Bitcoin: Teen Angst – Alex Erricker

Bitcoin: Teen Angst – Alex Erricker

After posting about the anniversary of the Bitcoin whitepaper last Thursday, I found myself thinking about how far Bitcoin has come and what will happen during its teenage years. Satoshi created the most secure, incorruptible and hardest money known to man, and then left. When most CEOs or presidents would now be implementing their policies on how to govern their system, we’ve been left to our own devices — which could be great, but it could also be dangerous. The future of bitcoin is widely debated but I’m going to try and get some concrete answers on where we’re going to be when Bitcoin is old enough to drive. (No price predictions!)

Education

One of the main issues with Bitcoin throughout its’ formative years has been its ease of use. This is radically changing thanks to new third-party wallets that make buying, storing and using your crypto super simple, but some would argue these wallets still miss the point of Bitcoin — that being the idea of being your own bank. If you’re still at risk of not being able to access your money for whatever reason, then why bother moving away from banks in the first place? The point is that Bitcoin is supposed to liberate us from corruptible and incapable third parties but if people would rather substitute financial independence and responsibility for convenience, then why bother? If people aren’t aware of the intricacies of Bitcoin, or crypto in general, then wallet providers can potentially exploit their lack of knowledge and pull a fast one — just look at PlusToken.

The key lies in education. France is trailblazing in education of crypto, implementing a crypto module in their high-school curriculum and I’m sure they won’t be the last. Personally, I have faith in the tech savvy generation that has seen the incompetency of the current monetary system, to utilise Bitcoin to its fullest potential and create a future where everyone has access to a global monetary system that doesn’t discriminate and one that works for all.

Halving

Now, this isn’t a price prediction, more of a logical statement — the price of Bitcoin is going to rise considerably. There have been 2 halvings so far, in 2012 and 2016 and they have reduced the mining reward by 25₿ and 12.5₿ respectively. At today’s prices, the May 2020 halving will reduce the rewards given to miners by approx. $56,000 (6.25₿ x $9,000). In Dollar terms, this will be the biggest slash in rewards by far, with the last having reducing rewards by $8,000.

All of this means that Bitcoin is going to get even harder to create. It will require more energy to mine because the mathematical funky stuff that us normies don’t understand will get even more complicated and require more computational power. If it takes more work to obtain something, it will inherently have a higher value. Compare this process to our current quantitative easing system and it’s basically the exact opposite. Imagine how different society would be if every 4 years the supply of new dollars was cut in half? The ramifications of this change go far beyond money, it could affect everything and at the very least inflation would be a thing of the past.

Adoption

Humans are extremely good at adapting to change. Although my parents are still getting their heads around smart phones, we tend to pick things up quickly. I have no doubt that private blockchains will be everywhere in 5–10 years, simply because of the security and transparency they offer but widespread Bitcoin adoption, that’s another matter altogether.

Although Bitcoin can be simple, many people are at fault for putting up barriers to entry, over-complicating it and putting colloquial folk off — it’s easy to teach someone about Bitcoin when they know nothing about it compared to those that have read biased or wrong information. Crypto is now being accepted all over the world but when you go to some smaller UK towns, like my hometown, it’s like you’ve stepped onto the set of Downton Abbey. We’re already making great strides with adoption but I’m not sure if we’re going down the right path. With things like Libra, and China potentially launching their own blockchain backed currency we’re faced with a crossroads: do we go to Utopia with Bitcoin or do we go to Dystopia with Blockchain? Adoption is coming, but is it the adoption we want?

Fiat Vs Bitcoin

For hundreds of years, money has been controlled by Central Banks, which in turn gives Governments a financial whip to keep society in order. Bitcoin is an overt threat to the power they wield. The only way I can see Fiat money and Bitcoin working together is by Governments using their own digital currency pegged to Bitcoin, similar to the way the USD is the world’s reserve currency. I’m sure there are dozens of outcomes I can’t foresee but regardless, there will be a power struggle in the next 10 years between Granddaddy Fiat and Teenage Bitcoin, but that’s another story.

Published at Mon, 04 Nov 2019 09:59:39 +0000

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