Since it’s all the rage right now, I’d like to announce that I’m launching my own cryptocurrency next week.
Let’s call it “kingcoin”.
No, that’s too selfish.
How about “muttcoin”? I have always bred mixed breeds.
Yes, that’s perfect – everyone loves dogs.
This is going to be the biggest thing since fidget spinners.
Congratulations! Everyone reading this will get one muttcoin when my new coin launches next week.
I will distribute 1 million muttcoins evenly. Feel free to spend them wherever you want (or wherever someone will accept them!).
What is it? The cashier at Target said they won’t accept our muttcoin?
Tell the doubters that muttcoin has scarcity value – there will only be 1 million muttcoins. On top of that, it’s backed by the full faith and credit of my desktop computer’s 8GB of RAM.
Also, remind them that ten years ago bitcoin couldn’t even buy you a pack of gum. Now one bitcoin can buy a lifetime supply.
And, like bitcoin, you can store muttcoin safely offline away from hackers and thieves.
It is basically an exact replica of bitcoin’s properties. Muttcoin has a decentralized ledger with unbreakable cryptography, and all transactions are immutable.
Still not convinced that our mutcoins will be worth billions in the future?
Well, that’s understandable. The fact is that launching a new cryptocurrency is much more difficult than it seems, if not completely impossible.
That’s why I believe bitcoin has reached these heights against all odds. And because of its unique customer network, it will continue to do so.
Of course, there were also setbacks. But each of these setbacks ultimately resulted in higher prices. The recent 60% drop will be no different.
The Bitcoin Miracle
Bitcoin’s success rests on its ability to create a global network of users who are either willing to transact with it now or store it for later. Future prices will be determined by the rate at which the network grows.
Even in the face of wild price swings, bitcoin adoption continues to grow at an exponential rate. There are now 23 million wallets open worldwide chasing 21 million bitcoins. In a few years the number of wallets may grow to include 5 billion people on the planet connected to the Internet.
Sometimes the motivation of new crypto converts was speculative; other times they looked for stores of value away from their home currency. In the past year, new apps like Coinbase have made it even easier to onboard new users.
If you haven’t noticed, when people buy bitcoin, they talk about it. We all have that friend who bought bitcoin and then wouldn’t shut up about it. Yes, I’m guilty of this – and I’m sure plenty of readers are too.
Perhaps subconsciously, owners become crypto-evangelists because persuading others to buy serves their own self-interest in increasing the value of their holdings.
Bitcoin evangelism – spreading the good word – is what miraculously caused the price to rise from $0.001 to a recent price of $10,000.
Who could have imagined that its pseudonymous creator, fed up with the global banking oligopoly, would launch an intangible digital resource that rivaled the world’s major currencies in value in less than a decade?
No religion, political movement or technology has ever witnessed these growth rates. Then again, humanity has never been so connected.
The idea of money
Bitcoin started as an idea. To be clear, all money—whether it’s shell money used by primitive islanders, gold bullion, or the American dollar—began as an idea. The idea is that the user network values it equally and would be willing to part with something of equal value for your form of money.
Money has no intrinsic value; its value is purely external – only what others think it is worth.
Look at the dollar in your pocket – it’s just a fancy piece of paper with a one-eyed pyramid, a portrait and signatures of important people.
To be useful, society must view it as a unit of account, and merchants must be willing to accept it as payment for goods and services.
Bitcoin has shown an incredible ability to reach and connect a network of millions of users.
One bitcoin is only worth what the next person is willing to pay for it. But if the network continues to expand at an exponential rate, limited supply means prices can only move in one direction… more.
Bitcoin’s nine-year rise has been marked by massive bouts of volatility. There was an 85% correction in January 2015, and several others over 60%, including the colossal 93% pullback in 2011.
However, through each of these corrections, the network (as measured by the number of wallets) continued to expand at a rapid pace. As some speculators saw their value decimated, new margin investors saw value and became buyers.
Abnormal levels of volatility are actually what helped the bitcoin network grow to 23 million users.
Hey, maybe we just need muttcoin price volatility to attract new users…