This section of Bitcoin’s evaluation is designed to establish its niche. What makes it special, relative to its competitors? If you haven’t already read parts 1-2 of the series, the links are below.
Related Article: Bitcoin’s Mission, Part 2
Succinctly, Bitcoin is the first to market, digital currency. Upon examination, there is no denying that Bitcoin gained a considerable first mover advantage in the crypto market. But, is it a first mover like Napster was in establishing digital music exchange; or is it more like the USD, as a currency that provides a relatively reliable way to make transactions, store value (to help keep up with inflation) and express value (of wages, goods, and services)?
Although both are responsible for molding the culture we currently exist in, the outcome and success of the USD far outweigh the outcome and success of Napster. Most proponents of blockchain-based currency (myself included) want to see it succeed as being the new form of money, that helps globally unite commerce, in a similar way that the internet helped globally unite information and communication. However, we have a long way to go before your average global consumer will be able to trust a digital currency (perhaps bitcoin specifically) as their primary form of money.
Much like Bitcoin, the primary currency of this new world will likely be globally decentralized and democratic; helping transcend governments that are irresponsible with inflation, and rampant with corruption. It may also provide a strong sense of anonymity for its users; helping restore a sense of privacy for how people spend their money. Also like Bitcoin, it will be a relatively quick and reliable way to send money across borders, as a medium of exchange.
Unlike Bitcoin, the primary currency of this new world will prove itself to be a more reliable way to store and express value, with less price volatility. From mid-October of 2016 to mid-October of 2017, the value of bitcoin increased by over 770%. In this timeframe, there were moments where bitcoin’s value dropped by over 30% within a span of two weeks! This volatility is not conducive to encouraging the average global consumer, who works hard for their money, to adopt such an unreliable measure of value, to make their everyday transactions.
Related Article: Bitcoin’s Relative Prowess, Part 4: Network Protocols
If you’d like to make a sharper turn down this avenue of the rabbit hole, then please consume the accompanying video, that further compares cryptocurrency to important functions of money. There is also information about how the IRS defines and treats digital currency, relative to traditional fiat currency. And if you prefer the written supplement to this article, and the video, then click here: http://www.cryptkeepers.club/
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