Bitcoin, Dogecoin, the Chinese, and Elon Musk, oh my
Supposedly, there’s an ancient Chinese curse that goes “may you live in interesting times”. And boy, have times been interesting for investors in cryptocurrency lately, with more ups and downs than a mountain trail run.
The main player, of course, is Bitcoin. By far the most famous and hyped of all cryptocurrencies. In fact, a number of small-time investors in cryptocurrency I’ve met were blissfully unaware that any other currency existed. The currency has gone from an extremely niche, quite idealistic thing; a currency of the future, detached from any central control and entirely anonymous, to being the belle du jour of day traders.
But Bitcoin isn’t the only cryptocurrency that has seen big gains and losses, even the satirical Dogecoin, crafted specifically to mock the hype of cryptos, has become somewhat of an investor darling.
Elon Musk’s voicing of support for the currency, and Tesla’s subsequent, if shortlived, acceptance of it as a means of payment, sent it sky rocketing recently, but the walk-back that came shortly after sent it plummeting, as did the Chinese government’s stern warning against Bitcoin and all things crypto. Big losses were had by all. Concerns about the energy cost, and the sustainability, of Bitcoin has also been a big thing in the media lately, something that puts the trend of crypto on a collision course with another megatrend; climate awareness.
So is this the end of Bitcoin? Maybe. But I don’t really care.
Ultimately, I believe that managed correctly, crypto has a huge potential in a world that is becoming more and more digitalized. But Bitcoin might not be the currency we’ll all end up using. In fact, I have some serious reservations about it.
One of the main problems of Bitcoin, and most other cryptocurrencies out there, stem from one of the main ideals of it: lack of centralized control.
Centralized control sounds bad, especially for most internet warriors (such as me), but for a currency, it has it’s advantages. One of them is stability, which is generally something you want from the stuff you’ll use to pay your rent and buy food. Imagine getting paid in Bitcoin, then on January 11th of this year, your salary would be slashed by 22.5 percent. Even if you have some compensation mechanism built in by whoever pays your salary, any savings you have would take the hit regardless. That sort of lack of stability is a deal break for most people.
I’ve heard some argue that the problem isn’t Bitcoin, but the fact that to make payments, we need to exchange the currency to an IRL currency, like the dollar. But that means that in order to make Bitcoin mainstream, we actually have to do an instantaneous and complete transition to Bitcoin. And even then, an unregulated currency is subject to hyperinflation, something you don’t want. Just ask the Argentenians.
So will we never see crypto work? I won’t count it out. All the current crypto show that the concept works. You can build a currency that is entirely digital, completely global, and widely accepted. As with many other things, I believe in the technology, even if the individual embodiments of it may fail.
So crypto may be dead, but long live crypto.
Thomas Grønfeldt Senger 