “proofs of works” (mining) are interesting because they can have many other applications outside of cryptocurrency.
If bitcoins where used solely as a secure method for non-centralised transmission medium of real assets, then things are perhaps ok.
But the problem is that’s not where it ends for bitcoin, no no no, its goes a little further to the point where real money is being involved. What is essentially monopoly paper or “Disney Coins” are being traded as if they were somehow real money.
Even more bizarre is that perhaps due to some kind of Stockholm Syndrome, some people are backward rationalising this exchange (of real money with make believe money) and suggesting that no, Pinocchio is a REAL BOY! (even though he’s made of magical wood).
One of the biggest kicker is that there are some who genuinely believe that bitcoin’s value is no different to say gold, and they point to many “attributes” that bitcoin and gold have in common. Ergo they shout “if it looks like a duck, quacks like a duck, damn it, it’s a duck”.
Yeah erm no, just please sit down before you hurt yourself, look gold is physical and thus has intrinsic measurable value, even when civilization is burnt down to the ground, gold will still exist long after humans go extinct. Now the valuation of something is different from its actual value, it’s very subtle but oh so important.
The current ongoing saga with bitcoins reminds me of the old Danish fairy tale the classic “The Emperor’s new Clothes”, where two weavers convince the King that his new suite is actually invisible. All bitcoin has to do is convince its users that immaterial “nothing” has actual real value.